property practice (week 1-5) Flashcards
what does caveat emptor mean?
buyer beware
means that a buyer needs to take the property as they find it. they cannot return the property if it turns out to be unsuitable in some way
when should a buyer instruct a surveyor to do a physical survey on the property?
buyer should ALWAYS be advised to instruct a surveyor to undertake a physical survey of the property to identify if there are any physical defects with the property
when is a homebuyer report survey necessary?
it is more detailed and will be suitable for most properties in reasonable condition aged less than 150 years
when is a full structural survey suitable?
suitable for any property but should be considered where property is listed, has had extensive renovations or where extensive alterations are planned
why do most residential properties not have to pay capital gains tax?
because there is an exemption called private residence relief
what is a syndicate?
in commercial property it is a type of funding option - where money is raised from a group of lenders to raise the money and limit their risk exposure
what is a capital repayment mortgage?
borrower repays capital sum by monthly payments, together with an interest amount added each month. at end of the term (eg, 25 years) loan has been paid off in full
what is an interest only mortgage?
it is where borrower only pays interest on loan - therefore, pay less but have not paid for any capital on the property
what is an endowment mortgage?
generally not available in the UK anymore - interest only mortgages topped up with payment that is invested in an endowment policy. idea is that the policy repays capital at end of the term
what are the exceptions to the rule that you cannot act if there is a conflict of interest?
1) substantially common interest
2) competing for the same objective
all clients need to give informed consent in writing
where appropriate put in place effective safeguards to protect confidential info
you need to be satisfied it is reasonable for you to act for the clients
should a seller disclose a right of way that is not apparent from title or an inspection of the property?
yes, seller must disclose the right of way because it is a latent defect (which are not discoverable through reasonable inspection by the buyer) therefore, must be disclosed by the seller.
how can a solicitor mitigate the risk of own conflict of interest when: need to recommend construction company and their brother has construction company and believes would be suitable for the job?
solicitor should disclose the relationship to the client and recommend other construction companies as well, allowing the client to make an informed decision
what does deducing title mean?
process of proving ownership to a would-be buyer (proof of ownership)
what are the 3 sections of the official copies?
1) property register
2) proprietorship register
3) charges register
what does the property register show?
describes the property and any rights benefiting the property
- freehold or leasehold
- title plan
- rights that benefit property
what does the proprietorship register show?
gives the registered proprietor’s name and address, the class of title and entries affecting ownership
what does the charges register show?
lists the rights burdening the property (eg, mortgage, covenants, easements and leases)
does the seller’s solicitor deduce or investigate title?
they deduce title - proving ownership
does the buyer’s solicitor deduce or investigate title?
they investigate title
if the property has the benefit of a right of way - what 4 issues must be considered?
1) registration of the burden
2) adequacy
3) maintenance
4) adoption
what is class of title?
it states how satisfied the land registry are with the registered proprietor’s proof of ownership to the property
what is title absolute?
indicates there are no issues - land registry are satisfied that proprietor is the true and proper owner
what is qualified title?
where there is a specific defect in the title
what is possessory title?
when registered proprietor has shown they have psyical possession of the property, but no title deeds or is claiming through adverse possession (eg, squatters rights)
what is good leasehold title?
for leasehold only - when leaseholder cannot provide evidence of the landlord’s title of the land
what should the buyer’s solicitor do if the property has qualified title/ possessory title/ good leasehold title?
- should report it to their client and explain what it means
- check mortgage lenders’ requirements
- advice they obtain indemnity insurance to cover risks
- consider possibility of upgrading title eg, finding missing doc
when would a seller’s name not appear as the registered proprietor?
if they are the executor of a deceased person’s estate
who can be a registered proprietor?
- individual
- company
- LLP
- co-owners
how can legal and beneficial ownership be held by co-owners?
legal title: joint tenants
beneficial title: joint tenants or tenants in common
what does the buyer’s solicitor need if dealing with a surviving beneficial joint tenant?
need a death certificate
what does the buyer’s solicitor need if dealing with a surviving tenant in common?
death certificate and a second trustee
what is overreaching?
process of transferring the beneficial interests in land to the money that the buyer has paid. means land is freed from beneficial interest and buyer doesnt need to worry
if there is a mortgage - what registers will it appear in?
mortgages are entered in the charges register
lender will also usually require restriction in proprietorship register
what is an indemnity covenant?
a covenant given by a buyer to seller to observe the positive covenant
what are the different options for dealing with a covenant?
- indemnity insurance
- get permission from person who has the benefit
- application to upper tribunal (land chambers): expensive and time consuming
what is the most suitable advice if there is a restrictive covenant to not put the property into commercial premises - and your client wants to buy the property to turn it into a shop?
obtain indemnity insurance to cover the risk of breaching the covenant - especially when there is arise of breaching it and no objections have been received so far
if you contacted for permission with benefit then this could affect ability to obtain insurance later
A buyer is considering purchasing a property and reviews the proprietorship register, where they find a restriction stating that no disposition by a sole proprietor of the registered estate is to be registered except under an order of the registrar or of the court.
What is the primary effect of this restriction on the buyer’s ability to purchase the property?
buyer will need to ensure that at least 2 trustees are involved in the sale to overreach beneficial interests. because the restriction indicates that sole proprietor cannot effectively transfer property without complying with terms of restriction, typically involving appointment of 2nd trustee to overreach beneficial interests, ensuring buyer contains clean title
who is responsible for registering title of an unregistered land when buying it?
buyer’s solicitor is responsible for registering the buyer’s title after completion
although, if transaction has taken place after relevant date for compulsory registration then should insist seller’s solicitor to register at their expense
what is the root of title?
it is the deed that is being relied upon as proving the title
what are the 4 requirements of good root of title?
1) must be dated more than 15 years ago
2) deals with both legal and beneficial title to the property
3) adequately describes extent of the land being conveyed
4) doesnt cast doubt on seller’s title
what is vacating receipt (for a mortgage)?
it is the wording written on the mortgage deed, or attached to it, confirming that the mortgage has been repaid, and signed on behalf of the lender
when do restrictive covenants bind unregistered land?
only bind unregistered land if the burden is registered as a d(ii) land charge
when do positive covenants bind unregistered land?
only bind unregistered land if there is a chain of indemnity covenants. buyer’s solicitor must check each deed in the chain
what does a class C (iv) land charge show?
represents an estate contract (agreements for the sale or disposition of an interest in land)
what does class C(i) show on unregistered land?
land charge is a mortgage
what is a report on title?
report which solicitor reports to its client on its investigation of title, search results and replies to enquiries
prepared before exchange of contracts
what are the standard searches?
- local search: enquiries to local authorities (CON29) and search of local land charges (LLC1)
- drainage and water search
- desktop environmental search
- chancel repair liability
what are the 3 parts that make up a local search?
- standard enquiries of the local authorities (Form CON29)
- optional enquiries (Form CON29O)
- local land charges search (LLC1)
what do replies to the standard enquiries of local authority (CON29) show?
planning permission, refusals and completion notices
building regulations
roads and public rights of way
environmental notices
what do replies to local land charges search (LLC1) show?
planning permissions that have been granted
planning enforcement or stop notices
article 4 directions (GPDO)
tree preservation orders
smoke control orders
financial charges such as road making charges
conservation areas
listed building status
what does a desktop environmental search show?
if there is historical use of contain mated land uses and illegal dumping of waste.
also shows likelihood of flooding, suspecitibility to natural subsidence an instrustrial land use within 250 meters of the property
what are the other environmental searches and what do they show?
environmental phase 1 survey: site inspection
environmental phase 2 survey: take samples to see if contaminated or not
flood search: when property has flooded before goes into more detail
what does the index map search (SIM) show?
the extent of registered titles and unregistered land within the area searched
what are the 3 situations when you do not need planning permission?
1) building work only affects interior of the building
2) building work doesn’t materially affect external appearance
3) building work is in the same use class
what does GPDO 2015 allow (town and country planning (general permitted development) order)?
it allows certain developments without planning permission - operating like a general planning permission
what is an article 4 direction GDPO 2015?
GDPO 2015 can be excluded or amended in a locality by an article 4 direction (in which case proposed develpment will need planning permission)
what is a certificate of lawfulness GPDO 2015?
if unsure if development falls under GDPO 2015 then can apply for a certificate of lawfulness
what is the process for consent and approval under building regulations?
first obtain building regulation consent
building control inspector may inspect work and if aligns with relevant regulations then inspector issues certificate of compliance
if there is a breach of planning permission - who is enforcement against?
enforcement is against the current owner not the person who caused the breach
what is an enforcement notice and what is the time frame?
enforcement notice is what local authority give (28 days) that land must be restored to condition it was before unauthorised development or make it comply with planning permission
what happens if a person doesnt comply with enforcement notice within 28 days?
land owner may be fined, and the local authority can enter land to carry out the work, recovering its expenses from land owner
when can local authority serve a stop notice?
only after serving an enforcement notice - requires specified activity stops immediate
cannot prohibit use as a dwelling house or any activity that has been carried out for more than 4 years
what are the enforcement time limits for work completed before 25th April 2024?
4 years: building works starting with date on which building works were substantially completed. change of use to single dwelling house starts from date use was begun
10 years: other changes of use and breach of planning permission
what are building regulation enforcement time limit for prosecution and enforcement notices? (England)
for prosecution there is no time limit
for enforcement notice it is 10 years
what are the building regulation enforcement time limit for prosecution and enforcement notice? (Wales)
for prosecution there is a limit of 2 years
for enforcement notice it is 1 year
what is a CPSE1 search? (commercial property standard enquiries)
applies to all commercial properties
what is a CPSE2 search? (commercial property standard enquiries)
applies when property is subject to commercial tenancies
what are the remedies available for incorrect replies to pre-contract enquiries (Misrepresentation)?
rescission or damages
damages only available where there is a material difference between represented and the actual description to value of the property
what is a certificate of title?
certifies that the title of the property is satisfactory for lending purposes
under standard conditions of sale (SCS) RESIDENTIAL - who has burden to disclose incumbrances?
seller needs to disclose any incumbrances registered at land registry, land charge registry (unregistered land) and companies house
under standard commerial property conditions (SCPC) - who has burden to disclose incumbrances?
it is for the buyer to carry out all relevant searches and enquiries to see if property is subject to any incumbrances
what is full title guarantee??
default for SCS and SCPC.
property is free of incumbrances other than those disclosed in contract and those which seller didn’t and couldn’t reasonably have known about
what is limited title guarantee?
given by seller with little knowledge (eg, executor of deceased estate).
means property has no incumbrances created over the property during the seller’s period of ownership
what is no title guarantee?
seller doesnt guarantee seller’s right to sell the property, nor that the property is free of incumbrances
are remedies available for any issues that arise over title issue after completion?
no remedy against seller if title issues arise after completion
if parties do not fix a completion date - what is the default completion date under SCS and SCPC?
20 working days after the date of the contract
what is the consequence of holding deposit as agent for the seller?
means seller may demand the deposit immediately after exchange
what are the exceptions that under SCPC the default position is that property is taxed VAT at standard rated supply?
if property is over 3 years old and seller has not made an option to tax then there is no VAT to pay
once contracts are exchange who bears the risk?
risk passes to buyer therefore, buyer’s solicitor should advice buyer to be ready to insure property from date of exchange
what is the VAT for a commercial property over 3 years old?
they are exempt from VAT unless owner has exercised option to tax (then it is standard rated)
what undertakings does Formula B impose on solicitors?
-buyer’s signed part belongs to seller and vice versa
- to post signed contract to other solicitor that day by 1st class post or DX
- buyer’s solicitor send deposit in form of payment specified in contract
what happens if a solicitor breaches the law society conveyancing protocol?
breaching the Protocol can lead to the Law Society requiring an explanation, monitoring the solicitor, and potentially removing them from the Conveyancing Quality Scheme.
who drafts the transfer deed?
buyer’s solicitor
so seller’s solicitor drafts the contract and then buyer’s solicitor drafts the transfer deed
what are the 3 different transfer forms and when are they used?
TR1: transfer whole of freehold or leasehold title
TP1: transfer of part only of a registered title
TR5: for transfer of portfolio of registered titled (can include unregistered titles too)
if a defaulting party has been served a notice to complete - how long do they need to complete by?
need to complete within 10 working days (excluding the date on which notice is given)
once notice to complete has been served - how can it be withdrawn?
cannot be withdrawn unless both parties agree
(if either party fails to complete within 10 working days then remedies available depend on whether the non-defaulting party is the seller or the buyer)
what remedies are available for the seller if the buyer has failed to complete the property transaction?
seller may rescind the contract and, on doing so, may also:
forfeit the deposit and any interest accrued on it
resell the property and any contents included in it
claim contractual damages
what remedies are available for the buyer if the seller has failed to complete the property transaction?
buyer may rescind the contract and, on doing so, may also:
demand return of the deposit with any interest accrued on it
claim contractual damages or even specific performance (equitable remedy forcing seller to complete the sale)
[damages only applies if there is a delay in completion]
what is the time frame that SDLT needs to be submitted and paid by?
within 14 days of completion to avoid penalties
what is the time frame that LLT return must be submitted and paid by? (Wales)
within 30 days of completion to avoid penalties
what is the time frame that a charge must be registered at companies house? (for a charge against a company)
within a 21 day period, starting the day after the creation of the charge.
if not done then charge is void against any liquidator or administrator and the lender is not protected
what is the consequence if a charge is not registered at companies house within the 21 day period?
if not done then the charge is void against any liquidator or administrator and the lender is not protected
when must the land registry application be made within (what is the time frame)?
application must be made within 30 working days of the OS1 search to protect priority
what is the time period that an unregistered application (for unregistered land) must be made by?
must be made within 2 months or the transaction is void
what is the first time buyer relief for SDLT?
first home and no more than £625,000. [if more than one buyer then all need to be first time buyers]
no SDLT needs to be paid on first £425,000 and then 5% for any bit that is over this
what conditions need to be met for private residence relief to apply for CGT?
- has been the person’s main home for all the time they have lived in it
- they have not let it out (other than taking lodger)
- has not ben used for business purpose (using room as temporary office is ok)
- ground including all building are less than 5,000sqm
- was not bought just to make a gain
what are the different methods of terminating a lease? [5 ways]
- effluxion of time [lease ends at end of contractual period]
- break clause
- surrender
- notice to quit
- merger
when can CRAR be used (commercial rent arrears recovery)?
premises are purely commercial
minimum of 7 days principal rent is owed
lease has not been forfeited
what is the process for CRAR?
appoint enforcement agent
give 7 days notice
if nothing happens (no repayment of debt within 7 days)
then can take goods
then serve a further 7 clear days notice if intend to sell
sell goods
what are the 3 scenarios that arise where the right to forfeit arises?
- fail to pay rent
- breach obligations under lease
- insolvency event
What is a self-help remedy of a Jervis v Harris clause?
gives landlord the right to enter the property, carry out any repairs, recover the cost of doing so from the tenant
no need to serve s146 notice
what must happen if fail to register a charge at companies house within the 21 day period?
apply to the court for an order to extend the registration period; if granted the charge will be valid against the administrator and other creditors. if court grants this order, the charge can be registered out of time and will be valid against the administrator and other creditors
