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SQE 1 Flashcards > Property (Completion) > Flashcards

Property (Completion) Flashcards

1
Q

What is required for a transfer of land?

s.52 LPA

A

Deed

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2
Q

What is the NHBC buildmark scheme?

A

Two separate agreements in the form of warranties given by the builder and the NHBC, respectively.

Part 1: The builder agrees that the new dwelling will be constructed in a good and workmanlike manner and in line with the requirements of the NHBC. The builder also agrees to put right any defects in the property, notified to the builder in writing, that occur during the first two years as a result of the builder’s failure to comply with the NHBC requirements.

Part 2: The NHBC gives separate warranties (ie the insurance) that will compensate the buyer against loss suffered as a result of builder insolvency prior to completion of contruction, failure to fulfil its own warranty and repair works exceeding £500 occuring during 8 yers following guarantee period.

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3
Q

What forms are used for transfers of registered land?

A
  • TR1 for whole of freehold or leasehold title
  • TP1 for part of a registered title,
  • TR5 for a portfolio of registered titles.
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4
Q

What form is used for unregistered land transfer?

A

Any conveyance (e.g. parchment!)

Although many use the Land Registry TR1, which can also be used for unregistered land.

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5
Q

Who traditionally drafts the transfer deed?

A

Traditionally, the buyer’s solicitor drafts the transfer deed, though more recently, the seller’s solicitor often drafts it.

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6
Q

When is the date entered in Panel 3 of the TR1 form?

A

It is handwritten on completion and left blank until then.

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7
Q

What is entered in Panel 5 of the TR1 form regarding the transferee? How many?

A

The buyer’s full name.

Maximum of 4 people or companies.

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8
Q

What are the options for title guarantee in Panel 9 of the TR1 form?

A
  • Full or limited title guarantee.
  • Leave empty if no guarantee is provided.
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9
Q

What is added in Panel 11 of the TR1 form?

A

Any additional provisions, such as an indemnity covenant or the appointment of a second trustee.

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10
Q

What must be done for execution in Panel 12 of the TR1 form?

A

The transferor (seller) must always execute the deed

Transferee (buyer) must execute if …
* they are tenants in common
* agree to hold the property on trust
* are providing an additional obligation in panel 11 (e.g. indemnity covenant or appointment of 2nd trustee)

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11
Q

How do individuals execute a transfer deed?

A

In the presence of one independent witness, who also signs and prints their full name and address.

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12
Q

What are the methods for a company to execute a transfer deed?

A

Any of the following…

  • Company seal
  • No seal, signed by 2 directors
  • No seal, signed by 1 director and a company secretary
  • Signed by 1 director and witnessed by independent witness
  • Signed by a senior employee authorised under power of attorney (not a director or company secretary)
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13
Q

What is the procedure for transfer deed completion?

A
  1. Buyer’s solicitor drafts transfer deed
  2. Seller’s solicitor either amends or approves the draft deed
  3. Once agreed, seller’s solicitor sends the engrossment (final) transfer deed to the seller for execution (buyer’s solicitor does likewise only if buyer needs to execute)
  4. Seller’s solicitor, and if appropriate buyer’s solicitor, hold the executed undated transfer deed for completion
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14
Q

Prior to completion, what search must the buyer’s solicitor undertake for registered land?

A

Search with priority against the title number at the Land Registry

Form OS1 (Whole) or OS2 (Part of land)

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15
Q

Prior to completion, what search must the buyer’s solicitor undertake for unregistered land?

A

Land charges search of the Land Charges Registry using Form K15.

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16
Q

What is the priority period for a Search With Priority (OS1/OS2)?

Registered Land Only!

A

It confers a 30 working day priority period, ensuring the buyer’s transfer takes precedence if the buyer’s solicitor submits application to register within this period.

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17
Q

What is a land charges search (Form K15) for unregistered land?

A

It identifies any encumbrances or adverse matters, conferring a 15 working day priority period.

Unlike OS1, it is only necessary to complete the purchase (not submit the land registry application) within the priority period

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18
Q

What is a bankruptcy search (Form K16) and when is it required?

A

A bankruptcy search is required against the buyer when acting for both buyer and lender.

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19
Q

What are requisitions on title?

A

Questions from the buyer’s solicitor to the seller’s solicitor before completion, often related to practical information and undertakings.

For example, collection of keys, bank details, exact amount payable, undertakings regarding redemption of morgages etc

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20
Q

What form is used for requisitions in residential transactions?

A

The Law Society’s TA13, ‘Completion Information and Undertakings’.

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21
Q

What form is used for requisitions in commercial transactions?

A

Made in the firms own precedent form, or using the CPSE form, Solicitor Completion Requirements (SCR)

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22
Q

What if the seller has a mortgage over the property being sold?

DS1 or Receipted Morgage

A

The seller’s solicitor will need to pay the money required to redeem the mortgage to the seller’s lender.

  • In registered land the seller’s solicitor will receive a Form DS1 from the lender discharging the mortgage
  • A receipted mortgage is used in unregistered land to show a mortgage has been discharged.

The seller’s solicitor must forward to the buyer the receipted mortgage or DS1 once received from the lender

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23
Q

What is the most common procedure for completion?

A

Completion by post, where the seller’s solicitor sends the transfer deed and documents to the buyer’s solicitor’s order.

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24
Q

By what time should the seller solicitor send the deeds to the buyer’s solicitor?

A

No later than the end of working day after completion

Although it can take place on any working day, most residential transactions take place on a Friday.

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25
Q

What happens if either party fails to complete by the contract deadline?

A

The defaulting party pays interest for each day of delay.

  • Interest is calculated at the interest rate in the contract.
  • If the buyer is late, the buyer pays interest on the purchase price less any deposit paid.
  • If the seller is late, the seller pays interest on the full purchase price.

If completion doesn’t occur, a notice to complete can be served and make time of the essence

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26
Q

Can damages be claimed for default to complete?

A

The non-defaulting party may claim common law damages.

If successful, the interest received under SCS is deducted from such a sum.

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27
Q

Can the contract be rescinded?

A

Unlike interest under SCS and damages, rescission is not automatically available to the non-defaulting party.

This is because, time is not of the essence.

However, after either party has failed to complete on time, the non-defaulting party can serve notice to complete.

After the 10 day period recession may become available.

28
Q

What does serving notice to complete mean?

A

If completion is not complete by the time and date stated in the contract, either party are able to give notice.

The parties must then complete within 10 working days, commencing the day after the notice is served.

  • If it is the buyer who is the defaulting party, and have not paid the full 10% deposit, they must make up the 10% immediately - even if a lower sum was agreed for the deposit
  • If either party fails within 10 days, the remedies available depend on whether the defaulting party is buyer or seller.
29
Q

What remedy does the seller have after 10 days following default and notice?

A

The seller can do the following…
* Rescind the Contract
* Forfeit the Deposit/Interest
* Resell the Property
* Claim contractual damages for loss

30
Q

What remedy does the buyer have after 10 days following default and notice?

A

The buyer can do the following…
* Rescind the Contract
* Demand return of the Deposit/Interest
* Claim contractual damages for loss
* Request specific performance

31
Q

What steps must the buyer’s solicitor take regarding Stamp Duty Land Tax (SDLT)?

England Only

A
  • Prepare and submit the SDLT return within 14 days of completion
  • Obtain the SDLT5 Certificate.
32
Q

What is the equivalent tax in Wales to SDLT and how does it work?

A

Land Transaction Tax (LTT)

Must be submitted within 30 days of completion to the WRA

The buyer’s solicitor will receive a WRA Certificate

33
Q

What is required if a company gives a charge?

A

It must be registered at Companies House within 21 days of creation, or, if missed, a court order is needed.

34
Q

What form must the buyer’s solicitor fill for registered land post-completion?

A

The land registry Form AP1

No deadline other than the time limit for priority under OS1 of 30 working days from the search.

35
Q

What form must the buyer’s solicitor fill for unregistered land post-completion?

A

An application for first registration is needed using Form FR1.

Deadline of two months from completion. Otherwise, the transaction is void.

36
Q

What is CGT?

A

Capital Gains Tax, a tax on profit when an asset is sold for more than it was purchased.

37
Q

What constitutes a chargeable disposal for CGT?

A

Sale or gift of an asset, but not gifts on death.

All property assets are chargeable

38
Q

What are allowable expenses in calculating a chargeable gain for CGT?

A

When calculating CGT, the taxpayer can take into account allowable expenditure such as:

  • Cost acquiring the asset (e.g. conveyance fees);
  • Costs contributing to the value of the asset (e.g. building an extension, but not maintenance or repair); and
  • Costs disposing the asset (.g. conveyance and estate agent fees)
39
Q

What is the annual exemption for CGT?

A

A taxpayer is entitled to a £3,000 annual exemption, which can reduce the chargeable gain.

40
Q

What is Private Residence Relief?

A

A person does not pay CGT if they sell or dispose of their home if…

  • It has been the main home for all the time lived in it
  • They have not let it out
  • It has not been used for business purposes
  • The grounds including all buildings are less than 5000 square meters
  • It was not bought just to make a gain
  • For a married couple or civil partnership, only one house will be eligible for PPR.
41
Q

How to calculate SDLT?

England

A
  • Rates will be provided.
  • But atm, no SDLT up to £250,00
  • £250,000 - £925,000: 5%

Calculate the percentage, based on the purchase price + VAT.

Then apply reliefs and charges…

  • A discount is applicable for a first time buyer provided the price is no more than £625,000 > no SDLT for the first £425,000 and 5% on any part over £425,000 (but not exceeding £625,000)
  • If the property is a second property, an additional 3% SDLT is charged on the whole purchase price. Calculate the usual SDLT then add 3% extra of the whole
42
Q

How to calculate LTT?

A

Same as sdlt, but…

  • No relief for first-time buyers
  • Higher rates of LTT apply for buyers with a second property
  • The rates are different
43
Q

When is the date of the disposal for capital gains tax (CGT) purposes?

A

The date of exchange of contracts.

It is this date, rather than the date of completion of the transaction, which is deemed to be the date of the disposal.

44
Q

For CGT purposes, when is the deemed date of disposal upon sale of a property?

A

The date of exchange of contracts.

Do not be mislead and think it is the date of registration or the date the balance of the purchase price was paid upon completion. incorrect

45
Q

A solicitor is acting in the purchase of a commercial freehold property for £250,000 in South London. This is the buyer’s first purchase.

Does Stand Duty Land Tax apply?

A

Yes

The first-time buyer relief for stamp duty land tax does not apply to commercial properties in England and Northern Ireland.

Note: Land transaction tax replaced stamp duty land tax in Wales on the 1st of April 2018. There is no first-time buyer relief available with land transaction tax.

46
Q

Can Stamp Duty First Time Buyer Relief be claimed if only one of the purchasers is a first time buyer, but the other is not?

A

No.

First-time buyer’s relief is not available if one of the purchasers has owned before and is therefore not a first-time buyer.

Standard rate will apply.

47
Q

Under the Standard Conditions of Sale (5th edn, 2018 revision) what is the default position relating to ccupation of the property by the buyer pending completion.

For example, to start moving into the property during the intervening period

A

Occupation will be permitted on the basis that the buyer is a licensee not a tenant.

48
Q

What is the ‘open contract’ position where the solicitors have suggested dispensing with a specified completion date in the special conditions?

A

Completion is to take place 20 working days after the date of the contract. correct

49
Q

What is the effect os SCS Special Condition 6?

A

Either party may rely upon any representations made by the other, provided these were made in writing. correct

If the contract document incorporates the normal pre-printed Special Condition 6, this applies except in cases of fraud or recklessness.

50
Q

The two executors of a deceased sole owner of a house are selling the property in their capacity of personal representatives.

Do either or both of the executors will need to sign the contract?

A

It is permissible for one executor to sign the contract provided they have the authority of the other to do so.

Signature of a single contract by both executors is not obligatory in all cases.

51
Q

Do the requirments of s2 of the Law of Property (Miscellaneous Provisions) Act 1989 (requirments for a land contract) need to be followed if the sale of land is at a public auction?

A

No

The statutory provisions expressly exclude contracts made in the course of a public auction (s2(5)(b)).

52
Q

What is the standard title guarantee when a personal representative is selling?

A

Limited title guarantee correct

53
Q

When acting for a client in a new build property purchase what should you ensure they have?

A

NHBC Protection
(Structural Defects Insurance)

54
Q

Under NHBC who can claim?

A

The benefit of the scheme is not restricted to the original buyer of the property covered by the scheme.

Any owner protected under the scheme within the time limits (e.g. 10 yeara for major structural defects

55
Q

How long does the buyer’s solicitor have to reply to TA13 undertakings form?

A

Must reply at least five working days before completion.

56
Q

What morgage discharge form will be used if to discharge part of a registered charge, not the whole of it?

A

DS3

57
Q

If SDLT is payable, what is the first £250,000 taxed at in a residential transaction?

A

0%

58
Q

If the purchaser has additional properties,

A
59
Q

Can a grant of a new lease for a term not exceeding three years be protection by entry of a notice in the landlord’s reversionary title ?

A

No

60
Q

What will the solicitor expect to receive on completion of the registration?

A

A title information document.

Although registered titles are now held electronically, a document will be issued by the Land Registry on completion of the registration.

61
Q

If there is concern about the sellers title, what remedy is available if the buyer wishes to proceed with their purchase?

A

Vendor and purchaser summons.

62
Q

If the contract provides that a % of payment can be deferred after completion, what sis the effect of the deferred amount?

A

It gives rise to a lien in favour of the seller.

63
Q

If there is an issue regarding a term of the property contract post-exchange (e.g. not reflecting the intention of the parties) how can it be rectified?

A

The parties can apply to the First-tier Tribunal (Property Chamber; Land Registration Division) for rectification, as it is a contract for the sale of registered land.

64
Q

A solicitor is acting for a sale of a residential flat which has been sold subject to a tenancy, instead of vacant possession.

If there is a delay in completion, what can the seller claim instead of interest?

A

The seller can elect to take the rent from the tenant rather than interest

65
Q
A

SQE 1 Flashcards (58 decks)

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