Property Law and Practice

Question 1

Acting for more than one party

Answer 1

Acting for seller and buyer - A solicitor can not act for both parties if there is a conflict of interest, or a significant risk of such a conflict. An exception to this is when there is a ‘substantially common interest’ (but this wont apply in property transactions).

Acting for borrower and lender – This is often the case when the mortgage is a standard one

Question 2

Stamp Duty

Answer 2

• First time buyers (as long as below £625,000):
• Tax free up to £425,000.
• 5% from £425,001 to £625,000.
• Regular buyers:
• Tax free up to £250,000.
• 5% from £250,000 to £925,000.
• 10% from £925,000 to £1,500,000.
• 12% on anything above.
• Non-residential/mixed use freehold property
• Tax free up to £150,000
• 2% between £150,000 and £250,000
• 5% between £250,000+

Question 3

Land Transaction Tax

Answer 3

• Residential Freehold Property
• Tax free up to £225,000.
• 6% between £225,000 and £400,000
• 7.5% between £400,000 and £750,000
• 10% between £750,000 and £1,500,000
• 12% for everything above.
• Non-Residential Property
• Tax free up to £225,000.
• 1% between £225,000 and £250,000
• 5% for those between £250,000 and £1,000,000
• 6% for those which exceed £1m

Question 4

Capital Gains Tax on Private Property

Answer 4

Will gain the benefit of private residence relief (‘PRR’) if it is the sale of an individual’s dwelling house used as their only or main residence. They must have occupied the dwelling house as their only or main residence throughout the period of ownership.

Question 5

Planning Permission

Answer 5

Planning permission is required for carrying out any development of land.

“Carrying out of building, engineering, mining or other operatior in, on, over or under land, or the making of any material change in the use of any buildings or other land”.

Carrying out the “maintenance, improvement or other alteration of any building or works which affect only the interior of a building, or do not materially affect the external appearance of the building” is excluded.

Section 55(2) of the TCPA 1990 – Excludes a change of use within the same class of use. For example, a change of use from a clothes shop to a restaurant will not require planning permission as both are within Class E.

Question 6

Property Register

Answer 6

• Description of the land
• Indication of whether it is a freehold or leasehold.

Question 7

Proprietorship Register

Answer 7

• Identify the current owners
• Whether they have absolute title, possessory title or qualified title.

Question 8

Charges Register

Answer 8

• Will identify incumbrances in particular covenants, easements, charges, leases and/or notices.

Question 9

Easements

Answer 9

Such as a right of way, right of drainage etc. They shall appear on the Property Register/Charges Register. The case of Halsall notes that if you wish to use a right of way, you will need to contribute to the cost of maintenance.

Question 10

Restrictive Covenant

Answer 10

Prevent land being used in a particular way and will usually bind successors.

Question 11

Positive Covenant

Answer 11

Obliges the covenantor to carry out works, or do something. This does not run with the land, and only binds the original individual, but is likely an indemnity covenant will be signed into.

Question 12

Local Search

Answer 12

LLC1 – Details of any financial charges/restrictions on the land, for example, planning consents, tree prevention orders etc.

CON29 – Reveal planning permissions, restrictions on permitted development, road adoption etc.

CON29O – Cover diverse matters such as environmental and pollution notice.

Question 13

Environmental Searches

Answer 13

CON29/CON29O both contain questions regarding environmental risks.

Question 14

Formula B Exchange

Answer 14

Each solicitor holds their own clients signed part of the contract. Each solicitor will call and then, that same day, send the signed part of the contract they hold to the other side. The buyers solicitor will send it alongside a cheque.

(Most common way of exchange).

Question 15

Pre Completion Searches

Answer 15

(Registered Land): A Land Registry Search (OS1) should be completed against the title number, to see if any new entries have been made since the ‘search from’ date.
This will confer a “priority period” of 30 working days which provides protection to the application against subsequent entries.

(Unregistered Land): A land charges search (K15 search on form K18) which confers a priority period of 15 working days from the result, during which time to searcher will take free of any entries made on the register between the date of search and the date of completion.

Question 16

How long after house transfer must you pay SDLT/LTT

Answer 16

This must be paid within 14 days of completion to HMRC, or 30 days of completion to the Welsh Revenue Authority.

Question 17

Remedy for Delay (Compensation)

Answer 17

• In residential purchases, both the buyer and the seller can be asked to pay compensation.
• Under the commercial purchases, only the buyer can be required to pay compensation.

Question 18

Deduction of Title

Answer 18

Assignors Lease (Registered – Absolute Title): No need to investigate title of freehold.
Assignors Lease (Registered – Good Title):Will request deduction of title.
Unregistered: Entitled to call for the lease, and all assignments in past 15 years, but not evidence of freehold.

Question 19

License to Under-Let

Answer 19

The Head-landlord gives consent to the head tenant to underlet the property to the undertenant. Often, the under-tenant will enter into a direct covenant with the head-landlord to perform the covenants in both the underlease and headlease.

Question 20

If Landlord Consent is Required to Assign a Lease

Answer 20

Leases of a commercial property usually provide for the landlord’s consent to be obtained before any assignment can take place. If the landlords consent has not been obtained by, or on completion of, the assignment then:
- Under SC’s – Either party may rescind the contract by notice of the consent has not been given three working days before the completion date, or if by that time, consent has been given subject to a condition to which the buyer reasonably objects.
- Under SCPC’s – Completion is postponed until five working days after the assignor notifies the buyer that consent has been given. The contract may not be rescinded until six months has passed.

Question 21

Covenant in a lease (Pre-1996)

Answer 21

Original tenant remains liable for the covenants under the lease, for the full term.
 Sue the original tenant in privity of contract.
 Sue the current tenant in privity of estate.

Question 22

Covenant in a Lease (Post-1996)

Answer 22

The original tenant is released from liability for the covenants as soon as it assigns the lease to the new tenant. Often an Authorised Guarantee Agreement (‘AGA’) is made, which is a promise by the outgoing tenant that it will be liable for any breaches of the covenants in the lease by the incoming assignee.

The AGA lasts for the duration of the ownership, so when the assignee assigns the lease on, the tenant who gave the AGA is released. The assignee (current tenant) who wants to assign will then need to give an AGA to the landlord.

Question 23

Self-help

Answer 23

This would allow the landlord to recover the cost of repairs as a debt, and not a damages claim. This also allows the landlord to request the works are done, and if not, go into the property, do the works and charge this to the client.

Question 24

Security under 1954 Act

Answer 24

Right for the tenant to stay in the property after the expiry of the contractual term and to apply for a new tenancy, which can only be denied on certain limited statutory grounds set out in s30 of the 1954 Act. You must have a tenancy AND occupy the property for business purposes under a lease that has not been excluded from protection.

Question 25

Termination of Business Lease

Answer 25

A tenant who wants to terminate the lease on the contractual expiry date may do so by ceasing to occupy for business purposes by the end of the lease or serving a Section 27 Notice, giving the landlord three months’ notice.

A tenant who wants to remain in the property, may serve a Section 26 Notice, requesting a new tenancy on the landlord.

A landlord who wants to terminate a protected tenancy may forfeit the lease, or agree a voluntary surrender with the tenant. Otherwise, the landlord must serve a Section 25 Notice, terminating the lease. The Section 25 notice must be given not less than 6 months, or more than 12 months, before the date specified in the notice for termination of the tenancy.

Question 26

Commercial Rent Arrears Recovery

Answer 26

Enter the property and seize and sell goods belonging to the current tenant. Seven days’ notice must be given, and the landlord can not take certain goods.

Question 27

Self Help

Answer 27

This would allow the landlord to recover the cost of repairs as a debt, and not a damages claim. This also allows the landlord to request the works are done, and if not, go into the property, do the works and charge this to the client.

Question 28

Covenant (Granted before Jan 1996)

Answer 28

Original tenant remains liable for the covenants under the lease, for the full term.
 Sue the original tenant in privity of contract.
 Sue the current tenant in privity of estate.

Question 29

Covenant (Granted after Jan 1996)

Answer 29

The original tenant is released from liability for the covenants as soon as it assigns the lease to the new tenant. Often an Authorised Guarantee Agreement (‘AGA’) is made, which is a promise by the outgoing tenant that it will be liable for any breaches of the covenants in the lease by the incoming assignee.

Question 30

Forfeiture

Answer 30

First a Section 146 notice is required, and then the landlord can forfeit either by peaceful re-entry or court order. (28 days)