Property practice Flashcards
Under the Standard Conditions, when will completion occur if the contract is silent?
20 working days after exchange
Under the Standard Conditions, what is the cut off time by which if the buyer has not sent funds, the completion is treated as taking place the next working day?
2pm
What is the consequence of the buyer not sending funds by 2pm on the day of completion?
They are liable to pay interest at the rate specified in the contract, even if they have already moved into the property
When does the interest penalty not apply?
When the reason for not sending the funds is because the seller has not vacated
When do terms in the Contract Incorporating the Standard Conditions have legal effect, and what trap should we look out for on the exam?
On exchange. Look out for answer choices suggesting the applicability of contract terms pre-exchange.
What five things should the buyer’s solicitor do if they discover a defect in title?
1)Raise it with seller’s solicitor
2) Request seller’s solicitor provide a draft insurance policy
3) Confirm the seller will pay for this policy
4) Include this agreement as a special condition in the contract
5) Notify the buyer’s lender
On the exam, what should we look for that can usually give the green light to proceeding even in spite of defects?
Indemnity insurance or seller indemnifying buyer
What will appear on the property register?
Rights which benefit the land, e.g. a right of way over neighbouring land, will appear as a notice in the property register.
Avoid answer choices which suggest a right benefitting property A is on the property register of the burdened property. They will use this to trick you into assuming it operates the same as a charge. It does not. A benefit can appear on the charges register of the burdened property, but not the property register.
What will appear on the proprietorship register?
Who owns the property and any restrictions affecting the title (e.g. selling without two trustees)
What must a seller’s solicitor do if they discover there has already been a triggering event in relation to unregistered property they are dealing with, and when?
Make an application to HMLR to register the property before drafting the contract
What are the six pre-contract searches which are always carried out?
Local search
Drainage and water search
Environmental search
Index map search
Bankruptcy search (if buyer is borrowing)
Company search (if seller is a company)
What two similarly named searches should not be confused, and what is the difference?
Local land charges register search and land charges register search.
Local land charges register search is a pre-contract search done by buyer to gather practical information.
Land charges register search is a pre-contract search done by buyer to investigate title and any third party rights (mainly for unregistered property)
Why is an environmental search important?
Because a buyer will be liable for paying for the clean up costs of any land they own which is contaminated, even if it was caused by the seller
What are some location specific searches which might be needed?
Coal mining search
Chancel liability search (ancient obligation to upkeep a church)
What is the commercial equivalent of the property information form?
Commercial Property Standard Enquiries
On the exam, what should a planning issue not be confused with, and which takes priority?
A planning issue should not be confused with a title issue, and planning permission will not cure a title defect
Under the Town and Country Planning Act 1990, planning permission is required for any development. In what two ways is development defined?
Building, engineering, mining or other operations with regard to land, or
Making any material change of use of any buildings or other land
What is a permitted development?
A development which has deemed permission and is exempt from applying for express permission
What are some examples of permitted developments, i.e. developments with deemed permission?
Small home extension, porch, fence, conservatory, some change of use within the same class
What is the effect of a local authority passing an Article 4 Direction?
It revokes the permitted development exception for the relevant area, meaning that all developments must be applied for
What are the two types of express planning permission?
Outline
Detailed
What is outline permission?
Broad permission to the principle of the development, (subject to any reserved matters which if part of the permission must be approved by the authority within three years)
No longer than how long after the grant of outline permission (or the approval of reserved matters where relevant) must development begin?
Two years (it could be five years before development needs to begin - see next)
Where detailed (full) permission is granted, within what time limit must development begin?
Three years
What is the consequence of planning issues running with the land?
The buyer is liable for any planning issues relating to land they own
Within what time limit of breach must a planning enforcement notice be served where it is regarding (1) unauthorised building works and (2) all other breaches, e.g. breach of conditions of planning?
1 - Unauthorised building works is 4 years
2 - For other breaches (breach of authorised planning permission) 10 years!
Within what time limit of breach must a local authority bring an planning enforcement action regarding a listed building?
There is no time limit
Even though a development might not need planning permission, what will all works require?
Compliance with building regulations
Within what time limit of breach must a local authority bring an enforcement action regarding building regulations?
12 months
Even though an building regulations enforcement can only be brought within 12 months, what is always available?
An injunction requiring the owner to comply with the regulations
Where a buyer asks the seller to provide indemnity insurance for a planning or building regulations breach, even though the enforcement period has passed, what must not be done and why?
No contact should be made to local authorities, as this can negate the availability of such insurance as it would technically be after the breach
Regarding planning in a commercial context, what is a use class?
A category of use describing the activities of the building, e.g.:
1) Commercial, business, and service, e.g. shop, restaurant
2) Learning and non-residential institution, e.g. museum, library
3) Local community, e.g. small shops, community hall
Planning permission generally required to change use class, even if no building work is being done.
When planning permission is granted for a use class, is further permission needed to change the activity within the same use class?
Not unless actual building work is required to make that change
Whilst some changes from one use case to another are allowed under permitted development, in what two situations will this not be available and changes to a use class will therefore require an application?
Conservation area
Listed building
What are the two functions achieved by the buyer’s solicitor submitting a clear Certificate of Title to the lender?
Confirms to lender that title is good and marketable
Requests a release of the mortgage funds
What two steps does the process of perfecting the mortgage involve, and who does it?
Buyer’s solicitor will:
Apply to register the title to the property after completion
Ensure the lender’s legal charge is registered as a first legal charge on the Charges Register
What should we look for on the exam which might not appear to trigger a registration requirement for unregistered property but actually does, and why?
A client mortgaging property they already own which has not previously been subject to a mortgage, because a first legal mortgage is a trigger for registration
Regarding registered land, what search begins the priority period to complete registration free from intervening interests, and how long does this period last?
The OS1 or OS2 search will give a 30 working day priority period
Where there is a registration requirement which is triggered by mortgage completion concerning unregistered land, within what period must the buyer’s solicitor register the mortgage?
2 months
If the buyer is a company, within what period must the mortgage be registered at Companies House?
21 days
What are the methods of exchange?
- In person
- Post
- Phone (most common
When is Formula A used for exchange and what is a quick way to remember this?
When one solicitor holds both signed parts of the contract.
Remembered because one solicitor is Away and the other is doing All the work
When is Formula B used for exchange and what is a quick way to remember this?
When each solicitor hold their own client’s part of the contract.
Remembered because Both solicitors are working.
When is Formula C used for exchange?
When there is a Chain of transactions
How is the interest in a sale contract protected after exchange, where land is (1) registered?
Notice placed on the seller’s charges register
Removed on completion
How is the interest in a sale contract protected after exchange, where land is (1) unregistered?
C(iv) estate contract registered against the seller’s full name
Both are removed upon completion.
How is a contract varied after exchange?
Both parties must exchange contracts again with the variation included in the new contract
In a lease situation, what is the final version of a lease called, and what are its two parts?
An engrossment made up of the original and counterpart
What should the buyer’s pre-completion searches not be confused with?
Pre-contract searches, e.g. local search or drainage search
What is an OS3 search?
Official search without priority of the land in registered title
In the registered system, in the period between completion and registration, only what type of interest does the buyer have, why, and what must be done to protect this interest?
Only an equitable interest, because legal title in the registered system passes upon registration. The equitable title must be registered as a notice on the charges register of the property
What are the two purposes of the official search carried out after exchange in the registered system?
Discover any new entries, e.g. new mortgages, requiring address before competition
Start the 30 working day priority period to complete and register
What occurs if there is an error in the official search certificate and what remedy is available?
Buyer is still bound by what should have been on the report, even if unaware of it, however they can claim an indemnity from HMLR
In the unregistered system, what pre-completion searches are carried out?
Repeat the pre-exchange full land charges search against the full names of the landowner/seller for the full period of their ownership
From this search, what is the priority period in the unregistered system in which to complete?
15 days (check working)
What are the three types of purchase deed used to transfer FH property?
- Conveyance (Unregistered)
- Transfer TR1 (registered and unregistered)
- Assent (used by PRs to transfer to beneficiary)
What are is the form for transfer of part?
TP1
What is a licence to assign?
Document evidencing landlord consent to assign under a lease
3 methods for how to complete?
Person
Agent
Post (most common)
What does merger on completion mean and what does it mean for the buyer?
On completion, the sale contract merges with the purchase deed, meaning the buyer can no longer sue on contract terms (unless the contract provides it will not merge on completion)
When must SDLT Form be sent out and tax paid?
Within 14 days of completion, even if no tax is payable (check working days)
Within what time must the buyer’s sol register the title for registered property?
Within working 30 days of official search (check working days)
Timeline for registering title of unregistered land?
2 months of completion
What is the effect of first registration on title deeds?
They no longer have legal effect
In what circumstance can delay give the innocent party the right to cancel the contract outright?
Where time was of the essence
Under standard conditions, what is required for time to be of the essence in a resi context?
Must be specified in contract
Even if time is not of the essence, what does any delay in completion give rise to?
Interest penalty (damages)
What is the interest penalty calculated on?
The outstanding amount = purchase price minus depost
As long as the delaying party is notified, what option is available to the innocent buyer where is a tenant in situ in the property?
They can elect to take the rental income instead of the interest
Where completion is delayed and time is not of the essence, what must the innocent party serve if they want to set the ball rolling toward being able to cancel the contract.
A notice to complete - which makes time of the essence
From what point can a notice to complete be served, and what three things must the be true of the party serving?
Any time after completion was due, but not after it has taken place, the innocent party must be ready, able and willing to complete.
What trap should we look out for on the exam regarding notice to complete?
The innocent party trying to serve a notice to complete in order to cancel the contract in a situation where completion has occurred late. A notice to complete can only be served if completion has not yet occured.
How long does the delaying party have to complete after a Notice to Complete has been served?
Ten working days (excluding the day the notice was given)
Upon receiving a notice to complete, what must the buyer do if they have negotiated and paid a deposit lower than 10% to the seller?
Make up the remaining amount of the deposit to make it 10%
What are the seller’s options when the buyer does not comply with a notice to complete?
- Rescind the contract
- Retain the deposit
- Claim damages
- Resell the property
What are the buyer’s options when the seller does not comply with a notice to complete?
- Rescind the contract
- Reclaim the deposit with interest at the contract rate
- Claim damages
What are the remedies for other pre-completion breaches, depending on the breach?
- Specific performance
- Damages
- Recission
Pre-completion, where a seller is claiming damages from a buyer, what is the limit on what can be claimed, and what is the effect of this?
Difference in value between contract price and value on resale, so if the resale value is higher, a claim for damages against the original buyer will not be available
Under the Standard Conditions, in what two situations is rescission available pre-completion?
- Misrepresentation because of an error or omission
- Landlord’s consent to assignment is not forthcoming
One of what two conditions must be met to rescind a contract for misrepresentation under the Standard Conditions pre-completion?
1) Element of fraud or recklessness, or
2) Property is substantially different from what the innocent party expected to take, to their detriment
What is misdescription?
An error in the property particulars of the contract, e.g. the estate held, or the size of the property
What must be true of the misdescription to allow damages or rescission pre-completion?
It must be significant
What is the statutory protection given to commercial tenants under the Landlord and Tenant Act 1954?
Tenant does not have to vacate their property at the end of a contractual lease, unless the landlord uses one of the statutory methods of terminating the lease
What are the 5 ways a tenancy protected by the 1954 Act can be terminated?
Forfeiture by the landlord
Surrender by both parties
Landlord serves a valid section 25 notice (to terminate lease or suggest new lease), or
Tenant serves a valid section 26 notice (to request a new lease)
Tenant serves a valid section 27 notice
What tenancies cannot be protected by 1954 act?
Fixed term not exceeding 6 months, employee in property of employer
Contracted out tenancy
Requirements to contract out?
Warning from landlord, declaration from tenant, reference in the lease
Time length of simple declaration?
14 days before completion
What is required for the tenant to waive the 14 day period?
Statutory declaration in front of an independent solicitor waiving the period
Does a simple declaration need to be witnesses by a solicitor?
No
Time limits on a section 25?
Between six months and 12 months before they wish the tenancy to end
What are the s30 grounds for terminating a lease?
Discretionary:
Tenant fault:
- Failure to repair
- Persistent delay in paying rent
- Substantial breaches of other obligations
No tenant fault:
-Landlord requires whole premises (if tenant only rents part)
Non discretionary:
- Has suitable alternative premises for the tenant
-LL intends to demolish or reconstruct the premises
- Intends to occupy the premises himself
What is a discretionary ground?
The court can still order a new tenancy even if the tenant is at fault
What is a mandatory ground?
The court cannot interfere - the no fault grounds
Section 26 timelines
Between 6 months and 12 months before they wish the new tenancy to begin
Time limit on opposing a section 26?
2 months
What can the tenant get if the landlord uses a no-fault ground?
Compensation
Will the tenant receive compensation if there is alternative premises?
No, they have not suffered a loss
What detemines how compensation is computed when a tenant is entitled upon t termination die to a non-fault ground?
Whether the tenant has been in occupation for 14 years or less
How is compensation calculated when the tenant has been in occupation for less than 14 years?
The rateable value of the premises - 1 years rent
How is compensation calculated when the tenant has been in occupation for at least 14 years or took over the business from someone and the combined tenancy is at least 14 years?
twice the rateable value of the premises
What is the maximum length a court will order the new lease to be where the lease is silent on term?
15 years
Do takeaway where food is mostly served off the premises count in the same use class as general shops or restaurants?
No - sui generis
Planning permission - Enforcement notice
28 days notice - land to be restored to the original condition or comply with any conditions imposed by planning permission. After 28 days you can get a fine or local authority will do the works and charge you
Planning permission: Enforcement time limits
Enforcement action can only take place within the following time limits -
4 years for building works - starting with the date on which the works were substantially completed
Change of use to a dwelling house
10 years
Other changes of use
Breach of planning condition
Planning permission - stop notice
served after enforcement notice - requires for a specified activity (eg unauthorised use) stop immediately
It cannot prohibit use as a dwelling house or any activity that has been carried out for more than 4 years
Planning - Breach of condition notice
SImilar to enforcement notice, but only concerned with breach of conditions or limitations to planning permission
Injunction
Local authority applies to court - must show good reason!
Breach of building regulations: Prosecution
6 months after discovering the breach to prosecute
it can take place up to two years after completion of the breach
It is to prosecute the builder, installer, or main contractor
Building regs: Enforcement notice
1 year after completion of the work the authority can serve a notice. Gives 28 days to alter or remove the work.
Building regs: Injunction
No time limit on an injunction if the work is unsafe
How does a buyer check for compliance with planning and building regs?
Local search,
Seller’s replies to enquiries
Buyer’s survey
What to do on discovering breach?
Indemnity insurance, ask seller to regularise, retrospective planning permission, regularisation certificate
Pull out!
Calculating interest on late completions
If fail to complete on date specified in the contract you pay interest for each day. Interest rate will be provided. For the seller, it is interest on the full price, for the buyer it is interest on the price less the deposit paid. Times by the percentage then divide by 365 and then multiply by the number of days late.
SDLT deadlines?
Paid within 14 days
LTT deadlines?
paid within 30 days
When can a landlord charge a lump sum or increase the rent for change of use?
If structural alterations are required.
What is an old lease?
Lease incorporated before 1 January 1996
What is the benefit that is consigned with a new lease?
The assignor is released from liability and all new tenant covenants are passed to the new tenant.
Under what circumstances does statute convert a qualified covenant into a fully qualified covenant?
Assignment, underletting, alterations when there is an improvement. Decision must also be made in a reasonable time (days, weeks) for alienation.
Time period for notice of dealing for assignment or underlease?
Notice given within 1 month
Requirements for CRAR
Commercial premises and principle rent has not been paid for a minimum of 7 days. 7 clear days (excluding sundays) must be given to the tenant. If the Notice expires without repayment of the debt, the enforcement agent can enter the premises and take control of goods belonging to the tenant up to the value of the debt owed. A further 7 clear days notice must be used to sell any of the seized goods.
What are the limitations for an action for debt?
Limited to rent due in the six years before the issue of proceedings.
What are examples of once and for all breaches?
Non-payment of rent, an unlawful assignment or underletting, an insolvency event
What are continuing breaches?
Failure to keep the premises in repair, breach of the user covenant, failure to comply with an insurance obligation
What happens if a tenant’s lease is forfeited and the subtenant requests relief from forfeiture?
The subtenant mau become a direct tenant of the landlord.
When forfeiting for breach of repairing condition, what happens if the lease is for a term of 7 years or more and has at least 3 years left to run?
The tenant can serve a counter-notice within 28 days. This means the landlord needs leave from the court (which is hard to get)
After serving a forfeiture notice for breach of repair and giving the tenant 28 days to respond, what can the landlord do?
Apply for damages - which is only for the cost of the loss to the landlord’s reversion, not the cost of putting the premises into full repair
How likely is it that a landlord can use specific performance or injunction to remedy a breach of the lease?
Quite unlikely, it is difficult to persuade the court, most likely used for intended breaches of user clause or an intended assignment or underletting. Can’t use specific performance for continuing obligations like keeping shop open every day.
What can a guarantor do if it is pursued for security?
Take an overriding lease.
