Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FLK2 > Property Practice > Flashcards

Property Practice Flashcards

1
Q

Key questions:
1. Title: registered or unregistered?
2. Estate: freehold or leasehold?
3. Client: selling or buying or both?
4. Transaction: residential or commercial?
5. Transaction: what stage?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Unregistered title

A
  • Documentary evidence
  • Epitome of title
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Registered title

A
  • Title number
  • Register of title:
    1. Property register
    2. Proprietorship register
    3. Charges register
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

If buying a flat or apartment = leasehold

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Leasholds help get around problem of enforceability of positive covenants in the freehold context as the burden of a positive covenant does not pass in the freehold context

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

A leasehold contract should include a provision whereby the landlord can enforce covenants against other tenants in the block. This provision is not implied into lease and must be express

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Synchronising transactions

A

Process of assuing the property that is being sold and the one being bought complete on the same day

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Related transactions

A

If a client is buying and selling property on the same day

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Stage of transaction

A
  1. Pre-market
  2. Pre-contract
  3. Exchange of contracts
  4. Pre-completion
  5. Completion
  6. Post- completion
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Before stage 3: no binding commitment between seller and buyer

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Stage 2

A

Seller’s solicitor:
- Prepare contract package

Buyer’s solicitor:
- Investigate title
- Conduct searches
- Raise enquiries
- Establish buyer’s finances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Completion must take place on a weekday

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Stage 3

A

Transaction becomes legally binding

Usually take place on the phone

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Once parties have exchanged contracts the parties cannot withdraw without penalty

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Pre-contract v pre-completion

A

Pre-contract:
- Buyer deciding whether to buy
- Due diligence

Pre-completion:
- Buyer committed to buy
- Avoid suprise third-party interests

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Completion

A

Date seller moves out and buyer moves in

Final 90% of sale proceeds are transferred and keys are handed over

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Post-completion

A

Buyer’s solicitor must:
- Pay stamp duty tax within 14 days of completion
- Submit application to register the buyer’s title with land registry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Residential leasehold

A

Long term e.g. 99-999 years

Premium (up front purchase price) plus nominal rent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Commercial leasehold

A

Medium term e.g. 7-21 years

Usually higher monthly rent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Grant of new lease

A

Head lease created

Freehold owner grants to new tenant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Assignment of existing lease

A

Transfer of lease remainder

Existing tenant transfers to new tenant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Once lease is completed it is final and no longer negotiable between parties

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

A lease of more than 7 years is registrable

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

If a lease is being assigned and the incoming tenant finds any of the lease terms unacceptable they need to get the outgoing tenant to negotiate with the landlord to alter terms of lease and any alterations must be enshrined in a deed of variation of the lease

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Deed of variation

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

In a commercial property it is likely the landlord must consent to assignment of leasehold but less likely in residential context

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Key provisions of a lease

A
  • Term
  • Rights and easements
  • Service charge and management company
  • Tenant covenants e.g. rent, repairs, use of premises
  • Alienation (ability of tenant to transfer their interest e.g. assign, sell or obtain mortgage)
  • Landlord covenants e.g. quiet enjoyment, enforcement of tenant covenants, forfeiture
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Rent review provision

A

Mechanism in commercial lease in which the landlord can review and increase rental payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Capital gains tax

A

Tax on profits made when taxpayer disposes of an asset that has increased in value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

When is tax payable?

A

Submit tax return

Pay tax within 30 days of completion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Principal private residence relief exemption

A

Provides relief against capital gains tax on the sale of a person’s principle residence

No tax payable on gain if:
- Seller’s only or main residence
- Not greater than half a hectar
- No part of their home has been used exclusively for business purposes e.g. holiday home, buy to let etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Professional conduct issues

A
  • Undertakings
  • Client confidentiality
  • Conflicts of interest
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Undertakings

A

Professionally binding promise given by solicitor (or anyone in the firm)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Law Society conveyancing protocol

A

Standardised forms and best practices for residential conveyancing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Stage 1 - energy performance

A

Seller produce an energy performance certificate to the buyer
- Details of property’s energy efficiency
- Valid for 10 years
- Not needed for listed buildings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Stage 1 - commercial

A
  • Landlord’s consent to assign often required
  • Licence to assign required (document containing landlord’s agreement)
  • Outgoing tenant pays fees for landlord’s solicitor to prepare licence to assign
  • Undertaking required to meet fees
  • Extra security for landlord
    a. rent deposit deed
    b. guarantor
    c. authorised guarantee agreeement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Stage 2 - seller’s solicitor

A
  1. Investigate title
    a. If registered download via HMLR
    b. If unregistered review epitome of title sent by seller and ensuring root of title is at least 15 years old
  2. Obtain seller’s title
    a. If registered download via HMLR
    b. If unregistered locate title deeds
38
Q

If the seller’s solcitor finds defects in their investigation of title what should they do?

A
  1. Rectify issue
  2. Include defects in draft contract
39
Q

Stage 2 - seller’s duty of disclosure in contract

A
  1. Must disclose latent defects/encumbrances i.e. not apparent from inspection e.g. restrictive covenant
  2. Need not disclose patent defects/encumbrances i.e. discoverable from inspection

Exception: need not disclose physical defects due to caveat emptor/buyer beware

40
Q

Stage 2 - seller’s solicitor

A

Seller fills out a property and information form and fittings and contents form

Buyer can ask seller questions

Seller may be liable to buyer for misrepresentation if forms incorrectly filled out or does not answer buyer’s questions

41
Q

Stage 2 - the contract package

A

Residential property:
1. Draft contract in dupliate
2. Property information form
3. Fittings and contents form
4. Copy of seller’s title and title plan
5. Other relevant documents e.g. guarantees for work to be done such as new doors

Leasehold property - new lease:
1. Contract should have draft lease annexed to it
2. Landlord’s freehold title
3. Copy of any relevant planning permission and/or building regulation consent
3. Service charge budget
4. Details of any management company
5. If property less than 10 years old a new build warranty

Leasehold property - existing lease:
1. Outgoing tenants leasehold title
2. Existing lease
3. Leasehold information form
4. Copy of last 3 years service charge accounts
5. Copy of landlord’s freehold title

42
Q

All agreed issues must be in contract to be binding

A
43
Q

Parts of the contract

A
  1. Particulars of sale
    - Name of seller, buyer and solicitors
    - Details of property
    - Purchase price
  2. Standard conditions of sale
    - Small print
    - Basic provisions that govern transaction
    - Capacity deposit is held
    - Occupation of property between exchange and completion
    - Steps in event of default
    - And more
  3. Special conditions of sale
    - Fittings and contents
    - Whether vacant on completion
    - Additional provisions agreed
44
Q

Key standard conditions on sale - deposit

A

Buyer pays 10% on exchange

Held by seller’s solicitor as stakeholder which means the solicitor does not have the right to transfer the funds to seller until completion

Seller’s solicitor may change standard terms so that buyer’s deposit is hold as agent for seller

45
Q

Key standard conditions of sale - risk

A

Risk in the property passes to buyer on exchange of contract e.g if property burns down between exchange and completion the buyer is liable for the property

A prudent buyer will wish to insure property upon exchange

46
Q

Contract only creates obligation to buy and sell, it doesn’t transfer the title to the property

A
47
Q

Property information form

A

Gives practical information about property to buyer

Seller must declare presence of a non-owning occupier

Information must be fully disclosed by seller

If seller makes an misrepresentation then buyer can sue

48
Q

If there is a non-owning occupier, a special provision in the contract is required to ensure they vacate on completion. The non-owning occupier must sign the contract so that they are bound by this clause.

A
49
Q

The seller’s solicitor should not also act for the non-owning occupier (conflict of interest)

A
50
Q

Seller’s solicitor should check with lender how much is owing on mortgage before exchange

A
51
Q

Defect in title - indemnity insurance

A

Seller indemnifies buyer for loss due to defect in title

Buyer’s solicitor should ensure a special condition is inserted into contract obliging seller to provide indemnity insurance at seller’s cost on completion

52
Q

Pre-exchange tasks

A

Seller’s solicitor:
- Obtain redemption figure for existing mortgage
- Agree form of contract

Buyer’s solicitor
- Report to buyer
- Confirm buyer wishers to proceed
- Confirm buyer’s financing

53
Q

On exchange transaction becomes legally binding i.e point of no return

A
54
Q

Buyer has to put down a 10% deposit on exchange and if they do not complete they will loose their 10% deposit

A
55
Q

Methods of exchange

A
  1. By person
  2. By post: exchange takes part when the seller’s part is posted to the buyer’s solicitor
  3. By phone: three formuae for exchange of contracts over the phone:
    a. One solicitor holds both signed parts of contract
    b. Each solicitor holds own client’s signed part of contract
    c. Used if chain of transactions
56
Q

After exchange the solicitors must make a written memorandum of exchange to place on their files

A
57
Q

Protection of contract by registration

A

If there is considerable time between exchange and completion the buyer’s solicitor should consider registering buyer’s interest

Registered land: notice on charges register

Unregistered land: C(iv) land charge

58
Q

Varying terms of contract for sale of land

A

Exchange contracts again to include the new term of the contract

Example: if completion date is missed

59
Q

Simultaneous exchange and completion

A
60
Q

Pre-completion tasks: seller’s solicitor

A
  1. Apply to lender for up-to-date redemption figure for existing mortgage up to date of completion
  2. Prepare completion statement = net sale proceeds
  3. Complete the completion information and undertakings forms
61
Q

Pre-completion tasks: buyer’s solicitor

A
  1. Check completion information and undertakings form
  2. Submit Certificate of Title
  3. Conduct pre-completion searches
  4. Bankruptcy search if buyer is obtaining a mortgage
  5. Company search is seller is a company i.e commercial contract
  6. Physical inspection by buyer
  7. Draft transfer
    - TR1 form (all land being sold)
  8. Prepare completion statement for buyer
62
Q

Pre-completion searches

A

Registered land:
1. Official search with priority
- Search updates register of title
- 30 working day priority period
- Prevents new interests from being registered after the search if the conveyance is completed and registered in te priority period

Unregistered land:
- Land charges search against seller’s name
- 15 working day priority period in which the transaction must complete
- Land registration must take place within 2 months of completion

63
Q

Priority periods

A

Registered title:
- 30 working days to complete and register

Unregistered title:
- 15 working days to complete
- 2 months to register land

64
Q

Completion

A

The buyer’s solicitor sends the balance of the sale price to the seller’s solicitor

Buyer collects the keys and takes up occupation and ownership of the property

65
Q

Under the standard conditions of sale completion must take place by 2pm

A
66
Q

Methods of completion

A
  1. By personal attendance
  2. By agent
  3. By post: the seller’s solicitor acts as agent for the buyer’s solicitor
67
Q

Code for completion by post

A
68
Q

Effect of completion: when does title pass?

A

Unregistered: title passes on completion

Registered land: titles passes on registration

69
Q

Service charge

A

Cost of maintenance or repairs to the shared areas

70
Q

Apportionment

A

Calculating the overpayment of service charge by the seller with the sum to be paid by the buyer on completion

May arise on completion of a leasehold transaction

71
Q

Post-completion: seller’s solicitors tasks

A
  • Report completion to seller
  • Pay off seller’s mortgage
  • Pay estate agent’s bills
  • Send bill for legal fees
72
Q

Post-completion: buyer’s solicitor

A
  • Report completion to buyer
  • Send bill for legal fees
  • Register any company charge (mortgage) at Companies House within 21 days of completion
  • Stamp Duty Land Tax submit return and pay within 14 days of completion
  • Register title: register within 30 working day priority period
  • Unregister title: register within 2 months of completion

Additional tasks for leasehold
- Purchasing a newbuild leasehold property which is managed by a management company they may need to buy a share in the management company - by way of application
- Assignment of existing lease: may be necessary for seller to transfer their share in the management company to the buyer - by way of a stock transfer form
- Assignment of existing lease: may be necessary for buyer’s solicitor to serve notice of assignment and mortgage (if any) to landlord under the terms of the lease

73
Q

Stamp Duty Land Tax: thresholds

A

Residential freehold: £125,000

Residential leasehold: assessed on the premium paid if over threshold of £125,000 (lump sum purchase price) AND net present value (based on total rent paid on life on lease) if over £125,000

Commercial: £150,000

74
Q

On exchange the completion date is inserted in contract and becomes fixed

A
75
Q

Delayed completion = breach of contract - remedies

A

Any delay = right to interest on outstanding balance calculated at the contract rate

Completion is treated as taking place on the next working day e.g. if meant to take place on a Friday and it was delayed the next working day is Monday and so interest accrues over the weekend

Interest can be obtained if competition is delayed beyond 2pm but still takes place on the agreed day

76
Q

If time of the essence = firm and cannot be moved = innocent party can rescind contract (unusual)

A
77
Q

Under standard conditions of sale time is NOT of the essence unless otherwise stated in contract - innocent party is not immediately entitled to rescind contract BUT can claim interest

A
78
Q

Notice to complete

A

Served on defaulting party requiring them to complete = makes time of the essence

Requires defaulting party to complete within 10 working days of service of notice (excluding day of service)

Innocent party must be willing, able and ready to complete at point of service of notice to complete

If defaulting part still does not complete then the innocent party can now rescind contract

79
Q

What happens if defaulting party does not complete after service of notice to complete?

A

Buyer in default
- Rescind contract
- Keep deposit
- Claim damages for losses

Seller in default
- Rescind contract
- Claim deposit with interest at contract rate
- Claim damages for losses

80
Q

Buyer’s deposit is held in seller solicitors account as stakeholder. If seller defaults on completion it can be recovered easily as held in seller’s solicitors client account

A
81
Q

Default position under Standard Conditions of Sale is that the buyer’s deposit is held as stakeholder as this makes it easier to recover the deposit in event of a default by the seller

A
82
Q

Remedies before completion

A
  1. Specific performance (equitable remedy) only available if damages are insufficient BUT likely in the sale of land as the land is unique
  2. Damages flowing from breach
83
Q

Remedies after (or before) completion

A
  1. Misrepresentation: false representation of fact that induces the other to enter into a contract = recession
  2. Misdescription: error in property particulars of contract
  3. Breach of title guarantee covenants
84
Q

Security of tenure for commercial tenants

A

Protection for tenants to remain in premises at end of tenancy under the Landlord and Tenant Act 1954

85
Q

If Landlord and Tenant Act 1954 applies to business tenancy, tenant has security of tenure

A
86
Q

If business tenancy is protected the tenancy will automatically continue unless brought to an end by:
- Forfeiture
- Surrender
- Landlord serves section 25 notice
- Tenant serves section 26 notice

A
87
Q

Exclusions from Landlord and Tenant Act 1954

A
  • Fixed-term tenancies which are less than 6 months
  • Service tenancies
  • Tenancies contracted out of the Act
88
Q

Requirements for contracting out

A
  1. Landlord serves health warning notice (statutory notice explaining terms) at least 14 days before tenant commits to lease
  2. Tenant signs declaration in front of solicitor confirming they have seen and agree to health warning notice
  3. Reference to health warning in lease
89
Q

Section 25 notice

A

Landlord serves to end tenancy or enter into new lease with tenant

Must serve 6 to 12 months before they wish to bring tenancy to an end

Must specific statutory ground to reclaim possession

90
Q

Section 26 notice

A

Tenant serves to request new lease

Must serve** 6 to 12 months before** they wish new tenancy to start

Landlord has 2 months to notify whether they oppose and must specify statutory ground to oppose

Tenant may be entitled to compensation if lease ends and the tenant not at fault

FLK2 (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions