Property 4 Flashcards
Substantially common interest
a situation where there is a clear common purpose between the clients and a strong consensus on how it is to be achieved
The mortgage offer
A formal offer by the lender to lend. It is subject to the lender being satisfied with the transaction and the security (ie, the property) and will set out the terms and conditions of the loan.
A facility letter
the commercial equivalent of a mortgage offer. Both a mortgage offer and a facility letter will set out the Ts and Cs of the loan
A certificate of title
a document in which a solicitor certifies that the title to the property is satisfactory for lending purposes
- For a residential mortgage it is usually a one-page form which is completed and signed
- More complex for a commercial certificate of title
Gives the lender the right to repossess
Charge by way of legal mortgage
Industry standard format for certificate of title for commercial property
the City of London Law Society (CLLS) Certificate of Title
What document will the lender give in a residential transaction to indicate the terms and conditions of the loan?
A mortgage offer
What document will the lender give in a commercial transaction to indicate the terms and conditions of the loan?
A facility letter
Purpose of a certificate of title
It confirms to the recipient matters relating to the property through a series of statements of facts and disclosures
A company is buying a registered freehold property in England with funding from a corporate lending bank secured on the property with a first legal charge. The company’s solicitor is required to submit to the lender’s solicitor a CLLS Certificate of Title (COT) as a condition precedent to receiving the funding.
When should the company’s solicitor receive confirmation from the lender’s solicitor that the draft COT is approved?
Before exchange of contracts.
A buyer’s solicitor should not exchange contracts unless the source of funds is confirmed. Exchanging without confirmation means the lender could have issues with the property and then not want to lend, leaving the buyer contracted to buy without access to the main source of funds. There would be financial penalties under the contract if the buyer did not complete.
The deed that creates the security interest and is registered at the Land Registry.
Legal charge
A contract for land must satisfy these conditions (s.2, Law of Property (Miscellaneous Provisions) Act 1989):
- Be in writing
- Incorporate all the terms which the parties have expressly agreed
- Be signed by, or on behalf of, each party to the contract
What contract is used for residential transactions?
Standard form residential contract, based on the Standard Conditions of Sale.
When are the Standard Conditions of Sale are obligatory
when parties adopt the Law Society Conveyancing Protocol
Your client is selling his home and you are about to start drafting the contract.
A standard form contract for sale incorporating the standard conditions of sale and pre-printed special conditions.
The role of special conditions in a property contract
Special conditions may be used in both residential and commercial property contracts to add to or amend the standard conditions
Defects in title
issues that cast doubt on the seller’s ownership of the property or the rights that affect it; for example, if a deed containing covenants has been lost
Latent incumbrances
rights burdening the property that are not apparent on inspection e.g. covenants and easements
What is the time for completion?
2pm
What is the default date for completion under the SCS and the SCPC?
20 working days after the date of the contract
Time is of the essence:
the contract must be performed by the specified time, and if not, the non-defaulting party can walk away from the contract and claim danages for the breach
If, immediately following exchange of contracts, the seller wishes to use the deposit payable by the buyer, the seller’s solicitor must ensure that the contract provides for the deposit to be held in which capacity?
By the seller’s solicitor as agent for the seller.
The seller needs to disclose any incumbrances (rights burdening the property that are not apparent on inspection) that are registered at the Land Registry (reg land), the Land Charges Registry (unreg land) and at Companies House.
What the seller must disclose - SCS (used in residential transactions)
The buyer is deemed to buy the property subject to any incumbrances which would be revealed by a prudent buyer’s searches and enquiries.
What the seller must disclose - SCPC (used in commercial transactions)
