Property Practice - Stage 1: Preliminary Matters

Question 1

Capital Gains Tax

Answer 1

Only gain is taxed not the total amount of money received from disposing of assets

If tax is payable: residential property return must be submitted to HMRC and any tax due must be paid within 60 days of completion

Principle Private Residence Relief Exemption: no CGT is payable if it is the seller’s only or main residents, not greater than 0.5 hectare and no part of their home has been used exclusively for business purposes

Question 2

Professional Conduct Issues

Answer 2

Undertakings

Professionally binding promise given by solicitor

E.g. undertaking not to dispose of title deeds until mortgage paid off on completion, undertaking to send over both client’s parts of contract, undertaking to redeem mortgage with sale proceeds on completion

Client Confidentiality

Duty to keep affairs of client confidential

In residential transcations often the buyer’s solicitor will also act for the lender. The buyer’s solicitor must report any issue which might affect the value of the property or the lender’s decision to lend. Buyer client’s consent required before disclosing anything to the lender.

Conflicts of Interest

Solicitor cannot act for client if solicitor’s interests conflicts with client’s

Significant risk of conflict is enough

E.g. solicitor attempting to represent clients on opposite sides of a transaction, solicitor acting for more than one seller or buyer (such as a married couple) needs to be instructed by both sellers or both buyers

If a solicitor is acting for more than one seller or buyer they must ensure that they are instructed by each of the clients

Question 3

Giving Co-Ownership Advice

Answer 3

Buyer’s solicitor must ensure that clients are given appropriate co-ownership advice

Clients should have a declaration of trust document prepared to reflect the details of their co-ownership arrangement

Question 4

Law Society Conveyancing Protocol

Answer 4

Standardised forms and best practices for residential conveyancing

Can be used to freehold and leasehold transactions but only applies to residential transactions

Not designed for the purchase of new build homes or commercial property