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SQE 2 > Property Law!! (complete deck) > Flashcards

Property Law!! (complete deck) Flashcards

1
Q

You have been instructed as the solicitor for a seller in a property transaction. What are your first 4 steps?

A

CIDA

(1) Client care letter
(2) Identification (driving licence/passport)
(3) Due Diligence (funds aren’t from crime)
(4) Advice on Capital Gains Tax (inc private residential relief)

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2
Q

You have been instructed as the solicitor for a buyer in a property transaction. What are your first 5 steps?

A

CIDAS

(1) Client care letter
(2) Identification (driving licence/passport)
(3) Due Diligence (funds aren’t from crime)
(4) Advice on Capital Gains Tax (inc private residential relief)
(5) Advise buyer to get a surveyor for structural defects etc

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3
Q

What happens if a solicitor breaches an undertaking?

A

Specific performance - an order requires them to perform.

Disciplinary actions / sanctions from the SRA

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4
Q

When can a solicitor represent the buyer and their lender in a property transaction?

A

If its an institutional lender (not friends and family)

Standard certificate of title is provided

Client confidentiality between the 2.

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5
Q

When can a solicitor represent a seller and the buyer’s lender in a property transaction?

A

Never: conflict of interest.

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6
Q

2 people co-own a property and would like to sell it. Can they use the same solicitor?

A

Yes as long as there is no apparent conflict between the parties.

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7
Q

2 people are interested in buying a property together as co-owners, can they use the same solicitor?

A

Yes but you should provide ‘co-ownership’ advice. If they are tenants in common they should enter a declaration of trust setting out shares of ownership.

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8
Q

What is the best practice guidance for property transactions that solicitors usually follow?

A

Law Society Conveyancing Protocol

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9
Q

Following the initial steps taken by the seller solicitor (CIDA), stage 1 includes:

A

(1) Obtain an EPC within 10 years (unless its a listed building)

(2) Registered property: review official copy of the register of title and title plan from HMLR.
or
(2) Unregistered property: locate & review title deeds and charges in the seller’s name

(3) Fix any defects in title (e.g. missing docs/discrepancies)

(4) Send a title map to seller to confirm land being sold.

(5) If the seller has a mortgage on the property, get an indicative redemption figure from the lender

(6) Draft a contract & contract package

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10
Q

What is included in the contract package that the seller sol drafts and sends to the buyer?

A

(1) 2 x draft contracts
(2) PIF (Property Information Form)
(3) Fittings & Contents Form
(4) Copy of seller’s title (or 15 years of epitome of title for unregistered land)
(5) Copy of the title map
(6) Guarantees and planning permission copies

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11
Q

What is covered in the PIF (Property Information Form)?

A

Disputes with neighbours
Building work
Notices
Flooding
Services that cross the property (e.g. sewers and electric pipes)
Utilities
Occupiers

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12
Q

What is included in the Fittings and Contents Form?

A

Personal property and sometimes which property is excluded.

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13
Q

What are latent defects and burdens and what duties surround these?

A

Anything that is NOT apparent upon inspection of the property, e.g. underground easement or restrictive covenant.
Seller has a duty to disclose.
If seller does not disclose, the buyer may have the right to withdraw following exchange, and to claim damages.

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14
Q

What does latent defect duty to disclose NOT cover?

A

Any physical defect hat would be found upon inspection e.g. rotting timpers. This is not included under the doctrine of caveat emptor (buyer beware) and is why you should use a surveyor.
This doesn’t apply if the seller purposefully concealed the defect.

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15
Q

What standard terms are used in a residential property transaction? And what about a commercial conveyance?

A

(1) Standard Conditions of Sale
(2) Standard Commercial Property Conditions

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16
Q

Outline the structure of the Standard Conditions of Sale

A

(1) Particulars of sale: names of parties, freehold/leasehold, completion date, purchase price…
(2) Standard conditions of sale: VAT, deposit, risk…
(3) Special conditions of sale: any amends e.g. a different time for completion or whether the property will be vacant.

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17
Q

VAT under Standard Conditions of Sale?

A

VAT is included in the purchase price unless stated otherwise.

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18
Q

Deposit % in Standard Conditions of Sale?

A

10% of purchase price (which can be a transfer of the money they received as a deposit for their property if they’re in a chain).

Otherwise, the deposit sits with the solicitor until completion.

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19
Q

Level of title guarantee under the Standard Conditions of Sale?

A

Full title guarantee unless the standard conditions of sale have been amended.
This includes a guarantee that:
- the seller is entitled to sell the property
- the seller (at their own cost) will do everything in their power to transfer the full title to the buyer.
- the property is free from charges or encumbrances other than those disclosed.

If it is a limited guarantee its a warrant that the seller has not created any charges or granted rights for their period of ownership (or have disclosed these)

Final option is to include no guarantee

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20
Q

Under the SCS, what happens if the seller discloses that the buyer will be obligated to do something e.g. maintain a fence under the contract?

A

The buyer agrees to perform the obligation and indemnifies the seller against future breach.

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21
Q

Under SCS, when does risk of loss transfer?

A

On exchange of contracts.
Following exchange, the house could burn down and the buyer would still have to purchase it.
The seller has no duty to insure the property after exchange (but usually both parties do - the buyer because they are liable, and the seller so as not to breach their ongoing mortgage or incase completion doesn’t go ahead).

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22
Q

Under unamended SCS, when will completion take place?

A

At 2pm 20 working days after exchange.

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23
Q

What are the 3 main components of the special conditions found in the SCS

A

(1) Will the property be vacant upon completion or is there a tenant in situ?

(2) Has a different time for completion been agreed?

(3) Are there any occupiers in the property? E.g. a relative of the seller whose rights will need to be confirmed

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24
Q

What will the buyer’s solicitor do upon receiving the contract package?

A

(1) investigate title
(2) identify anything that could cause an issue given the buyer’s future plans with the property.
(3) Raise pre-contract enquiries
(4) If there is a defect in title, create a deed of variation. If not possible, purchase indemnity insurance.

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25
Q

What does the buyers solicitor look for when investigating title?

A

Registered:
- Title number must match
- Encumbrances
- Class of sellers title

Unregistered:
- If land should have been registered (passed hands after 1 Dec 1990) ask seller to register before sale
- Make sure the epitome of title goes back 15 years

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26
Q

List the buyers pre-contract searches & enquiries

A

(1) Local search (if anything pops up, ask the seller sol to undertake to repay the charges and procure their removal from the the local land charges register).

(2) planning agreements and tree preservation orders

(3) listed building?

(4) who owns the road to the property, public rights of way, completed planning permission and building reg compliance

(5) optional searches: gas pipelines, private road proposals, village green…

(6) drainage and water search

(7) environmental search (contamination)

(8) companies house or personal bankruptcy search, especially if the buyer is getting a mortgage

(9) visit the property for evidence of tenant and physical condition

(10) For a commercial property, send the Commercial Property Standard Enquiries which goes through fire safety etc

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27
Q

Which piece of legislation is linked to planning permission?

A

Town and Country Planning Act 1990

28
Q

What does the Town & Country Planning Act 1990 broadly stipulate?

A

A landowner needs planning permission before any development of land including:
- Structural changes to a building
- Mining operations
- Material change of use

29
Q

What does the Town and Country (General Permitted Development) Order 1995 state?

A

Small porches, extensions and fences have deemed planning permission unless the local authority disapplies it - e.g. for a conservation area.

30
Q

If you obtain express ‘detailed planning permission’, how long is it valid?

A

The work must have commenced within 3 years from the date of permission

31
Q

What is express ‘outline permission’?

A

Planning permission is granted subjected to reserved matters.
The reserved matters will require full approval within 3 years.
Work must commence within 2 years of approval of the reserved matters.

32
Q

What happens if work goes ahead without planning permission or breaching the terms of the planning permission?

A

Local authority can take enforcement action e.g. requiring full compliance, pulling down/rebuilding elements…
If the property is sold, the new owner can still be held responsible.

33
Q

How does a local authority take enforcement action for a planning breach (+timelimits for each scenario)?

A

(1) for an unauthorised building: serve an enforcement notice within 4 years of the breach
(2) for a material change of use: serve an enforcement notice within 10 years of the breach
(3) injuction to prevent work / ‘stop notice’
(4) No time limit if a listed building is involved.

34
Q

What are building regulations?

A

all development works must be in accordance with building regs regardless of planning permission. A building control officer will inspect the work and issue a COMPLETION CERTIFICATE once satisfied.

35
Q

When can a local authority bring an enforcement action for failure to comply with building regs?

A

Within 12 months the council can act. After that, the council need a high court order.

They can also seek an injunction for specific performance.

36
Q

You’re buying a property which has an extension built 15 years ago with no planning permission or certificate of completion from the building reg officer. What should you do?

A

The relevant enforcement period has passed but enforcement could still happen. Ask the seller to take out indemnity insurance at their own cost just incase.

37
Q

All commercial buildings are in ‘use classes’. Which are the main use classes?

A

Class E = the Arndale plus leisure centres, offices, and financial and professional businesses

Class F.1 = libraries and art galleries (public buildings)

Class F.2 = Small shops selling essential goods

38
Q

As a buyer solicitor, what would you check first in relation to any money being spent on the transaction?

A

Enquire into the source of the funds for anti-money laundering.

39
Q

4 main types of mortgage

A

(1) repayment - borrower pays interest and some capital each month

(2) interest only - borrower pays interest each month and lump sum of capital at the end of the term

(3) Endowment & Pension - combined with life insurance and pension to provide sufficient funds to pay off loan at the end

(4) Sharia compliant - no interest.

40
Q

If the buyer solicitor is representing the lender too, the lender will provide instructions in line with the UK Finance Mortgage Lender’s Handbook which covers:

A

Anti-fraud regs e.g. searches no more than 6 months old, seller is legally represented, all signatures are valid, no discrepancies with valuation, solicitor has sufficient funds to pay SDLT and HMLR fees….

41
Q

How must a legal mortgage be created? (What document type?)

A

Deed

42
Q

What is the Certificate of Title used for?

A

The buyer solicitor must send it to the lender before they can release the mortgage funds. It confirms that the title is good and marketable.

43
Q

What are the main 3 ‘Search with Priority’ searches and what time period is provided?

A

Registered land
OS1 (search of whole) and OS2 (search against part) at HMLR both provide a 30 working day period to complete mortgage registration

Unregistered land
Mortgage completion will trigger first registration. 2 months to complete registration of mortgage.** (research)

If its a company it then has to register the mortgage at Companies House within 21 days.

44
Q

What legally happens at exchange of contracts

A

The transaction becomes legally binding on the seller and buyer.

45
Q

What are the 3 main law society formulae for exchange?

A

Formula A: Buyer sol sends signed contract and money to seller sol. Seller sol checks that they’re the same and signs, adding the date of exchange and completion to both.

Formula B: Each solicitor holds their own contract, confirm in a phone call that both are the same, and then send signed version to the other.

Formula C: Where there is a chain and deposit money is moving through, the first call ensures the solicitors are ready, and the second is for exchange.

46
Q

As the buyer solicitor, if you have exchanged but completion is more than a few weeks away, what could you do to secure the buyer’s position?

A

If registered:
register the exchanged contract on the charges register

If unregistered:
create a C(iv) land charge against the seller’s name.

47
Q

Exchange has happened but both parties want to vary the contract, what should you do?

A

Execute new contracts with new terms included.

48
Q

Pre-Completion Steps

A

(1) Completion Information and Undertakings Form - sellers solicitor completes including where keys will be on completion, bank details, undertaking that mortgage will be sent etc.

(2) Purchase Deed - usually TR1 or TP1 drafted by B sol

(3) Pre-Completion Searches - completed by B sol e.g. OS1 search with priority (30 days) which shows any entries added to the register since the last search, bankruptcy, and physical inspection…

(4) Pre-Completion Statement - completed by B sol, showing the sum of money required by B to complete.

(5) Under the SCS, if S has paid service charges in advance, the 2 parties will apportion the charge payable by B.

49
Q

The Purchase Deed is one of the 4 following deeds drafted by the buyer:

A

TRANSFER
For both registered and unregistered land:
TR1 = TRansfer a whole piece of land
TP1 = Transfer of Part of a piece of land

ASSENT
Used by personal representatives to transfer to a beneficiary

CONVEYANCE
For unregistered land.

ASSIGNMENT
For unregistered leasehold.

50
Q

What are the 3 main things to happen upon completion?

A
  • B sol sends completion monies to S sol
  • S moves out
  • B moves in
51
Q

What is the main standard code created by the law society for completion?

A

Code for Completion by Post

52
Q

Main points under the Code for Completion by Post

A

(1) Seller sol dates and executes the transfer and other docs (acting as agent for buyer sol)

(2) Buyer sol sends monies by bank transfer. Seller sol notifies B sol immediately upon receipt.

(3) S sol completed transfer docs when sum is received

(4) S confirms the time of completion to buyer and notify the key holder to release the keys.

53
Q

At what point does title pass?

A

When the buyer is registered at HMLR.

(Or, if unregistered, upon completion).

54
Q

What are the main Post-Completion Steps for the buyer sol?

A

(1) pay HMRC the SDLT within 14 days of completion. (even if no tax is due you still need to fill in an SDLT1 form).

(2) If B is a company, register any charge e.g. mortgage at companies house within 21 days of completion.

(3) Register title at HMLR within 30 working days.

55
Q

Seller Solicitor - Post-Completion Steps

A

(1) If the seller sol has undertaken to redeem the mortgage, discharge the mortgage using the appropriate HMLR method.

56
Q

What happens if, between exchange and completion, an error is found to have been made by the seller?

A

(1) Damages to put B into the position they would have been in if the property was as described.

(2) B is entitled to rescind (cancel) the contract IF
(a) ‘error’ was fraudulent or reckless OR
(b) the property was substantially different

57
Q

Under SCS, if the completion is delayed, what will happen?

A

The innocent party can receive damages caused by the delay, and interest (calculated as a percentage of the total purchase price minus deposit).

Anything after 2pm is considered the next day.

No right to rescission for delay unless ‘time is of the essence’ in the special conditions.

The innocent party can instead send a ‘Notice to Complete’ if they are ready, willing, and able to complete.

The defaulting party has 10 days to complete (excluding the day of service).

On receiving the notice (if its the buyer at fault) they have to pay S 10% of the purchase price.

After 10 days. S can cancel the contract, keep the deposit, find another buyer, and claim damages limited to 10% of the purchase price (inc. deposit).

After 10 days (if S is defaulting), B can cancel the contract, reclaim deposit plus interest, and claim damages to put B into position they would have been in if S had performed

As land is unique, specific performance can be ordered instead.

58
Q

What claims can be made after completion?

A

By B:
- Breach of title for guarantee
- Damages for misrep (fraudulent, reckless, or innocent).

59
Q

What is security of tenure?

A

Gives a COMMERCIAL tenant the right to stay in the leased premises for an additional term at the end of the tenancy (unless the landlord uses a stat method to terminate the lease).

60
Q

How long does a lease need to be to be covered by security of tenure?

A

Minimum 6 months.

61
Q

How can a landlord contract out of security of tenure?

A

(1) Serve a ‘health notice’ i.e. the consequences of contracting out at least 14 days before completion of the lease.

(2) Tenant must sign a declaration that they have received the health notice.

(3) The lease must reference (1) and (2) and the agreement to contract out.

62
Q

If the landlord did not contract out of security of tenure but a party wants to terminate the lease, what can they do?

A

Landlord serves a s.25 notice on the tenant.

Tenant informs the landlord of a desire for a new lease by serving a s.26 notice.

63
Q

Explain the s.25 notice

A

S.25 notice is from landlord to tenant when landlord wants to terminate the tenancy and has not contracted out of security of tenure.

Must be served 6-12 months before they wish to terminate the tenancy.

Based on 1 of the following statutory grounds:
(1) tenant breach of obligation (courts discretion)
(2) if tenant only rents a part of the property but the landlord needs to rent the entire property out as one (courts discretion)
(3) suitable alternative space available (mandatory)
(4) demolish/reconstruct (mandatory)
(5) landlord intends to occupy the premises (mandatory)

64
Q

Explain a s.26 notice

A

The law is in favour of the tenant being able to renew their tenancy.

6-12 months before the new tenancy is set to begin, the tenant must serve a s.26 notice on the landlord.

If the landlord wishes to oppose this, they need to reply within 2 months with one of the s.25 reasons for opposition!

65
Q

If the landlords reasoning under s.25/s.26 is swapping a partial lease for a whole lease, demolition/reconstruction, or taking back the property for themselves, the tenant is entitled to the following compensation…

A

(1) If the tenant occupied the space for more than 14 years, - compensation is twice the rateable value of the holding

(2) if less then 14 years, the rateable value of the holding.

The rateable value is set by the UK gov Valuation Office Agency.

No other compensation is due.

66
Q

What happens if the court orders a new lease/the parties agree to a new lease but can’t agree to the terms?

A

The court can set it terms for a max of 15 years.

SQE 2 (10 decks)

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