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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.

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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
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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.
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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)
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21
Q

What is SDLT?

A

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

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22
Q

What is LTT?

A

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

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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.

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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.

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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)
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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.

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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).
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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.

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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.

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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
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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
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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
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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.

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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

42
Q

A solicitor is acting for a client buying unregistered land.

The seller purchased the property in 2001.

What should they ask the sellers solicitor to do and why?

A

To register the land at the seller’s expense before proceeding further because of the rules on compulsory first registration

This is because they purchased the property after 1990 and had an obligation to register it but failed.

The buyer’s solicitor should not be required to investigate unregistered title, as the title should have been registered by the seller.

43
Q

What evidence of the executors’ authority to deal with a deceased’s estate will be required by the buyer’s solicitor?

A

A certified copy of the grant of probate to the deceased owner’s estate

44
Q

Is a buyer entitled to a pre-root covnveyance?

A

No.

Pre-root documents are not relevant to the title. The buyer is not therefore entitled to request a copy.

45
Q

What is a unilateral notice?

A

A charge used to register any interest which a third party may have in a particular property or estate and notify the other party of its existence. A

It can be registered without the property owner’s consent and the applicant does not need to provide any evidence that the interest exists.

The property owner will be notified and they can make an application to cancel the notice at any time, requiring the beneficiary to prove that their claim is valid.

46
Q

Can you sell a property if there is a unilateral notice in the charges register?

A

Yes

It will not prevent the transfer to the buyer being registered, but the property will remain subject to the equitable charge, so that the transferee will be bound by the interest protected by the notice.

47
Q

Are/when are official copies of the register copies admissible?

A

They are admissible to the same extent as the originals.

48
Q

Which is the effect of an application on Form UN4?

A

Form UN4 is an application by the registered proprietor to remove a unilateral notice.

The application will be successful if the beneficiary either consents to the application or does not lodge a valid objection to it within the notice period of 15 working days.

49
Q

If there is a ‘no disposition by a sole proprietor’ restriction, when is a second trustee needed to sell the property?

A

A second trustee is only needed to overreach the restriction if one of the owners has died and the property is sold by one seller.

50
Q

What will the Land Registry do if a company submits a morgage to be registered but fails to register it at Companies House?

A

Although the Land Registry will register the mortgage in the register of title, it will in doing so take account of the fact that it has not been registered at Companies House

51
Q

If a couple are getting a morgage for a house purchase, what would the lender require from their adult son occupying the home after purchase?

A

Ensure the son signs a declaration in favour of the lender postponing any rights he may have in the house. correct

52
Q

What would a lender need to secure from an adult occupier of a property (e.g. a son) if the owners are getting a morgage over the property? In this instance, the property is already owned and lived in by the son.

A

Check that the son has signed the ‘occupier’s consent’ in the special conditions in the contract.

53
Q

What is a City of London Law Society (CLLS) certificate of title?

A

It contains standard statements relating to the property which are qualified by any disclosures set out in the certificate. It is submitted to the morgage lender.

54
Q

If a husvan is seeking a morgage of the matriminial home, what must the solicitor do to ensure the wife is fully informed?

A

A solicitor must meet the wife face to face in the absence of the husband. correct, which should ideally then be confirmed in writing.

55
Q

How can a person with a morgage ensure the loan will be repaid if they die during the loan term?

A

Take out a mortgage protection policy in respect of the loan.

56
Q

What is the UK Finance Mortgage Lenders’ Handbook (the Handbook)?

A

It provides a standard set of mortgage instructions to a solicitor acting for a lender.

57
Q

If a property was relatively recently built, but needs some refurbishment what is the best survey to obtain?

A

A homebuyer’s valuation and survey report. correct

58
Q
A
59
Q

For PPR CGT Relief, what is the permitted limit?

A

The statutory limit is 0.5 hectare (5,000 square metres)

The remainder will fall outside the exemption and the gain will be apportioned

60
Q

Is CGT payable following sale of a buy-to-let property if a gain is made?

A

Yes

The PPR exemption only applies to a property which has been the only or main residence of the seller throughout their period of ownership, although certain periods of non-residence are permitted.

The fact that the property has been used as a residence by the tenant(s) is irrelevant in this context.

61
Q

If a couple are buying a house and one parties name will not be on the legal title, how can the other protect their beneficial interest?

A

Register a joint ownership restriction (in Form A) in the register

The restriction reflects this fact and protects the interest of the other buyer by ensuring that a co-trustee would have to be appointed on any subsequent sale or mortgage of the property. The proceeds would have to be paid to both trustees, who would then hold these on trust for the beneficial owners.

62
Q

When is the deemed date of disposal for CGT purposes?

A

The date of exchange of contracts.

63
Q

Is the Law Society Conveyancing Protocol (LSCP) for members of the Conveyancing Quality Scheme (CQS?

Is it limited to only such members?

A

Use of the LSCP is compulsory for firms which are members of the CQS

However, use is not restricted only to them.

64
Q

What is the rate of CGT for gains arising from a RESIDENTIAL PROPERTY DISPOSAL?

A

Basic: 18%

Higher: 24%

Note, this differs from non residential property where the rate is 10% and 20% respectively.

65
Q

If there are two purchases, and one is a first time buyer, can the SDLT fiorst-time buyer relief apply?

A

No

One of the purchasers has owned before and is therefore not a first-time buyer.

65
Q

The first-time buyer relief for stamp duty land tax does not apply to commercial properties?

A

No.

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

66
Q

Can a deposit be used on the seller’s related purchase prior to completion?

A

Yes

All or part of the deposit may be used as a deposit on the seller’s related purchase, with the balance held as stakeholder until completion.

67
Q

What title guarantee is expected where the seller is the sole legal and equitable owner of the property.

A

Full title guarantee.

68
Q

What title guarantee should an executor usually give?

A

Limited Title Guarantee

This is because an executor, in particular one acting in a professional capacity rather than as a close member of the deceased’s family, is likely to have only limited personal knowledge of the property

69
Q

What is the minimum period before the completion date within which the buyer’s solciitor must submit the draft transfer deed to the seller’s solciitor for approval?

A

At the latest, 8 working days before the completion date

70
Q

What is the standardefaultd contract rate in a residential contract?

A

If no other contract rate is specified, the default position is that it will be ‘the Law Society’s interest rate’, which is in fact 4% above Barclays Bank base rate.

71
Q

What is the Law Society’s interest rate

A

4% above Barclays Bank base rate

72
Q

If the contact does not specify a completion date, what is the default completion date under SCS?

A

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

73
Q

If the seller states ‘not as far as the seller is aware’ in relation to a pre-echange enquiry (e.g. CPSE 1) what effect does this have?

A

Such a response implies that the seller has made all reasonable investigations before giving the response. correct

74
Q

Do the ‘written’ requirments for a land contract apply to sales by public auction?

A

No

) The requirements apply to contracts by private treaty but not to contracts by public auction.

75
Q

If a morgage has not been registered at Companies House, but has been sent with the application to HM Land Registry to register the company’s purchase of the property, what will happen?

A

Although the Land Registry will register the mortgage in the register of title, it will in doing so take account of the fact that it has not been registered at Companies House and enter a note in the register to reflect that fact.

76
Q

If an adult child is occupying a property BEFORE completion of the purchase of a property with a morgage, what will be required for the lender?

A

Ensure the son signs a declaration in favour of the lender postponing any rights he may have in the house.

77
Q

What is a Class C(i) land charge?

A

Protects a (second) puisne mortgage

The grant of a second mortgage will not be a trigger for compulsory first registration of title.

78
Q

Following Etridge, what must a bank do if the hubsnamd seeks to take out a morgage on a property registered in the joint names with his wife?

A

A solicitor must meet the wife face to face in the absence of the husband.

79
Q

What effect does a unilateral notice have on a sale?

A

It will not prevent the transfer to the buyer being registered, but the property will remain subject to the equitable charge. correct

80
Q

If property is co-owned and one party dies, but there IS NO ‘joint proprietorship’ restriction on the register, what is needed to proceed with the sale>

A

All that is required is a copy of the death certificate as evidence to satisfy HM Land Registry that the other co-owner has died.

81
Q

If an application for compulsory first registration is not made within two months of the conveyance, what interest does the purchaser have?

A

The original seller retains the unregistered legal title to the property, but the buyer holds the beneficial interest

82
Q

Is a second trustee required if there is a ‘join proprietorship’ restriction, but both proprietors (e.g. married couple) are selling?

A

No

A second trustee is only needed to overreach the restriction if one of the owners has died and the property is sold by one seller.

SQE 1 Flashcards (60 decks)

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