Property 3: Stage 2 Flashcards
When does title need to be investigated (seller vs buyer)?
Seller
- Beginning of transaction
Buyer
- after receiving contract package
How might a solicitor investigate sellers title registered/unregistered land?
Stage 2
Sellers solicitor to investigate title
Registered
- download copy of title, title plan and any additional documents from HMLR portal
- check charges register
Unregistered
- find physical title deeds
- if property is mortgaged solicitor to give undertaking to lender not to part with deeds until mortgage is redeemed out of sale proceeds
What must sellers solicitor do once title is located
Stage 2
Remedy defects in title
- if there are any (missing docs, name issues) seller’s solicitor must remedy these
Obtain confirmation of title plan
- solicitor to send title plan to seller, who should confirm these conform to land being sold
Deducing Title
- sellers solicitor to send copy of title to buyers solicitor who also investigates
- Leases: only if over 7 years
What are the seller duty of disclosure. What are consequences of breaching this?
- Must Disclose
- latent defects / encumbrances
- non-disclosure buyer may be able to withdraw after exchange AND claim damages - Need not Disclose
- patent defects / encumbrances
- physical condition
- trying to cover up is wilful deceit or misrepresentation
Contents of contract package for sale of freehold?
Contains:
1. draft copy in duplicate (each sign one copy)
- property information form (PIF) and Fittings and Contents Form (F&C)
- copy of title, title plan and any relevant docs
- any guarantees or copy planning permissions
Contents of contract package new lease?
- draft contract and lease
- sellers freehold title
- property information form (PIF)
- replies to standard pre contract enquiries
- Details of management company (if applicable)
If newly built
- copy of planning permission and building regulation consent
If building under 10 years old
- new build warranty
If new build development
- service charge budget
What must be checked before being able to assign existing lease?
- Alienability Covenant (check if consent is required)
- if qualified treat as fully qualified - Does landlord have reasonable grounds to refuse
- If consent needed
- need Licence to Assign - No consent
- 3 working days before completion buyer can rescind
Contract package for assignment of lease?
- outgoing tenants leasehold register of title
- Landlords freehold title
- copy of existing lease
- PIF and Leasehold Information Form
- Copies of last 3 years service charge accounts
If property us under 10 years old
- copy of new build warranty, planning permission and building regulation consent
Why might the landlords freehold title be needed by seller?
To get leasehold title absolute (as opposed to good leasehold title)
Especially if using mortgage
How is a contract in contract package structured for residential transactions?
- Particulars of sale
- Standard Conditions of Sale
- Special conditions of sale
What is included in Particulars of Sale?
- date
- name of parties
- details of property (freehold/leasehold)
- specified encumbrances
- title guarantee
- completion date
- price
- contents price (items in or on property not included in purchase price)
What are the Standard Conditions of Sale?
- VAT
- purchase and contents price include any VAT - Deposit
- 10% of purchase price on exchange of contract
- even if parties agree lesser amount 10% is recoverable for breach - Proof of Title and title Guarantee
- seller to prove title
- seller to provide full title guarantee (unless agreed otherwise) - Indemnity Covenant
- for positive covenants - Risk and Insurance
- risk passes to buyer on exchange of contract
- seller need not insure after exchange - Completion
- 20 working days after exchange
Can a deposit be used for a related transaction?
Under Standard Conditions of Sale
Only if:
- other property is in England or Wales
- is to be used as primary residence
What is full title guarantee?
Proposed by standard conditions of sale (can be amended)
Includes guarantee that
- seller is entitled to sell property
- seller will do all they can to transferrer title
- property is free from any charges or encumbrances not disclosed
What is a Limited Title Guarantee
Seller warrants that they have not created any charges or granted any right during their period of ownership.
Given if they have lesser knowledge
