Property Practice

Question 1

what are the two main stages of conveyancing and what happens in each stage?

Answer 1

exchange of contracts - non compulsory but useful in that it fixes the completion date and gives the buyer time in between to make their final preparations (including fulfilling any conditions of sale) - usually pay a deposit which is held by seller’s sols until completion

The contract records the agreed terms and can be relied upon if anything goes wrong in the period between exchange of contracts and completion

completion - the bulk of the purchase money is paid to the seller and the transfer deed is completed to transfer the property to the buyer

Question 2

at what stage do the parties become bound to the freehold property transaction?

Answer 2

the parties are not bound by the transaction until the contracts are exchanged

Question 3

what impact does the ‘caveat emptor’ principle have on the stages of a freehold property transaction?

Answer 3

means buyer beware

the seller is not obliged to disclose information about the property, other than about limited matters of title, and would not be liable for any defects in the property which later come to light

the onus is on the buyer to conduct searches and make enquiries before exchanging contracts

the principle does not entitle the seller to give misleading answers to the buyer’s enquiries

Question 4

what happens in the pre-contract stage of the purchase of a freehold property transaction?

Answer 4

seller to buyer = pre-contract package of
documents includes a draft contract and evidence of the seller’s title to the property being sold

buyer’s sol must check the documents of title to ensure that:

1) the seller is entitled to sell the property +
2) there are no encumbrances, such as restrictive covenants, which would prevent the buyer from using the property as they intend

3) other enquiries re boundaries, disputes etc

seller not obliged to answer but most likely will to facilitate a sale - any incorrect statements - claim for misrep

Question 5

why is it important for the buyer’s sol to check the title docs at the pre-contract stage?

Answer 5

contracts will usually include a provision prohibiting the buyer from raising further queries on the title, known as ‘requisitions’, after exchange

Question 6

what happens in the pre-completion stage?

Answer 6

making sure all the correct docs (including transfer deed) and the completion monies will be available on completion

running necessary checks again to ensure no changes from pre-contracts stage

Question 7

what happens in the post-completion stage?

Answer 7

admin matters

seller’s sols must ensure any mortgage the seller had over the property is paid off and removed from title (usually give an undertaking to do this)

buyer’s sol = Stamp Duty Land Tax (England) or Land Transaction Tax (Wales) is
paid on the transfer

buyer’s sol = register buyer as new owner and register any mortgage

Question 8

what is the The Law Society Conveyancing Protocol

Answer 8

applies to res con only

standardises the res con process

standard docs

if want to be a member of The Law
Society’s Conveyancing Quality Scheme (‘CQS’) (needed to be on a panels of sols appointed by residential lenders) have to follow the protocol and its accompanying training

Question 9

can a sol act for both buyer and seller in the purchase of property?

Answer 9

sometimes buyer/seller think they can use the same sol to save money and time if for example the purchase price is agreed

however there is a significant risk a conflict could arise at a later point

Question 10

do the following present a conflict of interest in the purchase of property or do one of the exceptions apply?

• ‘substantially common interest’
• ‘competing for the same objective’
• acting for joint buyers
• acting for a borrower and lender in residential property
• lender and borrower in large commercial property transactions

Answer 10

• ‘substantially common interest’ exception = doesn’t apply to property purchase (buyer and seller = different interests)

‘competing for the same objective’ = could act for two buyers in purchasing the same property, but not buyer and seller

joint buyers = usually acceptable where both have given informed consent, safeguards are put in place to protect clients confidentiality and it is reasonable for you to act

borrower and lender = acting for both is possible unless there is a conflict or significant risk of one and an exception doesn’t apply i.e where it is not a standard mortgage or the mortgage is a standard mortgage but you do not use the approved certificate of title

large com prop transactions = usually have separate sols as there is likely to be negotiations as to price + it wont be on standard terms

it is common for the lender’s solicitor to ask the borrower’s solicitor to carry out the
title investigation and the searches and enquiries and to report the results to the lender and the borrower as this avoids duplication of costs and time - arguably common interest as well as both want borrower to obtain a good title and there not be anything affecting the property’s value

Question 11

what is a solicitor’s duty regarding contract races?

Answer 11

contract races = legitimate selling technique

but the buyers must be made aware they are engaged in a race

problems arise where sellers are not transparent about using such a technique

under para 1.4 of the code of conduct = duty not to mislead either by their own acts/omissions or being complicit in the actions/omissions of others

the solicitor should inform all buyers immediately of the seller’s intention to deal with more than one buyer

if the seller refuses to agree to such disclosure, the solicitor cannot disclose
the contract race to the prospective buyers because they have a duty of confidentiality to the seller client under paragraph 6.3.

Instead, the solicitor should immediately stop acting in the matter.

Question 12

would a conflict of interest arise if a sol were to act for joint borrowers?

Answer 12

joint borrowers is usually fine except in circumstances where the matrimonial home is co-owned and one decides to mortgage the home as security for a business loan

etridge guidelines

In the Etridge case, the House of Lords considered whether the wife should be advised by a different solicitor from the husband, but decided that the cost disadvantage outweighed the
benefit. Therefore one solicitor can advise both parties, provided that the Etridge guidelines are followed and the solicitor is satisfied that they can comply with paragraph 6.2 of The Code of Conduct.

the same principles will apply to
civil partners, cohabitees, parent and child and any other situation where property is being charged in return for a loan that is not being made to all of the property owners

Question 13

sometimes a solicitor may be asked to advised on the best form of finance, in what circumstances should they not provide this

Answer 13

If the solicitor does not have the requisite knowledge to provide generic advice, or the client requires advice on a specific mortgage product, the solicitor should refer them to a person authorised by the FCA to provide that advice.

Question 14

summarise the property taxation for buyers and sellers of residential and commercial property

Answer 14

residential buyers - may have to pay either SDLT or LTT

seller of residential property - may have to pay Capital Gains Tax but probably not if they have used the property as their main or only residence

buyer of com prop - SDLT/LTT but no concession for first-time buyers or differing rates of tax + may have to pay VAT

seller of com prop - com prop likely to be owned by company - companies pay corporation tax on their corporate income and profits

e.g. if the com prop is rented out, the company will pay corporation tax on the rent

a company will also pay corporation tax if the property is sold for more than it was bought for

Question 15

what is the SDLT basis charge for first-time residential buyers?

Answer 15

can claim relief from SDLT if they intend to occupy the property as their main residence and the purchase price is no more than £625,000.

They do not pay anything on purchases up to £425,000 and pay 5% on the portion from £425,001 to £625,000.

Question 16

what are the SDLT rates for second time buyers?

Answer 16

up to 250k = 0%
250.1k - 925k = 5%
925.1k - 1.5 mil = 10%
remaining = 15%

Question 17

what impact does a buyer having multiple residential properties or being a non-UK resident have on the SDLT they pay?

Answer 17

it will increase

Question 18

bob buys his second home for 500k, how much of the 500k will he be charged a 5% SDLT on.

Answer 18

anything above 250k

Question 19

what is the right of apportionment?

Answer 19

regarding sale of residential property

where you apportion some of the purchase price to valuable chattels you may want to keep when you buy a house e.g. curtains, free standing fridge etc

you dont have to pay SDLT on

Question 20

how is SDLT paid?

Answer 20

paid to HMRC

usually accompanied by a form called an
SDLT1 which provides the necessary details of the transaction

It must be paid within 14 days of
completion and if it is not paid, the transfer of the property to the buyer will not be registered by the Land Registry.

Failure to file and pay on time will also attract penalties and interest.

Question 21

how is LTT paid?

Answer 21

a land transaction return for LTT must be
submitted to the Welsh Revenue Authority within 30 days of completion

Question 22

what are the LTT rates for buyers of residential property?

Answer 22

up to 225k = 0
225.1 to 400 = 6
400.1 to 750 = 7.5
750.1 to 1.5m = 10
remainder = 12

Question 23

what are the LTT rates for buyers of comm prop?

Answer 23

up to 225k = 0
225k to 250k = 1
250.1 to 1m = 5
exceeds 1m = 6

Question 24

what are the tax implications of a residential property which is for sale, having a garden grater than 0.5 hectares?

Answer 24

charged capital gains tax on the excess land unless you can show to HMRC that land is necessary for the reasonable enjoyment of the home.

Question 25

can you claim private residence relief if you have more than one residential homes?

Answer 25

yes - you can elect to HMRC which residence obtains this relief

Question 26

who else does PRR benefit?

Answer 26

trustees where the property is occupied by a beneficiary as their principal residence

Question 27

how is VAT charged on the sale of residential and commercial property?

Answer 27

(i) Most real estate transactions are exempt from VAT.

(ii) VAT is not usually paid on residential transactions.

(iii) VAT is only compulsory on ‘new’ commercial properties.

(iv) VAT is not always charged on ‘old’ commercial properties.

(v) The seller has an option to tax the supply of ‘old’ commercial properties.

(vi) The seller needs to opt to tax only if it has paid VAT that it wants to recover.

(vii) If the seller opts to tax, the buyer will usually be able to recover the VAT paid.

(viii) If the buyer makes only exempt supplies, such as insurance or financial supplies, it may be unable to recover fully VAT it has to pay.

(ix) So, a buyer that makes exempt supplies will resist the seller’s option to tax, or seek a
compensatory reduction in the purchase price.

also if VAT is payable on the transaction e.g. new com prop, it will increase the purchase price of which SDLT/LTT must be paid

Question 28

what are the two main types of mortgages?

Answer 28

repayment mortgages (repayment of some of the lump sum + interest)

interest only mortgages

Question 29

who would be considered a VAT sensitive buyer and why might they be put off purchasing old commercial property where the seller chooses to add VAT?

Answer 29

banks building societies and insurance providers

they only provide non-vatable services

so if they try to buy a property in which the seller chooses to add the VAT, they will be paying 20% extra on the price, which they then wont be able to recover through their own services.

Question 30

why might a non-VAT-sensitive buyer purchase an old commercial property where the seller chooses to add VAT?

Answer 30

if they pay the VAT, they are paying 20% more but they can offset this through charging VAT for their own goods and services - makes no difference to them in real terms

Question 31

why might a seller choose to add VAT to the sale of an old commercial property?

Answer 31

if they have spent money on the property which they have been charged VAT on, e.g. they have brought builders in to renovate, they can only recover this if they end up charging VAT on the sale of the property.

Question 32

if a seller decides to add VAT to the purchase price of an old commercial property, what must they do?

Answer 32

inform HMRC

Question 33

a seller of an old commercial property is a bank, are they able to opt to charge VAT on the sale of the property?

Answer 33

If you only sell or supply exempt goods and services, then your business is exempt,
you cannot register for VAT and you cannot recover any input tax

building societies and insurance companies also apply to this

Question 34

what is deemed as old commercial property for the purposes of VAT on sale?

Answer 34

if the property was completed more than 3 years prior to the point of sale = old

Question 35

Planning permission is required for an activity that constitutes ‘development’ - Section 57(1) of the Town and Country Planning Act 1990 (‘TCPA 1990’).

define ‘ development ‘ and where in legislation is it found

Answer 35

‘Development’ is defined by s 55 of the TCPA 1990 as the carrying out of building, engineering, mining or other operations
in, on, over or under land, or the making of any material change in the use of any buildings or other land.

BEMOM acronym

two strands:

operational changes via building, engineering or mining

material changes to the use of the buildings or land

Question 36

what is excluded from the definition of development?

Answer 36

any works which only affect the interior of the building + do not materially affect the external appearance - don’t require PP

Changes of use to another use, or mix of uses, within the same use class will not require planning permission - s 55 (2) ‘use classes order’ contains the classes

Question 37

Changes to and from a ________ use will always require planning permission

Answer 37

there are a number of uses categorised in the use classes order as sui generis - one of a kind - could affect the locality e.g. entertainment establishments, drinking establishments and hot food takeaways

Question 38

as a general rule, once implemented, planning permission usually ___________________________ and any conditions attached to it will ____________________________

Answer 38

runs with the land forever

burden the land forever

Question 39

a PP will usually state it needs to be implemented within a certain time and if it is not, it will lapse.

what are the time frames for implementation in england and wales

Answer 39

england - 3 years

wales - 5 years

Question 40

do planning permissions impose a time in which the development needs to be completed?

Answer 40

not usually

but if the Local Planning Authority (‘LPA’) decides that completion will not take place within a reasonable time, it can serve a completion notice stating that the permission will cease to have effect if completion has not taken place by the
expiration period stated in the notice

completion notices = rare

Question 41

does planning permission give the developer the permission to use the land in some way and ignore any covenants affecting the land?

Answer 41

no - the grant of planning permission is effective for planning purposes only

may still need approval to use the land in some way and there still may be covenants on the land which cannot be breached

Question 42

it is not always necessary to apply expressly for planning permission as, in some cases, it is automatically granted - where are these rights located in legislation?

Answer 42

Town and Country Planning (General
Permitted Development) Order 2015 (‘GDPO 2015’) + Welsh version = same but 1995

Question 43

what are the most common categories of development which are granted automatic planning permission under the GPDO?

Answer 43

developments within the curtilage of a dwelling house (such as extensions below a certain size)

minor operations (such as painting the exterior of a building or installing a CCTV camera)

specified changes between use classes

changes from certain sui generis uses

Question 44

It is possible for the Secretary of State in charge of Town and Country Planning, or the LPA, to exclude the effect of the relevant GPDO providing for automatic planning permission rights, how would they do this?

Answer 44

by issuing an Article 4 Direction

a sol should check the latest version of the GPDO to see if there have been any article 4 directions made

Question 45

if there is doubt regarding whether a development would fall under a GPDO, what should be done?

Answer 45

apply for a Certificate of Lawfulness of Proposed Use or Development under s 192 of the TCPO 1990

Question 46

regarding automatic planning rights, if they do not fall under a _______ and a _______ has not be obtained, a developer should apply for express planning permission

Answer 46

General Permitted Development Order

Certificate of Lawfulness of Proposed Use or Development

Question 47

if the LPA thinks someone has developed property in contravention of planning control, what powers does the LPA have to get more info?

Answer 47

can exercise a right of entry to the property

or

serve a planning contravention notice, which requires the recipient to provide information about operations, use, or activities being carried out on the land and any matter relating to the conditions attached to a planning permission

Question 48

what enforcement options does the LPA have if someone is developing in contravention of planning control?

Answer 48

1. enforcement notice
2. stop notice
3. breach of condition notice
4. injunction

Question 49

what is an enforcement notice, what does it need to contain?

Answer 49

UK

The enforcement notice must be served on the owner, occupier and any other person
having an interest in the land, such as a mortgagee

becomes effective 28 days after service

the notice must:

allege the breach
steps to be taken to remedy
timescale for remedy

invitation to the recipient to regularise the breach by applying for a retrospective planning permission

It is possible for any person interested in the land to appeal an enforcement notice

WALES

there has been a breach of planning control and there is a reasonable prospect that
planning permission would be granted if an application was made

further enforcement action may be taken if an application for planning permission is not made within the period specified in the notice

Question 50

what is a stop notice, how does it work?

Answer 50

because the enforcement notice cannot take effect until 28 days after recipient has received it, and can be suspended if appealed, a stop notice works in the interim to stop all activities in relation to the land

cannot be served by itself, enforcement notice must be served first

Question 51

how can a LPA use an injunction?

Answer 51

actual or apprehended breach

discretionary so LPA will need to show it is expedient, necessary and the appropriate remedy

time limits in which LPA’s must take enforcement action if they think it is a breach:

UK - take action within 10 years of the breach

breaches involving operational development (such as building works)
OR
changing the use of a building to use as a single dwelling house that took place before 25 April 2024, the time limit is the one that applied before this date, which is within four years of the alleged breach

WALES:

breaches involving operational development (such as building works) or changing the use of a building to use as a single dwelling house = 4 years

all other breaches = 10 years

Question 51

what is a breach of condition notice?

Answer 51

v similar to an enforcement notice but can only be served a condition of planning is not being met

no right of appeal

Question 52

how is the time limit for enforcement by an LPA changed if the breach of the planning control has been concealed?

Answer 52

action can be taken after

apply to mags

planning enforcement order

Question 53

what is failure to comply with planning control notices punishable by?

Answer 53

fine

Question 54

who is held responsible for any breach in planning control?

Answer 54

the owner of the land - not necessarily the person who tried to obtain the PP

which is why it is so important for buyers sols to check the planning history of the land at the pre-contract stage

Question 55

what are building control regulations?

are they intrinsically linked with planning permission?

Answer 55

regulations related to the heath and safety of construction or alteration

both building control regulations and PP are usually considered together but it may be necessary to get building control consent even where the works themselves do not require planning permission

Question 56

what happens after you have made an application to the building control authority for building control consent

Answer 56

the work is inspected by a building control officer
inspection (s)
after final inspection - certificate of compliance issued by BCA

Question 57

what is the impact of self- certification
schemes regulated by trades and professions (eg plumbing and installation of windows)

Answer 57

dont need to make separate application to the building control authority regarding building control consent

self-certify the work

relevant body sends notification to the building control authority

Question 58

building control authorities can now prosecute for breaches of building control regs, in what time frame must the prosecution be brought?

Answer 58

wales = within 2 years of the offence

england = no time limit

(prior to 1 October 2023 the prosecution had to be brought within six months of the breach being discovered and within two years of completion of the work)

Question 59

BCA can also issue enforcement notices, what is the timeframe in which they must issue these?

what other enforcement options does a BCA have for a potential breach of the building control regs?

Answer 59

wales = within 1 year of completion of the work

england = within 10 years

injunctions if the work is unsafe - no time limit

Question 60

which parties would be concerned if a property had not obtained building control consent?

can any action be taken by these parties to ensure the building is brough up to standard?

Answer 60

buyer and lender

if consent has not been given - ask the seller to obtain a regularisation certificate from the BCA detailing what works would be required to bring the property up to standard

or get insurance - but wont cover personal injury or business interruption for a defective building

Question 61

what are listed buildings, and what do they include?

Answer 61

special architectural or historic interest - decided by the government

three grades

includes the building and any object or structure fixed to the building or within the curtilage of the building that forms part of the land and has done so since before 1 July 1948.

Question 62

what is the impact of a building being listed?

Answer 62

to demolish, alter or extend the building = listed building consent + PP

internal alterations = PP not required but may still need listed building consent

note there are a number of classes in the GPDO which do not apply to listed buildings - express PP from the local authority would be needed

Question 63

LPAs are under obligations to designate to conserve areas in what circumstances?

Answer 63

any parts of their own area that are of
special architectural or historic interest, the character and appearance of which it is desirable to preserve or enhance.

Question 64

what is the impact of an area being designated a conservation area?

Answer 64

wider protection than listed buildings

protects all features

more likely to need PP e.g. changing the externalities of a building in a conservation area, demolition in a conservation area + any works to a tree in a conservation area = have to notify 6 weeks before so they can consider

Question 65

a solicitor acting for the buyer of property will need to ask the following questions regarding planning law…

Answer 65

(a) Is there a planning permission for the construction of the building or was planning
permission not needed?

(b) Is the building currently being used for its authorised planning purpose?

(c) Are there any planning conditions which would prevent the buyer’s future use or any
proposed alterations?

(d) Are there any existing breaches of planning law for which action could be taken against the buyer after completion?

(e) Have any works been done which would have required building regulations consent?

(f) Is the building listed or in a conservation area?

Question 66

what should the buyer be provided with by the seller at the marketing stage of a property purchase?

Answer 66

Energy Performance Certificate (EPC)

EPCs= produced by an accredited energy assessor

the seller must make one available to the buyer, free of charge, at the earliest opportunity, preferably within 7 days of first marketing and in any event within 28 days.

Question 67

why would a lender care about there being proper investigation of title before the buyer purchases a property?

Answer 67

because if the borrower defaults on the mortgage, the lender wants to know they can sell the property for at least the value of the outstanding loan - if there has been an unsatisfactory investigation of title and there are some burdens on the land the lender wasnt originally told about, this will affect the market value of the property and thus the amount they can recoup

Question 68

when a seller’s sols produces a first draft of a sale contract, it should include what promise?

Answer 68

the seller promises to sell the property ‘free
from incumbrances’ unless it otherwise states

this is why it is also important for a seller’s sols to investigate the title - they need to be aware of any encumbrances on the land before drafting the first draft of the sale contract

Question 69

which two documents should the seller’s sol obtain when investigating the title of the seller’s land?

Answer 69

from the Land Reg :

title - ‘ official copies ‘
title plan

Question 70

what is meant by deduction of title?

when is this completed?

how should parties execute this?

Answer 70

is the expression used to describe the seller’s obligation to prove their ownership of the property to the buyer

before exchange of contracts - buyer usually prevented from raising objections to the title after the exchange of contracts

seller’s own expense to provide buyer with title and plan copies no more than 6 months old

the buyer’s sol will also need to investigate if there are any overriding interests

Question 71

what is the difference between the ‘edition date’ and the ‘search from date’ on official copies of the register of title

Answer 71

edition date - when the LR last updated the title

Question 72

the official copies of the registered title can be found in three places, what are they and how are they different?

Answer 72

(a) the Property register
- description of the land by postcode
- freehold / leasehold
- easements
- if anything you would usually expect to come with the land has been excluded (e.g. right to light)

(b) the Proprietorship register
- identifies current owners and their address
- class of title (3 classes - determined when first register freehold title)
- the state guarantees the title and offers compensation if there are defects with it
- may indicate price paid for the property by the current owners (but only if the land has been sold since 1 April 2000)
- will show if the owners gave an indemnity covenant when purchased the land - will show chain of indemnity covenants
- restrictions on the owners ability to sell (since 13 October 2003, the LR has provided only two types of entry for the protection
of third party interests – notices and restrictions)

(c) the Charges register
- identifies any incumbrances - a sol will be looking out for:
(i) covenant
(ii) easements
(iii) charges over the land, most commonly mortgages
(iv) leases granted over the whole or part of the property
(v) notices registered by third parties claiming an interest in the property
- some of the above will be a problem for the buyer, others won’t

Question 73

what are the three classes of title for registered freehold land?

what impact do the classes have on a buyer?

Answer 73

(i) Absolute title: the most common and best class, the registered proprietor has vested in them the legal estate subject only to the entries on the register, overriding interests and where the proprietor is a trustee, minor interests of which they have notice, such as the interests of the beneficiaries under the trust.

(ii) Possessory title: granted where the proprietor is in possession of the property but has lost the title deeds or is claiming through adverse possession, this means that the proprietor is also subject to all adverse interests existing at the date of first registration.

(iii) Qualified title: granted where there is a specific identified defect which the Registrar
feels cannot be overlooked or ‘cured’ by the grant of absolute title.

can upgrade from qualified to possessory

buyer concerned if not absolute title as may affect their ability to get a loan to purchase the property + may affect their ability to sell it in the future

Question 74

how would you go about investigating title to freehold unregistered land?

Answer 74

1. check if there is a pending application for first registration
2. a third party may have lodged a caution against first registration

(checks can be done by an Index Map search at the Land Registry, on Form SIM (Search of the Index Map) accompanied by a plan of the property

3. if no application for first registration then title is proved by deeds

(copies provided to buyer’s sols before exchange - originals exchanged on completion)

4. inspection of paper deeds
5. the seller’s solicitor must consider whether any transaction in the property’s history should have triggered first registration of title - if the title should’ve already been registered, the seller will be required to register it before any other transactions
6. find the doc = ‘root of title’ - begin title investigation from here (usually most recent doc that satisfies good root of title requirements)
7. where root of title found - older docs can be disregarded unless they refer to a third party right in an earlier conveyance
8. seller’s sol then creates epitome of title (schedule of all the documents from and including the root up until the present day)
   can proceed

Question 75

a third party may lodge a caution against first registration - what is meant by this?

Answer 75

warning any person attempting to deal with the land that they have an interest in the land, such as an easement

when the application for first registration is lodged, the LR will ‘warn off’ the cautioner, ie give them a limited period to establish their rights over the land and if they cannot do so, the registration will proceed and the cautioner will lose their rights

Question 76

how does the process of checking the title of unregistered freehold land change if there is a partial sale of the land?

Answer 76

1. still check if there is an application for first registration
2. check if a third party has lodged a caution
3. if none of the above, title is proven by deeds:

rather than copies and then exchange of originals, if it is a partial sale:

the seller keeps the originals and hands over certified copies on completion

completion = the buyer’s solicitor examines the original title deeds against the copies that they received prior to exchange of contracts to check they are the same; this process is referred to as ‘verification of title’

A memorandum of the sale of
part is marked on the original deed.

Question 77

what are the requirements of a good root of title?

Answer 77

• deal with or show who owns the entire interest (legal and equitable) that is being sold by the current owner
• contain a recognisable description of the relevant land
• do nothing to cast doubt on the seller’s title
• be at least 15 years old (creates ‘double guarantee’)

Question 78

once the root title has been discovered, all subsequent title deeds must be checked in a systematic manner, what will a sol look for?

Answer 78

• the chain of ownership

(should be unbroken chain from root title to current seller - if owner has died, property will best in their PRs and a grant of probate identifying the PRs must also be produced)

• description of the land
• stamp duties
• incumbrances (easements and covenants)
• execution (most need to be executed as a deed s 52 LPA and for a deed to be valid - s1 LP(MP)A)
• land charges searches (restrictive covenants will only bind unregistered land if they are registered at the central Land Charges Department in Plymouth)

note - in investigating unregistered title, a solicitor must ensure that valid searches
have been made against the names of all the estate owners revealed in the epitome of title and the attached documents, even if their period of ownership pre- dates the root of title - K15 form

Question 79

when two people co-own a property the legal interest can only be shared via joint tenancy. the equitable interest can be shared either in joint tenancy or tenancy in common.

what are the assumptions about how the equitable interest is held registered and unregistered land

what should a sol do where co-owned property, is only being sold by one owner?

Answer 79

where property is co-owned equitable interest presumed to be held:

registered land = as joint tenants unless there is a restriction on the proprietorship register

unregistered land = the conveyance will state whether the equitable interest is held as JTs or TICs
______________________________________________

if title investigation shows the property is jointly owned - must find out what happened to the other co-owner - may have died (need death certificate) + if alive = must be party to the contract

where there is only one surviving legal owner and the equitable interest was held by the coowners as tenants in common, another legal owner (often referred to as a ‘second trustee’) needs to be appointed to overreach the equitable interest of the deceased co- owner (by deed of appointment)

otherwise the equitable interest may have passed with the will / rules of intestacy = no need to appoint second trustee here

Question 80

a post 1925 restrictive covenant will only be binding against a buyer if what?

how can this be checked?

Answer 80

validly registered as a D(ii) Land Charge against the name of the original covenantor

checked on the Charges register

Question 81

which will bind the buyer?

restrictive covenant

positive covenant

Answer 81

rc = binds the buyer, as runs with the land

pc = need to ask whether the burden binds the seller because the burden doesn’t automatically run with the land

if the seller is the original covenantor or if the seller gave an an indemnity covenant to
their seller when they purchased the property, thus creating or continuing a chain of indemnity - this can be checked on the proprietorship register

Question 82

what is a chain of indemnity covenants?

Answer 82

This is where each successive buyer gives an indemnity to the previous owner to bear the cost of complying with the covenant. This contractual mechanism is a simple means of passing the burden of positive covenants to successors in title

Question 83

why would a buyer not usually be concerned if there is a mortgage over the property they are buying?

what duties does the buyer’s sol have regarding this?

Answer 83

because usually the seller will use the proceeds of sale to discharge the mortgage

The buyer’s solicitor should check that the
contract states that the seller is selling the property free of the mortgage and that the seller’s solicitor gives an undertaking to discharge the mortgage immediately on completion

Question 84

what impact does a notice being on the charges register of registered land have?

Answer 84

The entry of a notice does not guarantee that the interest it is valid or that it even exists.

The notice itself does not give the person who registers it any rights over the property as such.

It merely serves to ensure that the priority of the interest referred to in the notice is protected against any subsequent interests.

can usually just ask the seller to get the notice removed off the charges register

but if the notice is for a valid interest e.g. contract for a lease to a third party = more concern

Question 85

what options does a buyer’s solicitor have when there is an unwanted restrictive covenant on the land?

Answer 85

1. ask the seller if they know who has the benefit of the covenant and try to come to an agreement to get it released
2. obtain a restrictive covenant insurance policy for the proposed breach of covenant - not appropriate where person with the benefit of the covenant knows they have it and are likely to object to an alternative use of the land
3. apply to the Upper Tribunal (Lands Chamber) for modification or discharge of the covenant under s 84 Law of Property Act 1925 - argue the covenant is obsolete and the loss of it can be compensated in money

some of the above may be mutually exclusive - generally not able to obtain insurance where you have also approached the person to alert them to their right

If the covenant is old, the successor in title to the property with the benefit may not be aware of it, so an approach to them may not be in the client’s best interests

Question 86

summarise the approach to investigating title for both registered and unregistered land

Answer 86

registered land - seller supplies official copies and title plan + searches/enquiries re any charges which may not be on the registers

unregistered land - epitome of title which begins with a good root of title + Index Map search and central land charges searches

Question 87

list the conveyancing searches that are relevant to every property

Answer 87

6 in total

a) survey and personal inspection (by buyer’s sol):
- valuation (lender will always require one but wont tell the buyer much about the structural state of the property - if concerns re this = structural survey)
- structural survey
- ‘homebuyers valuation and survey’ (less detailed than structural survey but still contains advice on necessary repairs and
maintenance requirements)

b) the local search = local land charges search / standard enquiries of the local authority + optional searches
- The local land charges search, in form LLC1, provides details of any financial charges or restrictions on land that have been imposed by public authorities under statute, for example planning consents, tree preservation orders and conservation area designation orders.
- The standard enquiries, in form CON29, reveal lots of information such as planning
permissions, any restrictions on permitted development (such as an Article 4 Direction), whether the land has been designated as contaminated land + raise questions of liability for road repair
- optional enquiries = CON29O form and cover a range of diverse matters, including environmental and pollution notices and rights over common land
- note searches only in respect of the property, not the adjoining land so if the buyer wants a view over a field, the buyer’s sol should check for any proposed development

c) water and drainage search
- made to water company (not local authority)
- CON29DW (residential properties)
- CommercialDW (commercial
properties)
- if the property does drain into the public sewer = buyer will be liable for the costs of maintaining the drains and sewers and may be liable for the costs of bringing them up to adoption standard if the water authority decides to adopt them

d) pre-contract enquiries of the seller
- any disputes relating to the property
- any third parties occupying the property
- compliance with any covenants in the title
- boundary maintenance
- (for comm prop) the VAT status of the transaction

e) environmental searches
- costs of clean ups can be with the owner of the land not the polluter
- desktop searches = carried out by environmental search company
- consider insurance

f) flood search
- where the property is close to a river or the coast
- Government- backed reinsurance scheme known as ‘Flood Re’ (n/a for comm prop)

Question 88

list the searches and enquiries for particular properties and transactions

Answer 88

1. chancel repairs search
   - no liability will exist where the property is registered and the previous transfer for value occurred after 13 October 2013
   - insurance
2. mining searches
   (affected areas = Devon, Cornwall, Somerset, West Midlands, Cheshire)
3. canal and river trust search
   - liability for repairs to the maintenance of the waterways, banks and tow paths
   - also risk of flooding
4. commons search
   - properties on green- field sites or adjoining an open space such as a village green
   - optional enquiry 22 in the CON29O form in the local search
5. Railways
   - any obligations to maintain the boundary features separating the property from the railway line and whether there are any restrictions on carrying out building work next to the line
   - Network Rail wont answer these enquiries
   - the reply to enquiry 22 in the CON29 form in the local search will reveal if the property might be affected by a proposed rail scheme
6. Highways
   - enquiry 2 in CON29 form = some info
   - if not a public highway = no automatic right to use it and may also not be maintained at public’s expense
   - developments = can send plan to highways authority asking the boundaries of the publicly maintainable highways to be marked on
7. Unregistered Land
   - An Index Map Search (‘SIM’) and a Land Charges Department search against the seller and previous estate owners
8. Company search
   - if seller = company
   - confirms identity of current officers (check you’re dealing with the correct people)
   - any fixed or floating charges secured
   on the property that will need to be discharged on completion
   - check needs to be redone just before completion to check for insolvency issues
   - unregistered land = company searches should also be carried out against any corporate estate owners revealed in the epitome of title

Question 89

what impact do home rights have on a buyer when buying a property?

Question 90

what additional check should a solicitor who is acting for a lender do before purchasing a property?

Answer 90

Bankruptcy/ insolvency search against the buyer / borrower

where the buyer / borrower is an individual = K16 form to the Land Charges department in Plymouth

Question 91

what is a tree preservation order and which conveyancing searches would show a tree preservation order?

Answer 91

• will present as a local land charge in the LLC1 result
• criminal offence to lop or fell a tree subject to a TPO without the consent of the local planning authority
• pre- contract enquiries = buyer’s sols to obtain a copy of the TPO from the seller, establish the location of the protected
  tree(s) and check the TPO has been complied with

Question 92

what is a smoke control order and which conveyancing searches would show a smoke control order?

Answer 92

• regulation that limits the types of fuel that can be burned in certain areas of the UK to improve air quality
• will show as local land charge in the LLC1 result
• may be a problem where buyer has open fireplace which they intend to use

Question 93

in which conveyancing searches would it show if a property was within a conservation area?

Answer 93

LLC1 or CON29 result