Property Law 1

Question 1

What are the solicitors duties when acting for the buyer?

Answer 1

• the seller has the right to sell the property
• the physical condition of the land and buildings is adequate for the buyer’s needs and the property is worth the money being paid
• you identify all the rights that the property enjoys
• you identify any third party rights affecting the property
• the property is free from any security interest (such as mortgages) or will be on completion
• the contract reflects the terms agreed between the parties
• there are sufficient funds to finance the purchase

Question 2

What are the solicitors duties when acting for the Lender?

Answer 2

• the seller has the right to sell the property
• the physical condition of the land and buildings is adequate for the lender’s needs and the property is worth enough to cover any losses if the buyer fails to repay the mortgage
• you identify all the rights that the property enjoys
• you identify any third party rights affecting the property
• the property is free from any security interest (such as mortgages) or will be on completion
• the contract reflects the terms agreed between the parties
• there are sufficient funds to finance the purchase
• there are no discrepancies in the lender’s understanding of the transaction and the borrower’s circumstances
• the security document (mortgage) is valid and enforceable

Question 3

What are the solicitors duties when acting for the seller?

Answer 3

• the contract reflects the terms agreed between the parties
• provide the buyer’s solicitor with what they need to proceed with the purchase
• tie the timing of the sale to any related purchase
• transfer legal ownership (and responsibility) of the property to the buyer
• collect money from the sale, repay the mortgage and account to the seller for the balance

Question 4

What are the three stages of the conveyancing process for freehold property?

Answer 4

Pre-exchange

Pre-completion

Post completion

Question 5

What happens on Exchange?

Answer 5

· The seller and buyer enter into a contract to sell and buy the property on the completion date

· The buyer pays a deposit (usually 10% of the full price)

· From this point on, neither of them can pull out without serious financial consequences

Question 6

What happens on Pre-completion

Answer 6

• Buyer’s solicitor orders mortgage funds and ensures has full money from client in time for the completion date
• (Residential) Seller and buyer book removal vans for completion date if appropriate
• Seller ensures that has all necessary paperwork to transfer the property on completion

Question 7

What happens on completion

Answer 7

• the buyer’s solicitors send the purchase price to the seller’s solicitors
• the seller’s solicitors agree to send the necessary paperwork to transfer the property to the buyer’s solicitors
• the buyer gets the keys
• the buyer and seller physically move house

Question 8

What happens on post completion

Answer 8

• Seller’s solicitor pays off the seller’s mortgage and pays balance to seller
• Buyer’s solicitor pays Stamp Duty Land Tax (SDLT) or, in Wales, Land Transaction Tax (LTT), and
• registers buyer as the new owner at the Land Registry

Question 9

What are the seller’s steps pre-exchange

Answer 9

Take instructions
Prepare draft contract
Deduce title
Answer pre-contract enquiries
Answer queries on title

Question 10

What are the buyer’s steps pre-exchange

Answer 10

Take instructions
Pre-contract searches
Investigate title and raise queries
Report on title
Approve draft contract

Question 11

What are the seller’s steps pre-completion

Answer 11

Approve purchase deed
Reply to pre-completion requisitions
Prepare for completion

Question 12

What are the buyer’s steps pre-completion

Answer 12

Prepare purchase deed
Pre-completion requisitions
Pre-completion searches
Prepare for completion

Question 13

What is ‘Caveat Emptor’

Answer 13

‘buyer beware’

Question 14

What are the exceptions to ‘Caveat emptor’

Answer 14

• Misrepresentation
• Latent encumbrances
• Title defects

Question 15

exceptions to ‘Caveat emptor’ - What is a ‘misrepresentation’

Answer 15

A misrepresentation is a false statement by conduct (painting over damp) or statement which induces a buyer to contract to buy.

Question 16

exceptions to ‘Caveat emptor’ - What is a ‘Latent encumbrance’

Answer 16

A latent incumbrance is something which is not apparent, or cannot be discovered, when inspecting the property.

Question 17

exceptions to ‘Caveat emptor’ - When does a seller have a duty disclose latent incumbrances

Answer 17

A seller is under a duty to disclose latent incumbrances of which it is aware or of which it has the means to know, acting reasonably and diligently.

Question 18

exceptions to ‘Caveat emptor’ - What is a defect in title?

Answer 18

A defect in title is a matter that brings into question the seller’s ownership of the property, or the rights and burdens that affect the property.

Question 19

Who has legal ownership of a property?

Answer 19

The owner(s) registered at the Land Registry

Question 20

What is the maximum number of legal owners

Answer 20

4

Question 21

How old can a legal owner be?

Answer 21

Must be over 18

Question 22

What are the forms of legal ownership?

Answer 22

Legal ownership can only be sole or a joint tenancy

Question 23

What are the forms of beneficial ownership?

Answer 23

sole, a joint tenancy or a tenancy in common

Question 24

What advice should be provided on surveys?

Answer 24

A buyer should always be advised to instruct a surveyor to undertake a physical survey of the property

Question 25

Who pays SDLT / LTT (in Wales)

Answer 25

The buyer if SDLT applies

Question 26

When accepting instructions to act in a property matter, what conduct issues do you need to consider?

Answer 26

• Can you provide a competent and timely service?
• Are you authorised to act on your client’s behalf?
• Would you have any conflict of interest?
• Duty of confidentiality
• Duty of disclosure

Question 27

When can you act where there may be a conflict of interest?

Answer 27

a) The clients have a substantially common interest in relation to the matter or the aspect of it, as appropriate; or

b) The clients are competing for the same objective,

Question 28

What conditions need to be met to act where there may be a conflict of interest?

Answer 28

All the clients have given informed consent, given or evidenced in writing, to you acting;

Where appropriate, you put in place effective safeguards to protect your clients’ confidential information; and

You are satisfied it is reasonable for you to act for all the clients.

Question 29

What is the duty of disclosure?

Answer 29

Where you are acting for a client on a matter, you make the client aware of all information material to the matter of which you have knowledge…

You give clients information in a way they can understand…