Property Flashcards
When considering acting for a borrower and lender, what would constitute a high risk of conflict?
If the mortgage is not on the standard terms of property to be used as the borrower’s private residence.
The mortgage is a standard mortgage but are not planning on using the approved certificate of title.
The solicitor should therefore not act for both.
Would a solicitor usually act for a lender and a borrower at the same time in a large commercial property transaction?
The lender will usually have their own solicitors. This is because the mortgage documents will usually require negotiation and will not be on the standard terms.
But is common for the lender’s solicitor to ask the borrower’s solicitor to carry out the title investigation and the searches and enquiries and to report the results to the lender and the borrower as this avoids duplication of costs and time. The solicitors may agree that this is appropriate if the clients have a substantially common interest as the borrower wants the borrower to obtain good title to the property and they want to ensure that there are no problems affecting the property’s value.
Can a solicitor advise on mortgages?
If the solicitor is carrying out a regulated activity in relation to a regulated mortgage contract, then they must be authorised to do so under FSMA 2000.
They can give out generic advice on the differences of the types of mortgages or arranging the execution of a mortgage that has been chosen with independent advice.
If they do not have the knowledge to provide generic advice, should refer them to someone from the FCA.
If a regulated activity is involved but it is incidental to the provision of professional services I.e. that are regulated by the SRA in the solicitor’s case, they can rely on an exemption to provide advice. To do so, the solicitor has to comply with the SRA Financial Services Scope Rule sand the SRA Financial Services Conduct of Business Rules.
However, the solicitor can only do this is the borrower has taken advice from an independent source and the solicitor is merely endorsing that choice.
Can first time residential buyers claim a relief on SDLT?
Yes, they can claim relief from SDLT if they intend to occupy the property as their main residence and the purchase price is no more than £625,000.
They do not pay anything on purchases up to £425,000 and pay 5% on the portion from £425,001 to £625,000.
When would a residential property buyer have to pay a higher rate of SDLT/LTT?
If the buyer already owns a property and is buying an additional property or if the buyer is not a UK resident.
When is LTT paid?
Must be submitted within 30 days of completion (rather than 14 days for SDLT).
What are the conditions for private residence relief?
Main residence
Must be occupied for whole period of ownership
If garden over 0.5 hectares, must pay CGT on the excess unless there is proof that the garden is necessary for the enjoyment of the house
*relief is wholly lost if any part of the property is used for business purposes
When is VAT paid?
It is collected from each supplier at the end of each VAT period which is usually 3 months.
The supplier has to complete a VAT return online.
hen is VAT income tax recoverable?
When the input is attributable to a taxable supply/output supply and there is an immediate and direct link between the two.
What kind of supplies would be classified as reduced rate supplies?
Domestic fuel supplies and certain construction, conversion and renovation services. (VAT)
What kind of transactions are VAT exempt but subject to the option to tax?
The sale of a Greenfield site is exempt, subject to option to tax.
Sale of an old freehold building
Grant of a lease
How would an indemnity covenant appear in a conveyance of land in unregistered land?
THE Purchaser hereby COVENANTS with the Vendors to observe and perform the covenants contained in the Conveyance and shall indemnify the Vendors from and against all actions costs proceedings and claims in respect of any future breach thereof
Why would a client make the option to tax?
They may want to do this to recover input tax incurred in relation to the building e.g. building work on it and professional fees incurred.
The disadvantage is that they have to charge VAT on the purchase price when they sell. This is not an issue if the buyer makes taxable supplies and can recover input tax. But if the buyer is an exempt, the purchase price is effectively increased by the option to tax VAT.
If the option to tax has been made before the date of transaction the VAT will count as chargeable consideration for SDLT/LTT purposes so there is effectively extra SDLT/LTT to pay.
Where would a restrictive covenant appear in the Epitome of Title of unregistered land?
They appear in the conveyance, often in or immediately after the first operative paragraph conveying the property to the purchaser.
If the property is unregistered, a post-1925 restrictive covenant will only be binding against the buyer if it was validly registered as a D(ii) Land Charge against the name of the original covenantor. This can be checked with a Land Charges search.
Does an indemnity covenant need to appear as a special condition in the contract?
No
SC 4.6.4 and SCPC 7.6.5 state that, where the seller has such an ongoing liability in relation to the property, the buyer must give the seller a personal indemnity covenant in the transfer, i.e., they will require a covenant from the buyer to observe the covenants affecting the title and, should the buyer breach them, to indemnify the seller should they be sued as a result under their original covenant.
How would you draft an indemnity covenant in Panel 11 of a TR1?
The transferee covenants with the transferor to:
11.1 (by way of indemnity only) observe and perform the covenants referred to in entry 1 of the charges register of title number ESX112233 (‘the Covenants’) so far as they are subsisting and capable of taking effect; and
11.2 indemnify the transferor against any liability incurred for any breach or non-observance of the Covenants occurring after the date of this transfer.
Can one party to the transfer witness the signature of another party to the transfer?
No, because a party to the deed cannot witness the signature of another party to the deed.
Whilst the spouse, civil partner, co-habitee or relative of a transferor or transferee can act as a witness (if they are not a party to the deed), this is best avoided. The witness should be independent to counter any potential allegation of undue influence. One person may witness more than one signature but must sign and complete their details for every signature witnessed.
Who is liable for a breach of planning permission?
Planning permission, once implemented, runs with the land forever and any conditions attached to it will burden the land forever.
How can a GDPO be excluded?
By an Article 4 direction. This needs to be checked in the latest version of the GDPO.
This would be revealed by a local search.
What is a certificate of lawfulness?
If there is any uncertainty about whether the works or change of use are a development or permitted by a GDPO an application can be made to the LPA before commencement.
The LPA will either a) issue a certificate to say that they are satisfied the proposals are not a development, b) they come under the GDPO or c) they refuse the application because express planning permission must be obtained.
How can the LPA investigate if there has been a breach of planning permission?
The LPA can exercise the right of entry into the property or serve a planning contravention notice. This requires the recipient to provide information about operations, use, or activities being carried out on the land and any matter retain tot the conditions attached to a planning permission
When will an enforcement notice become effective?
28 days after service.
How is building regulation consent obtained?
Apply to building control authority for building regulations consent.
The work is inspected by a building control officer.
After final inspection, the building control authority issues a certificate of compliance.
Or if its a self-certification scheme, a separate application may not be required and they can self-certify and send the notification to the relevant body.
Why is it important that a building regulation consent or a regularisation certificate has been obtained for a prospective buyer?
Prospective buyers will be concerned about the safety of the building if there is no building regulation consent.
A lender may not agree to lend unless there is a full structural survey/they may keep some of the mortgage advance until the remedial works have been carried out.
What are the consequences for failing to obtain building regulation consent?
If building regulation control has not been sought out when it should have, the building control authority can prosecute for breach of building regulation control.
The local authority can seek out injunctions which are not time limited if the work is unsafe.
How can a buyer check building regulations have been complied with?
CON29 reveals building regulation consent and any certificates granted
Seller enquiries
What can a prospective buyer do if they discover that the property they are interested in is missing building regulation consent?
Ask seller to obtain regularisation certificate from local authority (lists work required to bring building up to standard)
Insurance to cover cost of enforcement proceedings
What should a solicitor consider if they discover their client’s property is in conservation area?
Protected by conservation order:
- changes to external appearance may need PP not required elsewhere
- difficult to demolish
- tree work notified to LPA 6 weeks in advance
How can a seller/buyer solicitor dealing with registered land check the official copies of a property?
Order official copies from Land Registry
Seller provides them to ‘deduce title’ (max 6 months old)
Searches and enquiries
What is the edition date in the official copies?
Edition date is the date the LR last updated the official copies
What does an enforcement notice do in the context of building regulation consent?
Requires work to be altered or removed
Wales: one year of completion
England: 10 years of completion
What is absolute title?
Legal estate subject to: entries on register, overriding interests, minor interests of which they have notice (if trustee)
Possessory Title
Proprietor is in possession of property
Title deeds are lost or claiming adverse possession (proprietor subject to adverse interests existing at date of first registration)
Qualified title
Specific identified defect cannot be overlooked or cured by granting absolute title
What two things should a seller solicitor check first when dealing with the sale of unregistered land?
a) That there is no caution against first registration
b) The property has not actually been registered
What is a caution against first registration?
3rd party lodged a caution: warns people that have an interest in the land
Application for first registration = LR warns person with the caution, time to establish their rights (if not registration proceeds)
How does a sellers solicitor deduce title of unregistered land?
Examine past deeds to transfer land: conveyances, mortgages, assents, deeds of gifts, land charges searches
Obtain deeds: from client
What happens if title is discovered that should have triggered registration in unregistered land?
Seller is required to register it before transaction proceeds
Buyer’s lender will insist on this
Good root of title
a. deal with entire interest being sold by current owner
b. contain recognisable description of relevant land
c. do nothing to cast doubt on seller’s title
d. be at least 15 years old
What is the epitome of title?
Bundle of docs from and including root of title up to present day.
unbroken chain from owner to present (docs as evidence of change in ownership)
Created by seller’s solicitor
Deducing title for unregistered land: steps
- check first registration
- find root of title
- create epitome of title
- check each title deed in epitome of title - chain of ownership, description of land, stamp duty, incumbrances, execution, local land charges searches
C(iv) Land Charge
Estate Contract
D (ii) Land Charge
Restrictive Covenant
D (iii) Land Charge
Equitable Easement
F Land Charge
Home right
What is a mine and mineral reservation?
Indication that the seller does not own the rights to the mines and minerals underneath the surface
With unregistered land, when can the buyer assume that the equitable joint tenancy was not severed?
Conditions met:
a. no memorandum of severance on the conveyance
b. no bankrupt proceedings registered at land charges registry
c. transfer to buyer contains statement that the survivor is solely & beneficially entitled to the land
What is a notice in the context of the official copies of registered land?
An entry into the charges register in respect of the burden of an interest affecting a registered estate
What should a buyer solicitor do if they discover a home right in the official copies/title of property?
If discovered, seller should be required to obtain a release of rights to the property and agreement to vacate prior to completion in the form of a contract
