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SQE 1 Flashcards > Property (Freeholds) > Flashcards

Property (Freeholds) Flashcards

1
Q

What are the Seller’s duties pre-contract to exchange?

A
  • Deduce Title
  • Answer Enquiries
  • Prepare Draft Contract
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2
Q

What are the Buyer’s duties pre-contract to exchange?

A
  • Investigate Title
  • Pre-Contract Searches and Enquiries
  • Report on Title
  • Buyer’s Mortgage
  • Approve Draft Contract
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3
Q

What are the Seller’s duties from pre-completion to completion?

A
  • Draft & Approve Deed
  • Reply to Completion Information
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4
Q

What are the Buyer’s duties from pre-completion to completion?

A
  • Draft/Approve Transfer Deed (TR1)
  • Request Completion Information
  • Pre-Completion Searches
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5
Q

What are the Seller’s duties post-completion?

A
  • Send completed TR1
  • Send any discharged mortgage to buyers
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6
Q

What are the Buyer’s duties post-completion?

A
  • SDLT/LTT
  • Companies House Application to Register Mortgage if buyer is a company
  • Land Registry Application
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7
Q

What is the general principle of Caveat Emptor (Buyer Beware)?

A

The buyer takes the property as they find it.

  • The Buyer can withdraw anytime up until exchange of contracts.
  • Seller has no obligation to give the buyer all relevant information.
  • The buyer’s job is to investigate.
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8
Q

What does investigating the property title involve?

A
  • Checking Land Registry Official Copies or deeds
  • Seller’s Replies to Enquiries
  • Conducting Searches
  • Obtaining Surveys
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9
Q

What must the seller provide before marketing the property?

A

Energy Performance Certificate (EPC)

Exception: No EPC is required in respect of a listed building insofar as compliance with certain minimum energy performance requirements would unacceptably alter its character or appearance.

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10
Q

What should solicitors check regarding the Energy Performance Certificate?

A

Ensure EPC is provided and valid.

An EPC remains valid for 10 years

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11
Q

What are typical timescales and costs involved in conveyancing?

A

Residential sales typically take 6-8 weeks from agreement to completion.

Commercial sales may take less time, requiring prioritisation - exchange within 2 weeks, completion in 4

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12
Q

What types of surveys should a buyer consider?

A
  • Basic Valuation Survey,
  • Homebuyer Report
  • Full Structural Survey
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13
Q

What is a Basic Valuation Survey?

A

A lender-required survey that provides a valuation and identifies major defects.

This is the cheapest option.

A buyer should be advised to obtain a fuller, more detailed survey.

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14
Q

What is a Homebuyer Report?

A

A detailed survey for properties under 150 years old in reasonable condition.

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15
Q

What is a Full Structural Survey?

A

The most comprehensive survey, recommended for any of the below:
…
* Listed properties
* Those undergoing extensive renovations
* Alterations are planned
* Older than 150 years old
* Property not in reasonable condition

This is the most expensive survey

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16
Q

What is the maximum number of legal owners in
Co-Ownership?

A

Maximum 4 legal owners, all must be over 18.

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17
Q

What is the difference between Legal Ownership and Beneficial Ownership?

A

Legal Ownership is registered, while Beneficial Ownership may not be.

18
Q

What is a Beneficial Joint Tenancy?

A
  • They may/may not be legal owners.
  • Unless they are legal owners, they will not be registered.
  • No maximum numbers, and can be of any age.
  • Suitable for married couples, where the right of survivorship applies.
  • Not suitable for co-owners who want to pass shares of property in will
19
Q

What is a Beneficial Tenants in Common?

A
  • Suitable for co-owners wanting to pass shares in a will or where contributions to the purchase are unequal.
  • Purchasers own an undivided share in whatever proportion they choose.
  • The right of survivorship doesn’t apply
  • TR1 contains a panel for decleration of trust, if this option is chosen, the buyer will need to confirm that each beneficiary is entitled to what share of the property.
20
Q

What taxes must be considered in property transactions?

A
  • Stamp Duty Land Tax (SDLT Englasnd, or Land Transaction Tax (LTT Wales)
  • Capital Gains Tax (CGT)
  • Value Added Tax (VAT)
21
Q

What is SDLT?

A

A tax paid when buying property over a certain price in England and Northern Ireland.

22
Q

What is LTT?

A

A tax paid when buying property over a certain price in Wales. Similar to SDLT but different rates.

23
Q

What is Capital Gains Tax (CGT)?

A

A tax on profit (gains) from selling assets, excluding most residential sales under Private Residence Relief.

24
Q

What is Value Added Tax (VAT)?

A

A tax added to the price of goods, usually not applicable to existing residential property sales that are VAT exempt.

25
Q

What are Commercial Funding options?

A
  • Equity finance(Shares)
  • Syndicates (Group of Lenders)
  • Development funding (Money to buy and develop along with step-in rights)
26
Q

What are the two types of Residential Mortgages?

A
  • Capital Repayment Mortgage- Borrower repays the capital sum by monthly payments with interest until the loan is fully paid off.

…
* Interest Only Mortgage - Borrower only pays interest on the loans each month. however, capital remains outstanding and is repaid upon sale of the property.

27
Q

When are you authorised to act on your client’s behalf?

CCS 3.1

A
  • You must be instructed by the client > Be careful about accepting instructions from one spouse on behalf of the other (require written confirmation from the other spouse)

…

  • Alternatively, you must be instructed by. someone properly authorised > When acting for a company, ensure that they are instructed by a validly appointed director (check Companies House) with authority to instruct (e.g. a board resolution).
28
Q

When is an instruction from one spouse sufficient authorisation to act?

A

Any written instruction (e.g. wife and husband) should be signed.

Make sure the other spouse signs and authorises in writing.

An email isn’t sufficient.

29
Q

When would a solicitor be personally conflicted?

A
  1. A financial interest of yours or someone close (e.g. the development is next to your partner’s holiday home);
  2. A personal or business relationship.

When it comes to relationships between solicitors, so long as they are able to be objective (e.g. two best friends at competing firms) and able to separate client interests from personal interests, this may not be a conflict.

30
Q

Can I act on a property transaction for two or more clients in the same or related matter?

A

Unless an exception applies you cannot act.

The exceptions….

  • Substantially Common Interest (SCI) > You can act if the clients have (a) a clear common purpose; and (b) a strong consensus on how to achieve the purpose
  • Competing for the Same Objective Exception (CFSO) - you can act if the matter concerns two clients competing for an objective that, if attained by one, will make it unattainable for the other clients
31
Q

What is the Substantially Common Interest (SCI) Exception?

A

You can act for two or more clients in the same related matter if…

  1. The clients have a clear common purpose
  2. The clients have a strong consensus on how to achieve the purpose,
  3. The exception should be regularly kept in check to ensure the common purpose and consensus remains.
  4. Lawyer must comply with all conditions:
  • All clients give informed consent, given or evidenced in writing to you acting
  • Put in place effective safeguards to protect clients and confidential information (e.g. information barriers)
  • Satisfied it is reasonable to act for all clients
32
Q

What is the Competing for the Same Objective Exception (CFSO)?

A

You can act for two or more clients in the same related matter if…

  1. The is a situation where two or more clients are competing for an objective that, if attained by one, will make it unattainable for the other clients,
  2. For example, this would apply in a structured competition process like an auction or tender.
  3. Lawyer must comply with all conditions:
  • All clients give informed consent, given or evidenced in writing to you acting
  • Put in place effective safeguards to protect clients and confidential information (e.g. information barriers)
  • Satisfied it is reasonable to act for all clients
33
Q

Can you act for both the buyer (borrower) and the lender?

A

In residential transactions it is usual for the buyer’s solicitor to act for both because there is unlikely to be a conflict because they will usually not negotiate terms or form of the loan (e.g. standard form will be used)

In commercial transactions it does not usually happen since lenders and borrowers often have different approaches and need to negotiate terms of loan agreements and security documentation.

34
Q

Can the legal estate ever be severed and held as legal tenants in common?

A

No. The legal estate cannot be severed and held as legal tenants in common.

It can only be held on a legal joint tenancy.

If a couple want a tenancy in common (and for example, say they want unequal shares) they should hold the legal estate as joint tenants but should hold the beneficial interest as tenants in common in specified shares

35
Q

Can you register someone as a joint beneficial owner?

A

No. The register of title relates only to legal estates—it is not possible to register the equitable title or to register a joint beneficial owner as a proprietor in the register if they are not a joint owner of the legal title.

They could however enter a restriction on the register.

36
Q

When does a seller have to disclose a right of way if it has not been exercised in a while and isn’t obvious on inspection?

A

The seller must disclose the right of way since it is a latent defect that the buyer is unable to discover through reasonable inspection.

37
Q

A first-time homebuyer is looking to purchase a property built in the 1980s. The property appears to be in reasonable condition, but the buyer wants to ensure there are no hidden defects before proceeding.

Which type of survey should the solicitor recommend to the buyer?

A

Homebuyer report

38
Q
A
39
Q

Does a deed need a statement indicating it is intended to be a deed to be valid?

A

Yes

A deed must include a statement indicating that it is intended to be a deed.

This is a formal requirement for a deed to be considered validly executed

The absence of such a statement means that the deed is not validly executed.

40
Q

What is a Class C(iv) land charge?

A

An estate contract

41
Q

Does taking out a mortgage on a property trigger compulsory first registration?

A

Yes, because mortgaging unregistered land triggers compulsory first registration if it occurs after 1990

SQE 1 Flashcards (57 decks)

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