Property 2: Stage 1 and professional conduct Flashcards
What does a solicitor have to do when taking instruction on sale/purchase
Stage 1
- take instruction to obtain essential information Interview or by sending client checklist)
- send client care letter setting out level of service to be provided and costs
- obtain appropriate ID to satisfy themselves that client is legitimate
- carry out appropriate DD checks (eg. see where large sums of money from client might have come from in accordance with AML requirements)
What preliminary matters will solicitor do when acting for the buyer // seller
Stage 1
Buyer
- advise buyer to have surveyor carry out physical inspection of property to determine any structural defects/ problems which might effect value
Seller
- advise seller if capital gains tax is required
- and should advise if this is due on sale
Rules for Capital Gains Tax
Tax on the GAIN (profits) made from increase in value of an asset
Not payable if asset is principle residence
If payable
- seller must submit tax return within 60 days of completion date
Confidentiality Rules in Conveyancing
If 3rd party (estate agents, mortgage brokers etc.) ask on progress of transaction solicitor must ensure they have authority from client to discuss this
Lenders (duty to buyer paramount)
- where solicitor acts for lender and bank providing mortgage
- bank will expect solicitor to report on anything effecting vale of property, or something that will effect their decision to lend
- must have consent of buyer/lender to report such issues
- if refused consent must stop acting for lender
Conflicts of Interest in conveyancing / rules and where you cannot act
Solicitor must avoid conflict or significant risk of conflict of interest
Where solicitor is acting for two buyers/seller must ensure they are instructed by each party (married couple etc.)
Cannot act:
- for seller and buyer
- for two sellers who cannot agree on how proceeds should be divided
- for two buyers who cannot agree on how to co-own property
- for buyer and someone gifting them deposit for property (ie. parents etc.)
What must solicitors be aware of when acting for more than one buyer
- must ensure they are instructed by each party
- must give co-owership advice
- where they hold beneficial interest as tenants in common, should advise them to enter declaration of trust
- also important for them to make will or review existing will to ensure it reflects this
What is the Law Society Conveyancing Protocol and when does it apply
Provides best practice for solicitors to follow in RESIDENTIAL conveyancing
Not meant for:
- commercial property
- new build homes
What is a memorandum of sale
Residential
What estate agent send to all parties once an offer has been made and accepted.
Includes: property, price agreed and solicitors being used by each party
Commercial property = heads of terms instead
When must you use a Mandatory Energy Performance Certificate
- must be provided by seller to buyer
- is valid for 10 years
- should be ordered before property is marketed if renewal is needed
EXCEPTION
- not required for listed buildings; or
- if old one is not 10 years old
- commerical lease of up to 6 months (with no renewal option) or over 99 years
First steps for a new commercial lease? What is used as guide to best practice?
Stage 1
- heads of terms to be negotiated with landlord (equivalent to memorandum of sale)
Best practice given in code for Leasing Business Premises and requires:
- landlord makes offer in writting
- offer to include clear terms, rent, break clause, rent review, assignment and repair obligations
First steps if assigning commercial lease
Stage 1
Land lords consent probably required
- may need reference
Landlords solicitor to draft terms of licence to assign
- all parties sign to create privity of contract and make lease enforceable
Landlord may require extra security
- rent deposit to be used in event of default by tenant (typically 3 months rent)
- guarantor (especially if tenant is LDT)
- AGA: can be condition of consent to assign
