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FLK2 > Property Practice > Flashcards

Property Practice Flashcards

1
Q

First stage in property sale?

A

Buyer’s solicitor will advise the buyer to have a surveyor carry out a physical inspection of the property. This is to determine if there any structural defects which may effect the value of the property

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2
Q

Professional conduct issues relative to conveyancing?

A

Undertaking’s
Confidentiality
Conflicts of interest
Giving co-ownership advise

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3
Q

What is the first step in a conveyancing transaction?

A

The property owner instructs an estate agent to market the property, advertise, and show it.

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4
Q

What document does an estate agent send after an offer is accepted?

A

A memorandum of sale, detailing the property, the agreed price, and the solicitors involved.

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5
Q

What is an Energy Performance Certificate (EPC)?

A

A certificate showing a property’s energy efficiency rating from A to G. Must be valid for 10 years.

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6
Q

When is an EPC not required?

A

For listed buildings or if a valid certificate exists (less than 10 years old).

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7
Q

What is the purpose of the Code for Leasing Business Premises?

A

To set best practices for landlords when negotiating lease terms with tenants.

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8
Q

What must a landlord be satisfied about in an assignment of a lease?

A

That the incoming tenant has good financial standing and can afford the rent.

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9
Q

What is a License to Assign?

A

A document that sets the landlord’s conditions for a tenant assigning their lease

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10
Q

What is the seller’s solicitor’s role in the pre-contract stage?

A

Investigate the seller’s title, remedy defects, and prepare the contract package.

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11
Q

What must the seller disclose in the contract for sale?

A

Latent defects and encumbrances but not patent ones.

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12
Q

Latent Defects vs Patent defects

A

Latent defects: Things are things that are not apparent if someone was to inspect the property (i.e. pipelines and cables)

Patent Defects: Things that can be found upon inspecting the property (i.e. rights of way)

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13
Q

What is the doctrine of “caveat emptor”?

A

“Buyer beware,” meaning the buyer is responsible for inspecting the property for physical defects.

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14
Q

What is wilful deceit?

A

If a seller attempts to cover up a patent defect, although they have no duty to disclose, the seller can still be sued in tort by the buyer

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15
Q

What does the Property Information Form (PIF) include?

A

Information about property boundaries, disputes, alterations, and utilities.

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16
Q

What happens if a seller breaches their duty of disclosure?
.

A

The buyer may withdraw from the contract and claim damages.

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17
Q

What is the purpose of an indemnity insurance policy in conveyancing?

A

To cover future losses from defects in the property title.

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18
Q

Contract Pack for sale of freehold?

A

Following must be included:

Contract in duplicate
Property Information form & Fittings and Contents form
A copy of the title
Any guarantees or copy planning permissions

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19
Q

Contract Pack for sale of leasehold?

A

Following must be included:

Draft contract and lease
Seller’s freehold title
Property information form
Replied to standard pre-contract enquiries
Building warranty (if building is under 10 years old)
Details of any management company (if applicable)

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20
Q

How is the deposit held?

A

Upon exchange, the buyer’s deposit is held by the seller’s solicitor as stakeholder

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21
Q

What are the main purposes of pre-contract searches?

A

To gather practical and legal information about the property, allowing the buyer to make an informed decision.

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22
Q

What happens if pre-contract searches reveal significant issues?

A

The buyer may withdraw without penalty since the transaction is not legally binding before exchange.

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23
Q

What is the purpose of the local land charges search?

A

To identify burdens on the property such as financial charges, planning restrictions, or Tree Preservation Orders (TPOs).

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24
Q

What is revealed by the listed building charges section of the local search?

A

Whether the property is a listed building, which imposes restrictions on alterations.

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25
Q

What key issues are covered in standard local authority enquiries?

A

Road adoption, public rights of way, planning permissions, and conservation area status.

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26
Q

Why is knowing about public rights of way important?

A

They allow public access, which cannot be refused by the property owner.

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27
Q

What does a drainage and water search determine?

A

If the property is connected to public water and foul drainage systems, and proximity to public sewers.

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28
Q

Why are environmental searches important?

A

Landowners are liable for clean-up costs of contaminated land, even if they didn’t cause the contamination.

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29
Q

What is a search of the index map used for?

A

To determine if unregistered property is fully or partially registered.

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30
Q

What does a bankruptcy search reveal?

A

Pending or actual bankruptcy orders against the buyer, which could affect their ability to secure a mortgage.

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31
Q

Why might a coal mining search be conducted?

A

To check for nearby mining activities that could impact property stability.

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32
Q

What is the process of raising enquiries?

A

Asking questions about issues or defects found in the title, PIF, or search results.

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33
Q

When should a solicitor proceed to exchange contracts?

A

Only after all enquiries are satisfactorily resolved.

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34
Q

What are the CPSE used for?

A

To gather detailed information about commercial properties in freehold or leasehold transactions

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35
Q

What types of issues do the CPSE address?

A

Boundaries, utilities, environmental concerns, planning, and fire safety.

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36
Q

What are the two methods planning permission can be given?

A

Deemed: Works that does not require express permission i.e. building porches, conservatories. fences

Express: Where an application is made to local authority for permission to be granted. Used when deemed permission is not available.

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37
Q

what are the two types of expressed permission?

A

Outline: gives broad permission as to the principle of development subject to reserved matters which must be approved.

Detailed: More costly and complex application. If allowed, detailed permission will allow development to commence. likely that conditions will need to be met before or during the development.

38
Q

How is the mortgage funds released?

A

The buyer’s solicitor must release the certificate of title to the lender, confirming that the property has good and marketable title

39
Q

Methods of Exchange:

A

In person: Solicitors meet in person to exchange contracts, matter becomes binding when the agree to meet face to face.

By post: Each solicitor posts their clients signed part of the contracts. Exchanged takes place when the contracts are posted.

By phone: Solicitors have phone call with each other, go through the contract and insert the completion date and the date of conversation exchanges takes place at that point.

40
Q

Three forms of formulae exchange?

A

Formula A: One solicitor holds both signed contracts. Upon exchange they will insert the completion date and send their clients signed contract to the other side.

Formula B: Each solicitor hold their client’s signed contracts, they will confirm the version are the same, and then send their client’s signed contracts to the other side.

Formula C: Commonly used when there is a chain, happens with two stages and two phone calls. Frist call confirms the solicitor are ready to exchange the second call confirms the exchange has happened.

41
Q

What is the pre-completion stage in conveyancing?

A

It is the stage after contracts are exchanged, during which the transaction becomes legally binding, and the parties prepare for the agreed completion date.

42
Q

What is simultaneous exchange and completion?

A

It is when exchange and completion happen on the same day, presenting a risk since there is no binding contract until the day of completion.

43
Q

What is a completion statement?

A

A document prepared by the seller’s solicitor showing the net sale proceeds after deducting the mortgage redemption amount and estate agent fees.

44
Q

What are Completion Information and Undertakings?

A

A standard form detailing the account for purchase money transfer, confirming completion amounts, and including an undertaking to pay off the seller’s mortgage(s).

45
Q

What is a TR1 form, and who signs it?

A

A purchase deed transferring property ownership. The seller must execute it as a deed before completion.

46
Q

What tasks does the buyer’s solicitor complete during pre-completion?

A

Pre-completion searches, checking Completion Information and Undertakings, preparing a completion statement, and ensuring mortgage funds are available.

47
Q

What is the purpose of an official search with priority?

A

To check for new adverse entries on the property register and secure a 30-working-day priority period for the buyer.

48
Q

How does the buyer’s solicitor handle pre-completion searches for unregistered land?

A

They perform a full land charges search against the seller’s name for their period of ownership, conferring a 15-working-day priority period

49
Q

What is the registration gap in property transactions?
.

A

The period between completion and the legal registration of the transaction, during which the buyer only has equitable interest

50
Q

What are the common forms used in official searches with priority?

A

OS1 for the whole title and OS2 for part of a registered title, such as new builds.

51
Q

What happens if a pre-completion search reveals a new adverse entry?

A

The buyer’s solicitor requires the seller’s solicitor to resolve it before completion, typically through removal or an undertaking.

52
Q

What is a TR1 form used for?
.

A

To transfer ownership of the whole of a registered title.

53
Q

What is a TP1 form used for?

A

To transfer part of the land in a registered title

54
Q

What is an assent?

A

A deed used by personal representatives to transfer property to a beneficiary.

55
Q

What is an engrossment in leasehold transactions?

A

The final version of the lease signed by both landlord and tenant before completion.

56
Q

What is a licence to assign?

A

A formal document showing the landlord’s consent for a lease assignment.

57
Q

How is service charge apportionment handled in leasehold transactions?

A

Through estimates, with potential retention of funds to cover shortfalls revealed after final accounts.

58
Q

What should be included in the buyer’s completion statement?

A

The purchase price, stamp duty, HMLR fees, legal fees, and indemnity insurance premiums

59
Q

What is the importance of cleared funds for completion?

A

The buyer’s solicitor must have cleared funds in their account by the completion date to comply with SRA Accounts Rules.

60
Q

Methods of completion

A

Personal attendance: Buyer’s solicitor’s attend seller’s solicitor’s office in person. Method of payment is usually banker’s draft. Buyer’s solicitors also take physical possession of the deeds.

By Agent: buyer’s solicitor appoints a local firm to attend completion at the seller’s solicitor’s office.

By Post: usual method of completion, seller’s solicitors acts for the buyer’s agent upon completion and posts all relevant deeds and documents to the buyer after completion has taken place.

61
Q

When does title pass?

A

Registered: Passes upon registration

Unregistered: Passes upon completion

62
Q

What must seller’s solicitor do after completion?

A

Report to client
discharge mortgage (if any)
Pay estate agent (if any)
File closure

63
Q

What must buyer’s solicitor do after completion?

A

Report to client
registration of company charge (if any, must be done 21 days)
payment of any stamp duty tax
Registration at HMLR (registered with priority 30 days for registered land and 2 months with unregistered land)

64
Q

When must a stamp duty tax return be completed by?

A

within 14 calendar days from completion, this must be done regardless if there is any stamp duty tax owed.

65
Q

What transactions are exempt?

A

Property transferred as a gift
property transferred to a spouse
property transferred to a former spouse after divorce

66
Q

Thresholds and rates of SDLT?

A

Residential:

0% up to £250,000
5% from £250,001 to £925,000
10% from £925,001 to £1.5mil
12% over £1.5mil

Non- Residential:

0% up to £150,000
2% £150,001 to £250,000
5% over £250,000

67
Q

Additional charge of SDLT

A

If a buyer already owns a property and purchases another property there will be additional 3% charge of SDLT on top of the normal rates

68
Q

Relief of SDLT

A

First time buyers
Linked transactions

69
Q

First time buyers thresholds and rates

A

0% up to £425,000
5% from £425,001 to £625,000
no relief above £625,000

70
Q

What is delayed completion in property transactions?

A

Delayed completion occurs when the completion of a property transaction does not happen on the specified date, whether freehold or leasehold.

71
Q

What are the two key situations in delayed completion?

A

(1) Completion is delayed beyond the contractual date.
(2) Completion does not take place at all.

72
Q

What is “time of the essence” in property contracts?

A

It means the completion date is firm and cannot be moved. Time is not of the essence unless explicitly stated in the contract.

73
Q

What is the consequence of a delay in completion even if time is not of the essence?

A

The delay constitutes a breach of contract, entitling the innocent party to damages.

74
Q

When can interest for delay be claimed?

A

Interest is calculated on the unpaid purchase price from the contractual completion date to the actual completion date.

75
Q

What is a “notice to complete”?

A

A formal notice served to make time of the essence, requiring the defaulting party to complete within 10 working days.

76
Q

What happens if the buyer fails to comply with a notice to complete?

A

The seller may rescind the contract, retain the deposit, resell the property, and claim damages.

77
Q

What happens if the seller fails to comply with a notice to complete?

A

The buyer may rescind the contract, reclaim the deposit with interest, and claim damages.

78
Q

What remedies are available before completion for breach of contract?

A

(1) Specific performance.
(2) Claim for damages.
(3) Rescission.

79
Q

What are the types of misrepresentation?

A

Fraudulent, negligent, and innocent misrepresentation.

80
Q

What remedies are available for misrepresentation?

A

For Fraudulent and negligent : Damages and rescission of the contract.

For innocent: recission or damages in lieu of recission, cannot claim both

81
Q

What does “rescission” mean in the context of contract breach?

A

It either restores the parties as if the contract never existed or accepts the repudiation of the contract.

82
Q

What are the remedies for breach of title guarantee after completion?

A

The primary remedy is damages.

83
Q

What does security of tenure for commercial tenants mean?

A

It is the right of a business tenant to remain in the premises at the end of their tenancy, protected by statutory provisions like the Landlord and Tenant Act 1954.

84
Q

Which Act provides security of tenure for commercial tenants?

A

The Landlord and Tenant Act 1954 (Part II).

85
Q

How can a tenancy protected by the Landlord and Tenant Act 1954 be terminated?

A

(1) Forfeiture by the landlord.
(2) Surrender by mutual agreement.
(3) Serving a Section 25 notice (landlord).
(4) Serving a Section 26 notice (tenant).

86
Q

What are some exclusions from the 1954 Act?

A

Fixed-term tenancies not exceeding six months, service tenancies, and contracted out tenancies.

87
Q

What is required to create a contracted out tenancy?

A

(1) Landlord’s health warning.
(2) Tenant’s declaration.
(3) Reference in the lease to the agreement.

88
Q

What is a Section 25 notice?

A

A notice served by the landlord to end a tenancy or propose a new lease, requiring six to 12 months’ notice.

89
Q

What is a Section 26 notice?

A

A notice served by the tenant requesting a new lease, also requiring six to 12 months’ notice.

90
Q

What are the statutory grounds for opposing a new lease under a Section 25 or Section 26 notice?

A

(1) Tenant’s breach of repairing obligations.
(2) Persistent delay in paying rent.
(3) Substantial breaches of obligations.
(4) Availability of suitable alternative accommodation.
(5) Premises required for reconstruction or landlord’s occupation.

91
Q

What compensation is a tenant entitled to for no-fault termination of tenancy?

A

Compensation is based on the ratable value of the premises, with a higher amount for tenants occupying the property for at least 14 years.

92
Q

What is the maximum lease term a court can order under a new lease?

A

15 years

FLK2 (7 decks)

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