Property Knowledge Flashcards
What are the that need to be taken prior to exchange of contracts
Report to client in writing results of title investigation, searches and enquiries, terms of contract and mortage offer
Report to lender if acting whether property is god security for loan and has good marketable value
Ensure the client has sufficient funds to complete including accepting mortage offer and complied/be able to comply with any conditions
Ensure that insurance is available immediately following exchange (standard contracts of sale) as risk passes to buyer on exchange
Completion date
Express authority to exchange (written ideally)
What are the different methods of exchange
Usual telephone (solicitors in different counties)
Which Law Society Formula should be used
Formula A if seller’s solicitor has both own and buyers
signed copies of contract plus deposit
Formula B if both solicitors have own client’s signed part
Formula C if chain
Which to discuss with opposing solicitors in conveyancing
Introduce
Get full name of opponent
Confirm ready to Exchange
Identify Property and Completion Date
Confirm who is holding which documents and which formula applies
Take contemporaneous note
Personal liability of undertaking
Aspects of Formula A
Seller confirms inserting agreed completion date in both contracts
Seller confirms inserting completion date and exchanging under formula A, date and time
Seller confirms inserting today’s date at top as agreement date
Seller confirms holding client’s part of contract to buyer’s order
Seller gives undertaking to buyer to send part
Aspects of Formula B
Each confirms inserting agreed completion date in signed contract
Confirm exchange Law Society Formula and Time and Date
Confirm inserting today’s date at top of contract as agreement date
Each confirm that holding client’s contract to together solicitor’s order
Undertake to sent today/1st class, DX/hand - seller then Buyer plus deposit
NB under B undertaking to deposit by bankers draft/solicitors client account cheque, conflicts standard, so agree variation of formula
Which matters are to be discussed in contracted during exchange?
Agreed completion date
Agreed date of contract
Which professional conduct issues arise when carrying out exchange of contracts
Undertakings required under law society formula
Must agree with timescales
Pre-contract
Seller: investigates title and prepares contract; buyer does pre-contract searches + investigates title
Conflicts
Cannot act for buyer and seller, can act for buyer and lender but only in residential.
Duty to inform of contract races - get client instructions
Undertakings - make sure can do it
Is VAT due
Yes commercial: MUST if less than 3 years; CAN if more than 3 years old - so negotiate a promise not to change their mind OR if law changes, is included - in the contract
No residential
Pre-Contract searches Mandatory
- Local search (3 x searches - local authority eg. planning permission LLC1, CON29R is private road/public road, environment, planning, listed, CON29O
- Drainage & Water
- Pre-Contract enquiries with seller: eg. occupiers
- Environment Risk Assessment
If private road
Need easement right of way
Pre-Contract non-mandatory searches
- Company - insolvency, floating charges
- Mining
- Environment Agency (flooding)
- Chancel Repair
- Railway embankments,
If unregistered: index map search & land charges searche
Why must seller investigate title
Seller’s side of contract is duty to inform of burden
Investigation for title - unregistered land
- Go back 15 years
- Reasonable identifiable land
- Must deal with all legal and equitable title eg. ‘estate in free simple’
- No doubt on land
Checklist for unregistered title checks: doubt on title (SELLER)
- Document properly stamped and duty paid - AV stamp, if no duty payable as long as wording saying is below threshold
- Break in chain of ownership - ok as long as can be explained, eg. death certificate, marriage certificate
- Property adequately/consistently described
- Incumbrances - registered against the individual who took on the burden - so search every person who has owned the land and cover full period of insurance
- Have mortgages been discharge - check back of contract
- Chain of personal indemnity covenants - previous promises
- Correctly executed - pre 31.7.90 - signed, sealed and delivered; post - signed and witnessed
- If documents related to PRE root- can request from seller. Check back pages
REMEDY: insurance
Land Charges Codes
Restrictive covenant - D ii Estate contract, eg an interest that isn't completed, in course, option - C iv Puisne 2nd Mortgage C i Equitable easement D iii Spouse right of occupation F
Positive covenants
Do no bind the land
Unregistered covenants - how binding?
Restrictive contract pre 1.1.26 if NOTICE
Easements
On title: Restriction - no disposition by a sole proprietor
Suggests tenants in common
On title: Caution
Suggests someone expressing an interest in land. Not checked by LR
Look into - can be struck off if not evidenced.
Stopped Oct 2013- unilateral notice
Overview of title:
Property
Proprietorship
Charges
Property - benefits and burdens of land
Proprietorship - personal matters for ownership - not burdens
Charges - Burdens
ONLY disclose burdens on land after completion as specified incumbrances - eg. mortgage that will be paid off won’t be included
What is a qualified restrictive covenant?
Buyer covenants not to do something without consent
What is a fully qualified restrictive covenant
Buyer covenants not to do something without consent not to be unreasonably withheld
How many entries on title
Mortgages - 2: existence and owner
Remedy for covenant when investigating title
Ask to be released/Insurance. If old, insurance probably cheaper
Restrictive covenants - which runs with land
Only negative. Positive must ensure has personal indemnity - chain of personal indemnity covenants - will be in title register
Amendments to property/change of use - need planning permission
Yes if exterior, unless GDPO - general development planning order - can be revoked
Or material change of use
What about internal changes
Buildings Regulation Consent
Making changes
- Building regs
- Planning enforcement periods. Start within 3, building works w/o permission - 4; breach planning 10, change of use - 10
- Listed
- Title restrictions. If old, insurance. New: beneficiary
What do you need to draft contracts
Official copies of contracts and client instructions
When are you bound by the contract
On exchange
Standard conditions for full title guarantee
Can be limited to knowledge during ownership - fine if buying from someone who didn’t check it out, OK if personal representatives - if bought from solicitor should be full title guarantee - FULL title guarantee is no burdens prior to or during, limited is just during
VAT payable?
NOT residential
Commercial: NEW (up to 3 years) MUST normally charge, can negotiate to be in price
OLD - can be charged up to day of completion. Negotiate no VAT and promise not to impose OR include VAT in the price AND if law changes
Need to reflect in contract. SCPC 1.4.1 - and special condition 1.4.2
Special page A1 commercial contract
Process to complete as seller
Approve transfer and give undertaking to discharge mortgage
Process to complete as buyer
Draft purchase deed (transfer)
Report to Lender
Draft and Buyer executes mortgage deed
Pre-completion searches
After completion as seller
Comply with undertaking to discharge mortgage
After completion as buyer
Pay Stamp Duty Land Tax and Register transaction
What forms for selling land
TR1 - whole land
TP1 - part land
What pre-completion searches are carried out
OS1 - search against title number - to check if any new burdens on title and protection of priority period (K15 if unregistered against name of seller)
Seller - check company search for solvency and floating charges
Searches for solvency if acting for Mortgage lender
Post completion matters
Stamp duty - form SDLT1 - within 30 days of completion, if not fine and interest, and need to complete registration for both buyer and lender
Registration - new proprietor and new charge if mortgage on AP1, or FR1 if unregistered. Registered land: within 30 working days of search result the priority period, 2 months if unregistered. If not, loose protection of priority period, won’t get legal title, lender won’t get legal charge
Grant/assignment of lease length
Sublease must be at least 1 day shorter than head lease otherwise is an assignment
Old leases - pre-1996 1.1.
Chain of personal covenants to enforce as landlord. Personal indemnity covenant - they are implied by STATUTE
In questions on leases, what must cite
the relevant provision
New leases - how to deal with tenant liability
Landlord can refuse assignment of lease if old tenant doesn’t agree to be liable for new tenant (but only during their period of ownership) - so old tenant needs personal covenant from new tenant. Must be expressly included.
Forfeiture of lease
- Breach
- Provision in lease for forfeiture
- Non-payment rent - must serve formal demand, then go to court
- Anything else - must serve notice specifying breach, remedy and time, then court
tenant can apply for relief
Termination of protected tenancy
s25 notice - less than 12 months, but more than 6 months before proposed end date. Both can agree. Both can go to court to apply for new lease before end date. Grounds must be supplied
What is the consequence of a joint tenant being dead before sale of property
- need copy death certificate
- share will not automatically pass to wife, as need to be sure that person entitled to the interest will agree to the sale. Need to appoint 2nd trustee: eg. seller’s solicitor
How deal with mortgages on property prior to sale
Request seller’s solicitor to give an undertaking that the mortgages will be discharged
When selling, how to deal with breach of covenant? eg. extension
- indemnity insurance - seller to pay
- retrospective consent - expensive and time delay, make insurance difficult to get
- apply to tribunal for restriction to be removed.
- will need lender’s approval
- breach planning permission? 4 years to enforce.
- Does it have buildings regulation approval?
- Full Structural Survey
What are the post completion steps for a buyer?
- Receive confirmation that seller’s undertakings discharged and proof - release from undertaking
- Stamp Duty Land Tax - fee and SDLT 1 form within 30 days of completion. Will receive certificate on payment SDLT 5. If not, fine payable and transaction cannot be registered.
- Registration at HM LR - Form AP1 + executed transfer, mortgage deed, SDLT 5, DS1 to prove mortgage discharged, RX3 to remove restrictions, pay registration fee
- Failure to register: legal title will not pass to buyer, lender will only have equitable charge, protection of priority period is lost, so adverse entries would now attach to the property to bind buyer and lender
Checking epitome of title
Land Charges Certificate Search results - request copes of any lettered covenants. Need to check don’t relate to property as could bind buyer. PLEASE SUPPLY COPIES OF ALL LAND CHARGES SEARCH CERTIFICATES AGAINST ALL ESTATE OWNERS OF THE PROPERTY FROM 1925 IN YOUR POSSESSION.
- Request copies of any missing conveyance / plan + any restrictive covenants.
- Check conveyance is stamped - request explanation, rectification, and any penalty paid. Lack of stamp: not good root of title, not valid link in chain, not accepted by LR on app for first registration and cannot be used in civil proceedings to prove title
- Conveyance after 1/12/1990: should have been registered. Register at seller’s expense. If not registered, transfer is void so title reverts. Can use special condition of contract
- If joint tenants sell, need explanation: evidence tenancy wasn’t severed in form of bankruptcy search. Death certificate. Sole joint tenant can sell if: no bankruptcy petition or order registered as a land charge; no memorandum of severance endorsed on conveyance, and conveyance states survivor is sole and beneficial owner
- Requisition: changes of name
- If someone dies, need evidence of sole ownership of survivor or second trustee to overreach
- discharge of mortgages
What is good root of title
- at least 15 years
- deals with whole of property: conveyance
- Must contain adequate description of property. Need in order to register
- Look at Land Charges Act Search - look at names which may indicate that they relate to a property
- Look for PD’s - particulars delivered
Documents for unregistered land
- Epitome of Title
2. Land Charges Act Search - central registry. D2: restrictive covenant against names -
