Brainscape's Knowledge GenomeTM

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


See full index

FLK2 > Property Practice > Flashcards

Property Practice Flashcards

1
Q

Stages of a transaction

A

Pre-market
Pre-contract
Exchange of Contracts
Pre-completion
Completion
Post -completion

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

Capital Gains Tax

A

Tax on profit made when a tax payer disposes of an asset that is increased in value.

Only the gain is taxed.

Submit tax return and pay tax within 30 days of completion.

Principle private residence relief exemption (no payment):

  • only or main residence throughout the period of ownership,
  • not greater than 0,5 hectare,
  • no part of the home has been used exclusively for business purposes.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Duty of confidentiality in case acting for the buyer and the lender

A

Duty of confidentiality is paramount:

If a solicitor finds out the the buyer lost his job, for instance, he should decline acting for the lender and return the offer without disclosing the job issue to the lender

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

Pre-contract: Energy performance certificate (validity, when not needed)

A

Valid for 10 years
Needed for both commercial and residential property
Not needed for listed buildings

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

Pre-contract: obtain title

A

If registered

  • download via HMLR

If unregistered

  • locate title deeds (if at lender - seller’s solicitor’s undertaking not to give the deeds before the loan is paid
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Pre-contract: who draft the contract

A

Seller’s solicitor

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

Title plan

A

Map outlines the land being sold

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

Pre-contract: What has to be disclosed in a contract

A

Latent defects/encumbrances (not apparent from an inspection of the property, for example, restrictive covenant)

No need to disclose patent defect/encumbrances (apparent from the inspection, for a example, access to another plot)

Exception: need not to disclose physical defects (caveat emptor - let the buyer beware - do a survey)

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

Pre-contract: the contract package

A

Residential property transaction:

  • draft contract
  • property information form
  • fittings and contents form
  • copy of a title and title plan
  • any other relevant documents

Lease:

Contract
Freehold title of the owner
Planning permissions
Service charge budget
New bill warranty
Details of management of company
In assignment - leasehold title, three years charge paid, licence to assign

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Form of Contract

A

Particulars of Sale
- names of the seller and buyer, their solicitors, details of property and purchase price

Standard Conditions of Sale

Special Conditions of Sale (specific conditions that relates to this particular transaction)

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

Key Standard Conditions of Sale

A

-10 % deposit to be held by the seller’s solicitor as a stakeholder (not an agent)

  • risks pass to the buyer upon exchange of contracts (better for the buyer to get insurance, as the buyer will have to purchase at an agreed price on the agreed date)

-

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

Property Information form

A

Any practical info about property (like dispute with a neighbour or that the property was flooded, occupiers - check study guide for the detailed list).

In case misrepresentation the seller can be sued.

In case of commercial property - commercial property standard enquiries form

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

Non-owning occupier

A

need to sign the contract so they are bound to vacate the property.

Solicitor cannot represent the seller and the occupier.

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

Mortgage - Seller’s solicitor to do

A

Check that the purchase price is enough to cover the loan prior exchange

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

Defect to title - how to deal with the risk

A

Indemnity insurance (indemnifying the buyer)

The obligation to provide the insurance shall be included into the special conditions of the contract

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

Investigating title

A

Has to be done prior to drafting the contract by the seller’s solicitor

After draft contract is sent, the buyer’s solicitor has to investigate

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

Investigating title: Registered Property

A

Property register:
-legal estate,
-postal address
-benefits

Proprietorship register:
- class of title (absolute, possessory)
- who holds the legal title (maximum 4, only joint tenants)
- restrictions form A (beneficial interest holder - co-owner)

Charges Register:
- encumbrances (mortgages, restrictive covenants)

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

Investigating title: Unregistered Property

A

Epitome of title chronological list of the documents of title with copies of this documents attached

Good root of title:
- whole legal/equitable interest in property
- adequate description of property
- doesn’t cast doubt on title
- at least 15 years old

Look also for triggering event after 1.09.1990 when property became compulsory registrable in England and if so, insist that the seller makes application.

Look also for any breaks in a chain of ownership.

Inspect all the documents.

Check if a stamp duty is properly paid and if not insist on payment including interest.

Check third party right capable of registration.

Check if any documents referred but not produced.

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

Priority period for registered title

A

30 days

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

Pre-contract searches

A

Before exchange of contract

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

Pre-contract: Local search

A

Local land charges register (financial charge owned to a local authority, who is responsible to keep up the road to the property, planning restrictions, public right of way, building regulations relevant to property)

Optional enquiries:
- commons registration search (village green, common land, other for of public used adjacent to a property)

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

Pre-contract: additional searches

A

Local water company - drainage and water search (property public water supply and drainage system)

Environmental Search (if the land has ever been put in contaminative use)

Index map search reveals if the land is registered (always if the land is unregistered)

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

Pre-contract: non-standard searches

A

If the title is unregistered
- search of Index Map (reveals if the title to a property already fully or partially registered)

If buyer obtaining mortgage
- bankruptcy search against a full name of the buyer

If coal mining locality
- coal mining search

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

Pre-contract: additional investigation

A

Survey of the property
Physical inspection

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

Pre-contract: commercial property information form

A

Commercial property standard enquiries instead of property information form

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

Town and Country Planning: planning permission

A

Consent to carry out development (addition or change of use: restaurant into art gallery for example)

Minor internal works do not require planning permission (example, larger access between the living and dining rooms)

Listed building - consent is needed for both internal and external works (any works)

Can be deemed or expressed
Expressed - formal written application
Deemed - permitted development (small home extensions) which local authorities may decide to disapply permitted development (will be revealed on buyer’s local search)

Outlined permission (development is broadly ok but some issues still need to be resolved)
Detailed planning permission

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

When development must commence after permission is issued

A

Within 3 years (or permission lapses)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

If unauthorised building work took place, how many years authorities have to take enforcement actions and how it can be remedied in conveyancing process

A

4 years from breach against the current owner (the problem runs with the property)

Indemnity doesn’t work, the seller has to obtain a retrospective solution

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

If material change of use was made how many years authorities have to take action

A

10 years from first breach

30
Q

Building Regulations

A

Health and safety standards for construction

Work must comply with building regulations (to be checked in local search)

31
Q

If works without building regulation consent how much to authorities have to take enforcement actions

A

1 year from date of work

If more that 1 year passed the authorities can take injunction (time is unlimited)

32
Q

Use classes

A

Has to be complied, planning permission required to change

33
Q

Covenant not to develop

A

If there is covenant on a title not to develop planning permission doesn’t supersede the covenant

34
Q

Mortgages

A

Repayment: monthly payment of capital and interest

Interest only: only the interest is repaid monthly, capital becomes due at the end of the terms

Endowment: mortgage combined with life insurance

Pension: mortgage linked to a personal pension

Sharia compliant (complies with Islamic law)

35
Q

Occupier in mortgage: what has to be signed to secure that occupier has no rights over the property

A

Occupier’s consent form

36
Q

Registration of mortgage: where and when?

A

Charges Register, after completion:

Registered land: within the 30 days priority period

Unregistered land: 2 months of completion

Company: also at company’s house within 21 day from completion. If you miss this deadline you have to obtain the court order.

It is called perfecting the mortgage

37
Q

Sources of funding

A

Cash
Mortgage
Related sale
Gifted deposit

38
Q

Exchange of contracts: pre-exchange tasks

A

Seller’s solicitor:
- obtain redemption figure for existing mortgage
- agree form of contract

Buyer’s solicitor
- report to buyer (on findings)
- confirm buyer wishes to proceed
- confirm buyer’s financing

39
Q

Methods of exchange of contracts

A

Person: personal meeting

Post: each solicitor posting their client signed contract to each other

Phone: by phone

40
Q

Formulata for exchange of contracts by phone:

A

A: One solicitor (usually the seller’s) holds both signed parts of the contract, dates the contract and sell one fully signed contract to another solicitor.

B: each solicitor holds own client’s signed part of the contract, during phone call each solicitor, checks, dates and send his client signed version to another solicitor.

C: chain of transactions

After - written memorandum of exchange (back up for the telephone conversation)

41
Q

Protection the Contract by Registration

A

Registered:

Estate contract - notice on charges register

Unregistered:

C(IV) land charge -registered against the seller’s full name

42
Q

After exchange - changing the contract

A

Exchange new contracts

43
Q

Pre-completion: seller‘s solicitor

A
  • Apply to receive redemption figure to the completion date
  • Prepare completion statement (sales price minus outgoing - net sale proceeds)
  • Complete completion information and undertakings form (undertaking to pay mortgage, where are the key, other)
44
Q

Pre-completion: Buyer‘s solicitor

A
  • Check CI and U form for appropriate undertaking
  • submit the certificate of title to the lender
  • pre-completion searches
  • prepare a purchase deed (in most cases a transfer)
  • prepare a completion statement for the buyer (all the fees, taxes, etc)
45
Q

Pre-completion searches

A

Registered title

Official search with priority (OS1 form or OS2 for acquiring part of the title):
- search updates register of title
- 30 working day priority period to complete and register

Unregistered title

Land charges search against the name of the seller
- 15 working day priority period to complete
- 2 months from completion for first registration

46
Q

Completion

A

Completion must take place by 2 pm
If the completion date is not inserted completion shall take place in 20 working days after exchange of contracts.

Residential: moving date
Commercial: collect the key and take up occupation

47
Q

Methods of completion

A

Personal attendance
Agent
Post (seller’s solicitor acts as agent and posts deeds and documents to the buyer’s solicitor) - the most common method

48
Q

Completion by post

A

90 % of purchase price shall be ready to be paid on the date of completion

The seller’s solicitor dates transfer document, sends it to the buyer’s solicitor by first class post or document exchange no later than the day after completion, pays the loan (if any) to redeem a charge and releases a key

The seller’s solicitor must confirm completion as soon as possible by phone, fax, or e-mail and by written confirmation sent by first class post or document exchange no later than the end of the working day following completion.

49
Q

When title passes

A

Unregistered land

On completion

Registered land

On registration

50
Q

Leasehold completion (service charge)

A

Long lease

Overpayment of service charge shall be paid by a buyer (apportionment)

51
Q

Post Completion: Seller’s solicitor

A

Report completion to the Seller
Pay off seller’s morgage
Pay the estate agent fee and legal fees

52
Q

Post Completion: Buyer’s solicitor

A

Report completion to the buyer
Send a bill for legal fees
Company charge 21 days (if the buyer is a company and it took mortgage
Stamp duty tax form submitted and SDT paid 14 days from the date of completion

53
Q

Stamp Duty Tax

A

Form shall be submitted notwithstanding if the payment shall be made within 14 days from completion

Residential freehold
Threshold 125,000

New lease
STD is assessed on the premium and on the net present value (total rent to be paid over the life of lease)

Threshold
125,00 on each (premium and net present value)

Nonresidential threshold

150,000

54
Q

SDLT (stamp duty land tax)

A

SDLT return form and payment within 14 calendar days of completion.

A return must be filed even if no SDLT is due.

Paid on a purchase price (VAT inclusive figure where relevant).

SDLT can be paid on any consideration given (for example, responsibility of a mortgage in return for the house transfer - value of the mortgage, worked performed)

55
Q

Transactions exempt from SDLT

A

Property transferred as a gift

Property transferred to a spouse or former spouse upon divorce

Property transferred under a variation of will within two years of the decendent’s death

56
Q

Additional residential property - SDLT!

A

Additional 3 % to each band if the consideration is not less than 40,000 pounds.

57
Q

SDLT on leases

A

Lease premium - taxed the same way as commercial or residential sale

Net present value tax - rates are lower

58
Q

SDLT reliefs

A
  1. First time buyer of residential property:
    0% rate on first 300,000 pounds and

5% on any excess up to 500,000 pounds and

Normal rates if cost greater that 500,000 pounds

  1. Multiple Dwellings Relief

SDLT calculated on average price paid

SDLT then multiplied by number of properties purchased

10 flats for 1 mln overall, average price 100 000 meaning 0 % tax rate but since it is more than one flat, 3 % applies, i.e 3% - 3000 pounds per flat

59
Q

Delayed completion

A

Under Standard Conditions of Sale:

Time is not of an essence

Remedies
- interest at the contract rate
(Completion is deemed to be made on the next working day if the completion made later agreed time even on the same date)

60
Q

Notice to complete

A

If innocent party wants to withdraw,
Notice to Complete has to be service:
- makes time of the essence
- requires a defaulting party to complete within 10 working days of service of notice (innocent party has to be willing, ready and able to complete)

If completed, the innocent party can claim the interest. If not, the innocent party may rescind the contract.

Defaulting party buyer: the seller can also keep deposit, resell and claim losses

Defaulting party seller: the buyer may claim the deposit back with interest and claim damages

61
Q

Specific performance

A

Equitable remedy
Granted at a court’s discretion if damages are not sufficient (if the property is unique)

62
Q

Claims after completion (or before)

A

Misrepresentation - rescission and damages (the seller didn’t disclose the behaviour of the neighbours)

Misdescription - rescission and damages

63
Q

Claims after completion

A

Breach of title guarantee - rescission and damages (rare claim)

64
Q

Secure of tenure in leasehold for commercial tenants

A

Protection for tenants to remain in premises at end of tenancy (Landlord and Tenant Act 1954) for long term leases:

Tenancy will automatically continue unless brought to an end
- forfeuture
- surrender
- landlord serves section 25 notice
- tenant serves section 26 notice (to request a new lease)

65
Q

Exclusions from 1954 act

A

Fixed term tenancies which do not exceed 6 months
Service tenancies
Tenancies contracted out of the act (parties agreed to exclude the tenure provisions under the following requirements:

  • landlord serves health warning notice (14 days before the tenant commits to lease, has to include reminder to seek for a professional advice)
  • tenant signs a declaration in front of the solicitor confirming that the notice have been received and that tenant agrees
  • lease contains a reference to above notice and agreement of tenant
66
Q

Section 25 notice

A

Between 6 and 12 months before the landlord wishes to bring a tenancy to an end

Must specify statutory grounds to regain possession (demolishing, reconstruction, wish to occupy himself, persistent delays of rent payments)

67
Q

Section 26 Notice

A

Between 6 and 12 months before a tenant wishes a new tenancy to start

Landlord has 2 month to decide (if oppose - statutory grounds to oppose)

Tenant is entitled to compensation

The court can set new terms of lease (rare case) if the parties do not agree

68
Q

License to assign

A

Documents that needs to be obtained from the landlord when it’s consent is required for assignment

69
Q

Who prepares the contract package

A

Seller’s solicitor

70
Q

Solicitor must ensure that the borrower shall pay (advised to pay) the loan (credit card). It was not paid, has solicitor breached any duties?

A

YES!

71
Q

No title guarantee

A

Seller has no knowledge of a property at all (mortgagee in possession)

FLK2 (7 decks)

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