Property Practice Flashcards
1
Q
What are the stages in a conveyancing transaction
A
- Pre-Market
- Pre-Contract
- Exchange of Contracts
- Pre-Completion
- Completion
- Post-Completion
2
Q
What should you consider in a conveyancing transaction
A
- What state of the transaction is it at
- Is the title registered or unregistered
- Is the title freehold or leasehold
- Is client selling, buying or both
- Is the transaction residential or commercial
3
Q
What are related transaction and synchronisation
A
Related Transactions
- where client is selling one property and buying another
Synchronising
- action of having sale of one property and buying of another complete at the same time
4
Q
What is a premium in the purchase of leasehold
A
For long leases
- annual rent may be very low but there is a significant up front payment called the premium
5
Q
What are the different types of leases
A
Head Lease
- lease granted by freehold owner themselves
Underlease
- subletting for period shorter than own lease
6
Q
How can terms of lease be changed in different types of leases?
A
New Lease
- terms of lease can be negotiated between seller and buyer
- if granted for over 7 years then must be registered
Assignment
- terms cannot be negotiated
- only OG lease holder can try to renegotiate terms with OG landlord and get a Deed of Variation
7
Q
What is the role of a management company in leasehold
A
May be used for maintenance of common areas
- buyers may take share in management company
- landlord (if developer) may covenant to transfer freehold to management company when last leasehold is sold
- typically for tenants to pay service charges to management company
8
Q
What are prescribed clauses in a lease provision
A
If lease is registered (over 7 years)
- these are summary of lease terms in HMLR standard form
9
Q
Examples of unacceptable covenants in residential leasehold transactions? What should lawyer do?
A
Solicitor should push for them to be removed
- absolute prohibition on assignment
- forfeiture on bankruptcy
To change
- new lease - renegotiate
- assignment - Deed of Variation
10
Q
What does a solicitor have to do when taking instruction on sale/purchase
A
Stage 1
- take instruction to obtain essential information Interview or by sending client checklist)
- send client care letter setting out level of service to be provided and costs
- obtain appropriate ID to satisfy themselves that client is legitimate
- carry out appropriate DD checks (eg. see where large sums of money from client might have come from in accordance with AML requirements)
11
Q
What preliminary matters will solicitor do when acting for the buyer // seller
A
Stage 1
Buyer
- advise buyer to have surveyor carry out physical inspection of property to determine any structural defects/ problems which might effect value
Seller
- advise seller if capital gains tax is required
- and should advise if this is due on sale
12
Q
Rules for Capital Gains Tax
A
Tax on the GAIN (profits) made from increase in value of an asset
Not payable if asset is principle residence
If payable
- seller must submit tax return within 30 days of completion date
13
Q
Confidentiality Rules in Conveyancing
A
If 3rd party (estate agents, mortgage brokers etc.) ask on progress of transaction solicitor must ensure they have authority from client to discuss this
Lenders (duty to buyer paramount)
- where solicitor acts for lender and bank providing mortgage
- bank will expect solicitor to report on anything effecting vale of property, or something that will effect their decision to lend
- must have consent of buyer/lender to report such issues
- if refused consent must stop acting for lender
14
Q
Conflicts of Interest in conveyancing / rules and where you cannot act
A
Solicitor must avoid conflict or significant risk of conflict of interest
Where solicitor is acting for two buyers/seller must ensure they are instructed by each party (married couple etc.)
Cannot act:
- for seller and buyer
- for two sellers who cannot agree on how proceeds should be divided
- for two buyers who cannot agree on how to co-own property
- for buyer and someone gifting them deposit for property (ie. parents etc.)
15
Q
What must solicitors be aware of when acting for more than one buyer
A
- must ensure they are instructed by each party
- must give co-owership advice
- where they hold beneficial interest as tenants in common, should advise them to enter declaration of trust
- also important for them to make will or review existing will to ensure it reflects this
16
Q
What is the Law Society Conveyancing Protocol and when does it apply
A
Provides best practice for solicitors to follow in RESIDENTIAL conveyancing
Not meant for:
- commercial property
- new build homes
17
Q
What is a memorandum of sale
A
Stage 1
- used for residential (commercial = heads of terms)
What estate agent send to all parties once an offer has been made and accepted.
Includes: property, price agreed and solicitors being used by each party
18
Q
When must you use a Mandatory Energy Performance Certificate
A
Stage 1
- must be provided by seller to buyer
- is valid for 10 years
- should be ordered before property is marketed if renewal is needed
EXCEPTION
- not required for listed buildings; or
- if old one is not 10 years old
19
Q
First steps for a new commercial lease? What is used as guide to best practice?
A
Stage 1
- heads of terms to be negotiated with landlord (equivalent to memorandum of sale)
Best practice given in code for Leasing Business Premises and requires:
- landlord makes offer in writting
- offer to include clear terms, rent, break clause, rent review, assignment and repair obligations
20
Q
First steps if assigning commercial lease
A
Stage 1
Land lords consent probably required
- may need reference
Landlords solicitor to draft terms of licence to assign
- all parties sign to create privity of contract and make lease enforceable
Landlord may require extra security
- rent deposit to be used in event of default by tenant (typically 3 months rent)
- guarantor (especially if tenant is LDT)
- AGA: can be condition of consent to assign
21
Q
How might a solicitor investigate sellers title registered/unregistered land?
A
Stage 2
Sellers solicitor to investigate title
Registered
- download copy of title, title plan and any additional documents from HMLR portal
- check charges register
Unregistered
- find physical title deeds
- if property is mortgaged solicitor to give undertaking to lender not to part with deeds until mortgage is redeemed out of sale proceeds
22
Q
What must sellers solicitor do once title is located
A
Stage 2
Remedy defects in title
- if there are any (missing docs, name issues) seller’s solicitor must remedy these
Obtain confirmation of title plan
- solicitor to send title plan to seller, who should confirm these conform to land being sold
Deducing Title
- sellers solicitor to send copy of title to buyers solicitor who also investigates
23
Q
What are the seller duty of disclosure
A
Stage 2
Must disclose latent defects and encumbrances
- things that would not be apparent from an inspection of the property
- ie, underground easement for pipeline, easements that are not visibly apparent or restrictive covenants
Non-disclosure
- if breached the buyer may have right to withdraw from contract after exchange and claim damages for losses
24
Q
What must not be disclosed by the seller
A
Stage 2
Patent defects and encumbrances
- things that would be apparent by inspection
Physical Defects
- due to doctrine of buyer beware (caveat emptor)
However
- seller should not try to cover up patent defects as amounts to wilful deceit (seller could be sued)
25
Who sends contract package for FREEHOLD, what is included?
Stage 2
Sellers solicitor sends to buyers solicitor
Contains:
- draft copy in duplicate (each sign one copy)
- property information form (PIF) and Fittings and Contents Form (F&C)
- copy of title, title plan and any relevant docs
- any guarantees or copy planning permissions
26
Leases and contract package in New Lease
1. Parties to Agree From of Lease
- parties to agree on form of lease and contract
2. Seller to deduce title if term is over 7 years
- so tenant can register with absolute title
3. Seller to send contract package
27
What should contract package of new lease include
- draft contract with draft lease annexed
- sellers freehold title
- PIF
- replies to standard pre-contract enquiries (boundaries, disputes, services supplied etc)
- copy of planning permission and building regulations consent (if newly built block)
- new build warranty (if building is under 10 years old)
- service charge budget (if new build development)
- details of management company (if applicable)
28
Lease and contract package process assignment
- sellers solicitor to check if landlords consent is needed
- seller to apply to consent at their expense and use all reasonable endeavours to obtain consent (provide all info needed by landlord)
- buyer can rescind contract if landlords consent is not obtained 3 working days before completion
- contract package
29
What is included in contract package for assignment of lease
- copy of outgoing tenants leasehold register of title
- copy of existing lease
- PIF and Leasehold Information Form
- Copies of last 3 years service charge accounts (if any)
- copy of landlords freehold register of title
If building is under 10 years old
- copy of new build warranty, planning permission and building regulation
30
What is the form needed for freehold or leasehold contract in residential conveyancing
In writing and must include:
1. Particulars of Sale
- date, name of parties, details of property, any specified encumbrances, title guarantee, completion date, purchase price and contents price (for fittings on land)
- price to include VAT
2. Standard Conditions of Sale
- formation of the contract
- service of notices, matters subject to which property is sold
- physical condition of property
- right of buyer to occupy between exchange and completion
- remedies for late completion/no completion
- deposit of 10% to buyer on exchange of contract
3. Special Conditions of Sale
31
Standard Conditions of Sale Deposit rules
1. Even if parties agree to lower deposit, if the buyer breaches contract they are liable for 10%
2. Use
- deposit can be used by buyer for deposit of related transactions for their residence in the UK/Wales
- so not for a buy to let property
3. Deposit held by sellers solicitor as stakeholder
- as stakeholder (rather than agent) means held on behalf of both parties and cannot be paid to seller until completion
32
Standard Conditions of Sale Proof of Title and Title Guarantee
Seller required to prove title and their ability to sell it
Prove title by producing official copy of registered title or by epitome of title
Unless provided otherwise SCS provide that seller sells property with full title guarantee. buyer can rely on these after completion.
Full Guarantee of Title includes guarantee that:
- seller is entitled to sell property
- seller will, at own cost, do all in their power to transfer the purported title to buyer, and
- seller is selling property free from all charges or encumbrances other than those disclosed in contract
33
What other forms of guarantee might seller give in relation to title
Limited Title Guarantee
- seller has not created any charges or granted any rights during their period of ownership that have not been disclosed
- typically given by seller with less knowledge or involvement with property (eg. personal representative)
No Title Guarantee
- used when seller has no knowledge of property at all (eg. mortgagee in possession or someone disposing of property by way of gift)
34
Standard Conditions of Sale: Indemnity Covenant
Where contract discloses binding obligation relating to property (maintaining communal fence etc.)
Buyer to agree to perform the obligation to indemnify seller if buyer breaches obligation
35
Standard Conditions of Sale: Risk and Insurance
Risk in the property passes to buyer on exchange of contracts
- so if property is destroyed or damaged between exchange and completion buyer must still purchase
Seller does not have to insure property between exchange and completion
- in practice it is insured by both parties in this period
36
Standard Conditions of Sale: Completion // and failure to comply
Normally inserted into contract on exchange but if not then
- completion will take place 20 working days after exchange
Failure to Comply
- if buyer does not provide funds by 2pm on completion then completion is treated as taking place on next working day
- buyer liable to pay interest at rate specified in contract
- applies even if buyer moves into property on agreed date
- no penalty if buyer was ready and willing to provide funds by seller failed to vacate
37
What special conditions are normally applicable in most transactions and pre-printed on contract
- whether property being sold will be vacant on completion or whether there will be tenant in situ
- Whether a different time for completion has been agreed (by 2pm is often preferred if there are chain of transactions)
- Whether there are any occupiers on the property (in which case they need to confirm their relinquishment of any rights on completion)
38
What is the Property Information Form
completed by the seller to give buyer practical information about property.
Buyer is entitled to rely on answers the seller gives and any pre contract enquiries raised by buyer solicitor
39
Buyers responsibilities in relation to occupiers
Info can typically be found in PIF but buyers solicitor should check this.
Any non-owning occupier must agree to sign contract as confirmation that they will relinquish any rights in property and vacate on completion
40
What is the Fitting and Contents Form (F&C)
Lists items which are at the property and included in the sale price and those excluded from sale price
Annexed as part of contract
- so seller can be sued for taking items included
If buyer agrees to buy other items above contract price this sum is indicated on Particulars of Sale and items included in contract
41
when should title be investigated and by whom
By Sellers Solicitor
- when they are drafting contract
By Buyers Solicitor
- when they receive contract package
- to check that buyer will receive good title when they make application for registration after completion and to identify if there are any issues that they effect buyers future plans
Buyer solicitor will ask questions on any issues (raising requisitions on title)
- will require all to be resolved before advising client to proceed to exchange
42
What must sellers solicitor be aware of if seller has mortgage
Must ask lender for indicative redemption figure to ensure sale proceeds will be sufficient to redeem mortgage on completion
Because solicitor will give undertaking to redeem mortgage out of sale proceeds
43
How are defects in title discovered and resolved
Should be discovered by sellers solicitor when investigating
Might only be discovered by buyers solicitor's investigation
- will raise inquiries and request sellers solicitor provide draft insurance policy that seller will indemnify for cost of policy and include this as special condition in contract
Resolved
- best way is to resolve is by entering deed of variation or deed of rectification
- might not be possible (to long, costly or requires consent of neighbours etc.)
- then use indemnity insurance policy to cover specific issues
44
What to look for when investigating title- Registered Land
Stage 2
Whether title number matches that in contract
Encumbrances
- are easements properly registered
- is there a mortgage that sellers solicitor must give undertaking for
Class of seller title
45
Investigation of title (what to look for) - Unregistered Land
Any event that would have required compulsory registration
- since 1st Dec 1990
- if so must insist seller register
Whether there is good root of title
If there is unbroken chain of owner ship from root of title to current seller
If documents have been stamped correctly
Whether third parties might have rights in relation to land
46
What pre-contract searches are always done?
Stage 2
- Local search
- Drainage and Water Search
- Environmental Search
47
What searches are part of the local search and what do you seek to find
Local Land Charges
- General and specific financial charges owed to local authority (should seek sellers undertaking to repay)
- Planning charges including: tree preservation orders, any planning agreement and eateries against property
- Listed building charges
Enquiries of Local Authority for issues including:
- Roads: if road fronting property is adopted by the local authority
- Public Rights of Way: over property for public
- Planning: ie planning entries and building regulation consent
Optional Enquiries of Local Authority
- if private road proposals have been made
- any major has pipeline effecting property
- any environmental pollution notices served
- if property abuts common land/village green
48
What is the significance if property abuts common land / greens
There may be restrictions on access over common ground or restrictions on developing/enclosing common land
49
What is the drainage and water search
Stage 2
- check if property is connected to water and drainage system and any details on this (metering etc.)
50
What is the Environmental Search
Stage 2
Current landowner would be liable for any contaminated land (even buyer)
51
What are transaction specific searches
Search of index map
- if title is unregistered
- send address or plan to HMLR to see if it is partly registered
Bankruptcy Search
- if buyer is getting mortgage
- if pending or actual bankruptcy then must be reported to lender
Company Search
- if seller is company
- reveals if company is subject to winding up/liquidation proceedings
- any fixed or floating charged
52
What are location specific searches
Coal mining search
- if land is near coal mine then shows if this affects land
Chancel Liability Search
- shows if property is under obligation to contribute to upkeep of chancel of church
53
How does buyer raise enquiries Residential
Stage 2
List is questions / issues sent from buyers solicitor to sellers
Questions and responses to be give not parties before exchange of contracts
54
How to raise enquiries Commercial
Stage 2
Commercial Property Enquiries = PIF
Includes rage of pre-printed enquiries sent to seller at the beginning of transaction
55
How is a development defined in the Town and Country Planning Act 1990
- Carrying out building, engineering, mining, or other operations in, on, over or under land (includes structural changes or additions)
- Making any material change of use of any buildings or other land (changing one property into flats or to business etc.)
56
What is deemed planning permission
Certain types of developments can be done without express permission (oe. small home extensions, porches, fences, conservatories etc.)
However, local authority can exclude locations by passing article 4 direction. this will require applicant to get express planning permission.
57
What is express planning permission
If no deemed permission must make application to local authority for express planning permission
Outline permission
- gives broad permission as to principle of development on land in question subject to reserved matters (issues such as materials used)
- if there are reserved matters there will have to be full application within 3 years of the outline permission to obtain approval on matters
- work must start within 2 years of permission
Detailed permission
- involves submission of full plans to local authority
- permission may be subject to conditions
- development must start in 3 years of permission
58
What enforcement action can be taken for breaching planning permission and against whom
Can take action against owner of occupier of property or against interested party. Action may require full compliance
- problems run with property so b buyer can be liable for sellers breach
59
Enforcement actions for planning permission breach process
Enforcement Notice
- must state nature of breach
- steps required to remedy breach
- time limit to complete required work
- could also apply for injection to stop work or stop notice
Time Limit
enforcement notice must be served within
- 4 years of the breach for unauthorised building works
- 10 years of first breach for all other breaches (material change)
- no time limit for listed buildings
60
What counts as a listed building
Building its-self and everything within its curtilage (meaning garden and immediate area)
61
Rules for altering listed buildings
They cannot be demolished, extended or altered without listed building consent form from local authority
62
How do you comply with building regulations
Applies to all building work not just that which requires planning permission (including installing windows etc.)
Building control officer inspects building at various stages and once satisfied with completed work issues building regulations completion certificate
63
Enforcement actions for non compliance with building regulations
Local authority can take enforcement action within 12 months of breach
Can enforce injunction to bring property up to standard any time
64
How should you try to mitigate for a breach of planning laws or building regulations
Indemnity insurance - seller to take out at own cost
- important not contract local authority to discuss lack of documentation as insurance will no longer be available
65
What must a solicitor do for a cash buyer
Source of Funds Check
- generally see that money has been in UK bank account in clients name for 3-6 months
Source of Wealth
- client to prove by documentary evidence where they got the money
- includes (inheritance, bonus/income from job, sale of other assets etc,
66
What types of transactions require solicitor to consider mortgage requirements
Acting for:
- seller of property subject to existing mortgage
- buyer of property looking to borrow money
- client seeking to transfer a mortgaged property from sole name into joint names with spouse etc. (or other way round)
67
What type of advice can a solicitor give/not give in relation to a mortgage?
Can only give generic advice (on mortgage type etc.)
Cannot give specific advice and should advise client to see Independent Financial Adviser
- can't give value judgements/opinions
68
What are the types of mortgages
Repayment mortgage
- repay capital and interest in instalments
Interest Only
- instalments = interest only
- capital to be paid at end of term
Endowment Mortgages
- mortgage combined with life insurance
- pay premiums and hope life insurance policy will be sufficient to pay off mortgage at end of term
Pension Mortgage
- mortgage combined with pension policy
Sharia Compliant Mortgage
-
69
What is a mortgage offer
Lender will obtain mortgage valuation report to confirm the property is good security and that buyer can repay mortgage (with evidence).
Once satisfied will issue a mortgage offer to buyer and their solicitor
70
When can a solicitor represent both buyer and buyers solicitor
In residential transactions provided that:
- lender is institutional lender
- standard certificate of title is provided
- there are no conflicts of interest/ risk of conflict
Commercial transactions parties will typically use different solicitors
71
What are the lenders instructions for their solicitors when issuing mortgages
1. Fraud Prevention
- documents properly signed (good for lawyer to witness buyer signing)
- seller has lawyer who will receive funds
- details of property valuation
- how long seller has owned
- if price in mortgage offer is same as asking price
- how buyer is funding rest of purchase (third parties lending may have interest in property)
2. Title Issues
- solicitor to take reasonable steps to ensure no discrepancies between description of property as valued by lender and title
- ensure all searches have been carried out (and report anything bad to lender)
- ensure lender is named as applicant in HMLR pre-completion searches
- ensure all searches are not more than 6 months old at completion
- not release mortgage advance unless solicitor has sufficient funds to pay all stamp duty land tax and HMLR fees to perfect registration of mortgage (solicitor should give undertaking to register after completion and get fund from buyer before completion)
72
Requirements for a mortgage deed
Must be by deed and executed by mortgagor prior to completion (normally before exchange of contracts)
73
What must happen before a lender will release mortgage funds
Buyers solicitor to submit Certificate of Title to lender which:
- confirms to lender that title is good and marketable, and
- acts as a request for release of mortgage advance
Time limit
- typically given in mortgage offer (often 5--7 working days)
74
What should a solicitor do if buyer is also borrowing money from private source
- Source of funds check
- Source of wealth check
- reveal this to institutional lender (if acting for them)
- if private sources are to be repaid then institution will typically not lend
75
Why must a solicitor check if there are any non-owning adult occupiers
Their rights may interfere with lender right to possess
Must advise lender to require all occupiers to sine waiver/consent form to ensure they do not require any rights in property
(buyers solicitor cannot act for non-owning occupier)
76
When must a mortgage be registered (time limits)
Registered land
- 30 working days
Unregistered Land
- 2 months
Company borrower
- must also register with companies house in 21 days of completion
- certificate of registration from CH must be sent with application to HMLR
77
What needs to be considered for exchange when there are related transactions
That these are synchronised so:
- exchange on same day
- have same completion date
78
What are the methods of exchange for exchange of contracts
In person
By post
- each solicitor posts their clients signed contract to each other. Exchange takes place when seller's part is posted to buyers solicitor.
By phone
- exchange takes place when completion date and date of the conversation are inserted
79
What are the different formulae for exchange on contract over phone and when are they used
Formula A
- when one solicitor has both signed contracts
Formula B
- when each solicitor has their clients signed part of the contract
Formula C
- Used for chain of transactions
80
What is a memorandum of exchange
Stage 3
After exchange of contracts both solicitors make a file memorandum recording:
- their name
- date and time of exchange
- exchange formula used
- completion date
- amount of any deposit paid
81
What duties / responsibilities might buyer and seller have after exchange of contracts
Seller
- duty of care to keep property in same condition it was on exchange
Buyer
- now responsible for risk of loss so must insure property from time of exchange
82
When and how can a contract (after exchange) be protected
When
- if it is likely that there will be a couple of weeks between exchange and completion
How
By registering it as an estate contract
- Registered land: unilateral notice will be placed on sellers charges register, and
- Unregistered: C(IV) land charge to be registered against sellers full name
83
How can a contract be varied after exchange on contract
- Must exchange contract again with variation included in new contract
84
What does sellers solicitor do in pre-completion
- completion statement
- completion information and undertakings form
- execution of purchase deed
-
85
What is the completion statement
Stage 4 - by Sellers solicitor
If seller has existing mortgage solicitor asks lender for redemption figure (calculated to date of completion)
Then prepare completion statement which subtracts redemption figure and estate agent fees (if relevant) to show net sale proceeds
this is sent either to seller or towards a related transaction
86
What is the completion information and undertaking form
Stage 4 - by Sellers solicitor
Form that gives details of:
- client account to which purchase of money must be sent on the day of completion
- confirms amount due
- where the keys to the property can be collected
- (if property is mortgaged) gives undertaking to pay off mortgage out of sale proceeds and provides evidence of discharge when received
87
Purchase Deed When is it signed
Stage 3 - for freehold purchase
Typically drafted by buyer side and sent to sellers solicitor who must execute it with formalities before completion
On completion it is handed to buyers solicitor
88
How does pre-completion for first time leasehold differ to freehold
instead of Purchase Deed the parties execute a lease
Prepared by sellers side (including all plans referred to) - final one is called engrossment
- original signed by landlord and copy signed by tenant
89
Buyer solicitor tasks in pre-completion
- check completion information and undertaking (crucially if seller solicitor has undertaken to pay off mortgage)
- pre-completion searches
- completion statement and
- certificate of title (if mortgage)
- purchase deed (if buying freehold)
90
Pre-completion searches Registered Land and purpose
Official Search with Priority
- either against the Whole of Registered Title or against Part of Registered Title (if buying new build from developer etc.)
What these do
- show any new entries (if so then require sellers solicitor to deal with these before completion)
- priority period: 30 working day period where new entries are paused and fall away if buyer completes and registers transaction within period)
91
What happens if there is an error in the official search certificate
Buyer will be bound by what is on register even if they were no aware of it
But may be able to claim an indemnity from HMLR for any loss sustained
92
Pre-completion searches unregistered land
Stage 4
Full land charges search to be made against full names of current estate owners again
- gives priority period of 15 working days
93
Pre-completion searches repeated for all types of land
- bankruptcy search (if mortgage)
- company search (if seller is a company)
- advise buyer to do another physical inspection
94
Who has to sign the Purchase Deed and when
Must be signed before completion
Must be signed by seller
Has to be signed by buyer if the transfer includes covenants by buyer or if there is more than one buyer
95
What are the different types of purchase deed
Conveyance
- when unregistered land is sold but not used in practice
Transfer
- used for registered and unregistered land
- TR1 form - where the whole of land in a title is being transferred
- TP1 form - used where part of the land in a title is being transferred
Assignment
- for unregistered leasehold land (not used in practice)
Assent
- when personal representatives transfer land to beneficiary
- must be in writing and (by deed if it contains covenant by absentee)
96
How are service charges dealt with in transfer of leasehold
Stage 4
if seller has paid service charges in advance parties should use best estimate to apportion the charges and buyer will have to pay shortfall
97
What are the different methods of completion
1. Personal Attendance
- buyers solicitor goes to sellers solicitor
2. By Agent
- buyer solicitor appoints local agent to go to sellers solicitor
3. By Post
- sellers solicitor acts as agent for buyers solicitor and post relevant deeds/documents to buyer after completion
98
What are the key steps for completion by post
- parties to agree in advance to use it (although post is default unless agreed otherwise)
- sellers solicitor gives warranty that they act for true seller (which B' solicitor can rely on)
- S' solicitor to confirm in writing which mortgages are to be redeemed
- completion money sent by bank transfer
- B's solicitor must S's with list of deeds/documents to be marked as examined (against originals)
- if unable to comply with code S' s to provide statement to B's before 4pm on day before completion
- S's to list mortgages they can discharge
- S's to agree to complete transfer docs upon receipt of sum
- S's to confirm date/time of completion to buyers solicitor and to whomever holds keys (to be given asap after completion)
- S's to agree to send executed transfer docs by first class mail or DX asap (cannot be later than 5pm of day after completion)
- Once deeds are posted they are held by B's at risk of buyer
99
When does title pass after completion
Registered Land
- upon registration
Unregistered Land
- on completion
100
What is the significant on merger upon completion
Contract will merge with deed
- therefore buyer can no longer sue on contract terms
Non-Merger Clause
- part of Standard Conditions of Sale
- means parties must still perform outstanding obligations in contract (which can be sued for under contract)
101
What must sellers solicitor do post-completion
1. Report to Client
- call to confirm completion has taken place, followed by written confirmation
2. Discharge Mortgages (if any)
- repay redemption figure and discharge using HMLR form
- or if unregistered original mortgage deed to be sent to lender for acknowledgment, back to buyer and then to sellers solicitor to comply with undertaking
3. Pay estate agent (if any)
- seller to approve bill for solicitor to pay out of net proceeds
4. File Closure
102
What does a buyers solicitor have to do post-completion
1. report to client
- call client to inform on completion, followed by letter of completion and bill for legal fees
2. Registration of Company Charges (if company)
- if buyer is company with mortgage have to register mortgage with CH in 21 days
3. Payment of Stamp Duty
- in 14 days post completion
4. Registration with HMLR
- 30 days for registered land
- 2 months unregistered land
103
What does a buyers solicitor have to do post-completion - New Lease
1. Register lease if over 7 years
- if also have mortgage then this is registered at same time and notice of mortgage must be served on landlord
2. apply for share in management company (if applicable)
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What does a buyers solicitor have to do post-completion - Assignment of Lease
Sell Side
1. send BS original lease and share certificate (for management company), and original licence to assign (if applicable)
2. prepare final service charge adjustment
Buyers Side
1. Arrange payment of SDLT
2. serve notice to landlord of assignment to buyer (and notice of any new mortgages created)
3. arrange for registration at HMLR of transfer of lease and any new mortgages
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Is time of the essence for completion // what would be the significance
Generally not for residential transactions (Standard Conditions of Sale)
- therefore cannot cancel contract
To be of the essence it has to be specified in the contract (in special conditions)
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What amounts to a breach for delay of completion
Any delay even of a couple of hours (past 2pm normally) of sending funds
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What is the usual remedy for delayed completion
Seller (who has reviewed funds) is entitled to interest
Interest calculated at contract rate (for any amount outstanding)
- Rental in lieu of compensation: if property has a tenant innocent party can choose to take rental income until completion instead
If delay of a few hours then completion is treated as occurring next WORKING day and interest is due for time in-between
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What is a notice to complete
Where time is not of the essence this can be used by innocent party for delayed completion
Notice makes time of the essence allowing innocent to cancel contract if completion does not happen in 10 working days
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Requirements for Notice to Complete
- Can be served at any time after completion date (that has been missed)
- party serving must be ready, able and willing to complete
- completion has not already taken place
In practice
- might not be needed if there is just a slight delay and party is clearly willing to complete
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What must other party do if served with Notice to Complete
- needs to complete in 10 working days or risk contract being canceled
- if they paid a reduced deposit must also pay balance necessary to bring deposit to 10%
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Consequences for non-compliance with Notice to Complete
Buyer = defaulting party
seller can rescind contract and:
- retain deposit
- resell property
- claim damages
Seller = defaulting party
Buyer can rescind contract and:
- reclaim their deposit with interest at contract rate
- claim damages
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What remedies are available for breach of delay to completion (before completion)
Notice to Complete
Specific Performance
- equitable at discretion of court
- can be pursued with other remedies but must choose one by trial
Claim for Compensation by way of damages
- innocent party to be placed in position they would have been in had contract been executed
- innocent seller can only recover difference between contract price and value on resale (advise not to pursue if resale is higher /but keep deposit)
Rescission
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When can Rescission be used for breach of delay of completion
Under SCS can be used when
1. there has been a misrepresentation made
- fraudulently or recklessly or
- if buyer took the property it would be substantially different in quality, or tenure from the property they expected to take
2. the landlord's consent for an assignment is required and the licence to assign is not forthcoming
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How can a tenancy protected by Landlord and Tenant Act 1954 be ended
Either by:
Forfeiture
Surrender
Landlord serves valid Section 25 notice on tenant
Tenant serves section 26 notice on landlord to requires new lease
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When does landlord and tenant act not apply
- to fixed term tenancies not exceeding 6 months
- service tenancies
- tenancies where it has been contracted out
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Process of contracting out LandLord and Tenant Act // consequences for not following
1. Landlords health warning
- to be served 14 days beef tenant completes lease
- tenant can waive 14 period for landlord by signing formal statutory declaration in front of independent solicitor
2. Tenants Declaration
- tenant to sign confirming they have received health warning and agree to contracting out of the Act
- can be signed privately
3. References in the Lease to:
- health warning
- tenants declaration
- agreement to contract out
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What is a landlords Section 25 Notice
Informs tenant with security of tenure that landlord requires premises back/wishes to enter new lease
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landlords Section 25 Notice formalities // grounds
must be served 6-12 months they wish existing tenancy to end
Grounds:
- tenants breach of obligation (repair, delayed rent etc.)
- if part of land is sublet by tenant, landlord requires full property
- availability of suitable alternative accommodation for tenant
- landlord intends to demolish or reconstruct premises
- landlord intends to occupy premises
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What is a Tenants 26 Notice + requirements
Request by tenant with security of tenure for a new lease.
Requirements
- served to landlord (or agent) and requirest grant of new lease
- notice to include outline of required terms
- serve 6-12 months before they wish new tenancy to start
- on receipt of notice landlord has 2 months to inform if they intent to oppose the request
- if they oppose must specify one of statutory grounds for this
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When might a tenant be compensated by Landlord and Tenant Act
If landlord uses no fault ground or is able to provide alternative suitable accommodation as ground
- then compensation
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