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SQE 1 FLK 2 > Property Practice > Flashcards

Property Practice Flashcards

1
Q

What are the stages in a conveyancing transaction

A
  1. Pre-Market
  2. Pre-Contract
  3. Exchange of Contracts
  4. Pre-Completion
  5. Completion
  6. Post-Completion
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2
Q

What should you consider in a conveyancing transaction

A
  1. What state of the transaction is it at
  2. Is the title registered or unregistered
  3. Is the title freehold or leasehold
  4. Is client selling, buying or both
  5. Is the transaction residential or commercial
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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

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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
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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

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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

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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
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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

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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

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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)
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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

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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

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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

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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.)

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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
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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

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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

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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

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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

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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

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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

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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

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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

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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)

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25
Q

Who sends contract package for FREEHOLD, what is included?

A

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

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26
Q

Leases and contract package in New Lease

A
  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
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27
Q

What should contract package of new lease include

A
  • 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)
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28
Q

Lease and contract package process assignment

A
  • 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
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29
Q

What is included in contract package for assignment of lease

A
  • 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

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30
Q

What is the form needed for freehold or leasehold contract in residential conveyancing

A

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
  1. Special Conditions of Sale
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31
Q

Standard Conditions of Sale Deposit rules

A
  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
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32
Q

Standard Conditions of Sale Proof of Title and Title Guarantee

A

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

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33
Q

What other forms of guarantee might seller give in relation to title

A

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)

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34
Q

Standard Conditions of Sale: Indemnity Covenant

A

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

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35
Q

Standard Conditions of Sale: Risk and Insurance

A

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

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36
Q

Standard Conditions of Sale: Completion // and failure to comply

A

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

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37
Q

What special conditions are normally applicable in most transactions and pre-printed on contract

A
  • 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)
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38
Q

What is the Property Information Form

A

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

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39
Q

Buyers responsibilities in relation to occupiers

A

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

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40
Q

What is the Fitting and Contents Form (F&C)

A

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

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41
Q

when should title be investigated and by whom

A

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

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42
Q

What must sellers solicitor be aware of if seller has mortgage

A

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

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43
Q

How are defects in title discovered and resolved

A

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

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44
Q

What to look for when investigating title- Registered Land

A

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

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45
Q

Investigation of title (what to look for) - Unregistered Land

A

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

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46
Q

What pre-contract searches are always done?

A

Stage 2

  • Local search
  • Drainage and Water Search
  • Environmental Search
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47
Q

What searches are part of the local search and what do you seek to find

A

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

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48
Q

What is the significance if property abuts common land / greens

A

There may be restrictions on access over common ground or restrictions on developing/enclosing common land

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49
Q

What is the drainage and water search

A

Stage 2

  • check if property is connected to water and drainage system and any details on this (metering etc.)
50
Q

What is the Environmental Search

A

Stage 2

Current landowner would be liable for any contaminated land (even buyer)

51
Q

What are transaction specific searches

A

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
Q

What are location specific searches

A

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
Q

How does buyer raise enquiries Residential

A

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
Q

How to raise enquiries Commercial

A

Stage 2

Commercial Property Enquiries = PIF

Includes rage of pre-printed enquiries sent to seller at the beginning of transaction

55
Q

How is a development defined in the Town and Country Planning Act 1990

A
  • 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
Q

What is deemed planning permission

A

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
Q

What is express planning permission

A

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
Q

What enforcement action can be taken for breaching planning permission and against whom

A

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
Q

Enforcement actions for planning permission breach process

A

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
Q

What counts as a listed building

A

Building its-self and everything within its curtilage (meaning garden and immediate area)

61
Q

Rules for altering listed buildings

A

They cannot be demolished, extended or altered without listed building consent form from local authority

62
Q

How do you comply with building regulations

A

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
Q

Enforcement actions for non compliance with building regulations

A

Local authority can take enforcement action within 12 months of breach

Can enforce injunction to bring property up to standard any time

64
Q

How should you try to mitigate for a breach of planning laws or building regulations

A

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
Q

What must a solicitor do for a cash buyer

A

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
Q

What types of transactions require solicitor to consider mortgage requirements

A

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
Q

What type of advice can a solicitor give/not give in relation to a mortgage?

A

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
Q

What are the types of mortgages

A

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

69
Q

What is a mortgage offer

A

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
Q

When can a solicitor represent both buyer and buyers solicitor

A

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
Q

What are the lenders instructions for their solicitors when issuing mortgages

A
  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
Q

Requirements for a mortgage deed

A

Must be by deed and executed by mortgagor prior to completion (normally before exchange of contracts)

73
Q

What must happen before a lender will release mortgage funds

A

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
Q

What should a solicitor do if buyer is also borrowing money from private source

A
  • 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
Q

Why must a solicitor check if there are any non-owning adult occupiers

A

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
Q

When must a mortgage be registered (time limits)

A

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
Q

What needs to be considered for exchange when there are related transactions

A

That these are synchronised so:
- exchange on same day
- have same completion date

78
Q

What are the methods of exchange for exchange of contracts

A

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
Q

What are the different formulae for exchange on contract over phone and when are they used

A

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
Q

What is a memorandum of exchange

A

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
Q

What duties / responsibilities might buyer and seller have after exchange of contracts

A

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
Q

When and how can a contract (after exchange) be protected

A

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
Q

How can a contract be varied after exchange on contract

A
  • Must exchange contract again with variation included in new contract
84
Q

What does sellers solicitor do in pre-completion

A
  • completion statement
  • completion information and undertakings form
  • ## execution of purchase deed
85
Q

What is the completion statement

A

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
Q

What is the completion information and undertaking form

A

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
Q

Purchase Deed When is it signed

A

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
Q

How does pre-completion for first time leasehold differ to freehold

A

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
Q

Buyer solicitor tasks in pre-completion

A
  • 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
Q

Pre-completion searches Registered Land and purpose

A

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
Q

What happens if there is an error in the official search certificate

A

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
Q

Pre-completion searches unregistered land

A

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
Q

Pre-completion searches repeated for all types of land

A
  • bankruptcy search (if mortgage)
  • company search (if seller is a company)
  • advise buyer to do another physical inspection
94
Q

Who has to sign the Purchase Deed and when

A

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
Q

What are the different types of purchase deed

A

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
Q

How are service charges dealt with in transfer of leasehold

A

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
Q

What are the different methods of completion

A
  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
Q

What are the key steps for completion by post

A
  • 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
Q

When does title pass after completion

A

Registered Land
- upon registration

Unregistered Land
- on completion

100
Q

What is the significant on merger upon completion

A

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
Q

What must sellers solicitor do post-completion

A
  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
Q

What does a buyers solicitor have to do post-completion

A
  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
Q

What does a buyers solicitor have to do post-completion - New Lease

A
  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)
104
Q

What does a buyers solicitor have to do post-completion - Assignment of Lease

A

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

105
Q

Is time of the essence for completion // what would be the significance

A

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)

106
Q

What amounts to a breach for delay of completion

A

Any delay even of a couple of hours (past 2pm normally) of sending funds

107
Q

What is the usual remedy for delayed completion

A

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

108
Q

What is a notice to complete

A

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

109
Q

Requirements for Notice to Complete

A
  • 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

110
Q

What must other party do if served with Notice to Complete

A
  • 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%
111
Q

Consequences for non-compliance with Notice to Complete

A

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

112
Q

What remedies are available for breach of delay to completion (before completion)

A

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

113
Q

When can Rescission be used for breach of delay of completion

A

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
114
Q

How can a tenancy protected by Landlord and Tenant Act 1954 be ended

A

Either by:

Forfeiture

Surrender

Landlord serves valid Section 25 notice on tenant

Tenant serves section 26 notice on landlord to requires new lease

115
Q

When does landlord and tenant act not apply

A
  • to fixed term tenancies not exceeding 6 months
  • service tenancies
  • tenancies where it has been contracted out
116
Q

Process of contracting out LandLord and Tenant Act // consequences for not following

A
  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
117
Q

What is a landlords Section 25 Notice

A

Informs tenant with security of tenure that landlord requires premises back/wishes to enter new lease

118
Q

landlords Section 25 Notice formalities // grounds

A

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

119
Q

What is a Tenants 26 Notice + requirements

A

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
120
Q

When might a tenant be compensated by Landlord and Tenant Act

A

If landlord uses no fault ground or is able to provide alternative suitable accommodation as ground
- then compensation

121
Q
A

SQE 1 FLK 2 (91 decks)

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