SPA PROPERTY Flashcards
SPA B
Interview/Attendance Note
Heading:
Client
Matter
File Ref
Date
Attending
Time spent
Request information
Contact email
Contact phone
Sle price
Fixtures and fittings
Deposit
Buyer
Buyer solicitor
Estate agent
Mortgage
Leasehold
No related purchase
Exchange in 10 days
SDLT/CGT to pay
Renovation costs
What happens conveyancing process
Attendance note
-Exchange 10 days very unlikely; buyer purchase may be dependant on successful sale of property = chain transactions
-Buyer probably require full survey to be carried out, perform usual searches
-Local authority search take 4 to 6 weeks to be returned
-Info from management company, consent landlord to sale
-Progress matter as quickly as possible
-Inform buyer solicitors and estate agent that Amanda seek quick exchange
Service charge
-Management company propose renovate communal gardens
-1.5k to renovation
-To request
1. Last 3 year service charge accounts
2. Details of sinking fund
3. Details of insurance policy
4. Details of upcoming expenditure
Buyer not keen to pay 1.5k contribution to renovation works
Could jeoparadise sale
Reduce purchaes price to offset if necessary
Taxation
No CGT payable as only property own and live in property
Buyer not responsible for paying SDLT upon completion of sale, not seller, so not something worry about
Next steps
-Amanda complete PIF, LIF, FCF
-Receipt of service charge, insurance, ground rent, management company details and EPC
-Write to Barclays Bank, buyer’s solicitors, estate agents
-Apply to land registry for register title and plan
-Prepare draft contract and send other related documentation
-Write to management company req service charge info
-Check terms of lease if any issues and landlord consent to assisgnment req, make necessary app
-Take over file as holiday - appropriate contact details
SPA E
Writing
Clients: Mr and Mrs James
Matter: purchase of their new freehold property
1.
Mr and Mrs James are very keen to keep costs low and have raised the possibility of our law firm representing both themselves and the Seller of the property. Please advise the clients as to whether this is a viable
option.
2.
Mr and Mrs James are quite confused in respect of the mortgage products on offer to them. Please briefly outline the difference between a repayment and interest only mortgage.
3.
Mr and Mrs James have recently got married and they are unsure as to their options with regard to how they should own the property.
Structure
Thank instructions
Set out queries
- Acting for you and the seller
unable to represent both you and the Seller
Solicitors are under a duty to avoid conflicts of interest between clients and also situations where there is a significant risk of such conflict arising.
At moment interests aligned with seller
During course of transaction may vary
e.g. you will be keen to purchase the property for the best possible price and the Seller will wish to sell the property for as high a price as possible
- Differences in types of mortgage
Solicitors generic commentary
Cannot advise suitability of products
Further clarification from mortgage broker
Repayment - repaying capital and interest on loan in monthly repayments throughout the term
of the mortgage, meaning that the mortgage will be fully repaid at the end of that term.
Interest Only Mortgage - repay the interest element of the loan in your monthly repayments throughout the term of the mortgage and the capital sum will become payable at the end of the term. You would, therefore, need to have some means of repaying the capital sum at that time and may wish to take further
financial advice in this regard.
- Joint Tenants
If you decide to hold the property (i.e., how you will be recorded as owning the property at Her Majesty’s Land Registry (HMLR)) as Joint Tenants, this means you will both be regarded as owning the whole of the property absolutely. Neither of you
will have an identifiable share of the property.
As a Joint Tenant you cannot leave your “share” in the property in your will. If one of you dies, the property automatically passes to the surviving co-owner without any further legal steps being necessary. The surviving co-owner then owns the entire property and upon their death, the property would form part of their estate. This is known as the “right of survivorship”.
Tenants in Common
If you decide to own the property as Tenants in Common, this means you will each own a separate share in the property. These shares may, but do not have to, be of equal size; for example, they can proportionately mirror your contributions to the
purchase price.
If you hold the property as Tenants in Common, your respective shares can be passed on to another person, either during your lifetime or under your will. Holding the property as Tenants in Common is often appropriate if either party has children
from previous relationships and they would prefer their children to inherit their interest on death rather than the other co- owners.
In the event you are unable to agree on how you wish to hold the property, this would represent a conflict of interest between you as my clients and, as a
consequence, I would be unable to act for you further in this matter.
SPA H
CMA
Prepare advice and analysis for me to use as the basis of a letter to the clients.
Clients: Ian and Julie Price
3 transactions - sale of 2 properties (1 by Ian, 1 by Julie), purchase of another property in joint names
Found buyer for Ian property
Not buyer for Julie property
Can purchase w/o sell Julie property
Apply mortgage
How protect respective interest
Negotiate reduction in purchase price
Ian and Julie both have children from their previous relationships
The mortgage they will be applying for will amount to 50% of the cost of the new property
The remaining 50% will be funded by 25% from the sale proceeds of Ian’s property and 25% from Julie’s savings
When Julie sells her house, the proceeds will be used to pay off the mortgage on their new property
They have been living in Ian’s house for some time.
They have agreed to pay £400,000 for the house they’re going to buy but the survey has revealed that it needs a n
windows. They have obtained a quotation for the cost of this work which amounted to £50,000.
Advice and analysis required
1. Ian and Julie would like advice about how their separate interests can be protected so that all their respective children will inherit their parent’s share in due course. As they will not be contributing equally to the purchase, and their contributions
change after Julie sells her house, they want to know how this can be recorded. Do any additional documents have to be prepared and signed? If so, at what stage of the process should the documents be completed? Would these documents
be recorded anywhere?
- Tax for sale and purchase. How reduce? Estimate?
- Negotiate reduction of purchaes price as property requires 50k works
- Joint Ownership
JT or TIC
JT then own whole property with no quantified share
Not able to leave share of property
TIC mean specified share
Leave share to respective children
Shares in property change when buy Left Bank Farm - contribute equal amount
50% joint mortgage
25% sale proceeds of Ian property
25% remaining from savings
Therefore both 50% interest
BUT when Julie sell property, use sale to pay off mortgage so 75% share property; Ian 25% share
Advise enter declaration of trust, set out circumstances of purchase, contributions, set out shares
Revised DOT when Julie sells
TR1 form then second option in panel 10 confirm hold TIC
Registrar enter Form A restriction: No disposition by a sole proprietor of the registered estate (Except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court
= if either dies then whole property not vest in survivor
Make new wills to future marriage in contemplation future marriage, leaving respective shares LBF to children
Make clear on first death, survivor allowed to live in LBF until death or decide voluntarily sell
Sale proceeds distributed to children
Express reference in wills to future marriage mean wills made after purchase but before union not automatically revoked by marriage
- Taxation
SDLT
Pay on purchase
See bands - 400k = 7.5k
OR 19.5k if Julie still owns Tiptree Cottage as additional 3% higher rate SDLT
CGT if dispose asset increased in value
Private Residence Relief exemption then no need pay if main residence during ownership, not absent, grounds not greater 0.5 hectare, no part used exclusively for business purposes
Julie sell then not benefit since not satisfy
Residential property return and submit within 60 days when complete sale
If both marry before Tiptree Cottage sold, Julie consider transfer Tiptree into joint names of herself and Ian
Both able deduct CGT tax-free allowance from share of taxable gain
- Negotiation of revised purchase price
If significant reduction then sellers unlikely agree
Two further quotations and advise ask builders consider whether whole roof replace or can repair
Further information, timescale, cost
Consider negotiate reduction replace/repair roof and windows
Discuss estate agent, consider max and min reductions, whether prepared no reduction
Initially ask max reduction; then consider meet half way
Survey affect amount lender prepared to lend? Lenders need to be kept informed of any negotiations and reduction
Can ask seller to complete required works before completion - special condition in contract to cover; property inspected and ensure completed satisfactorily
If works completed properly, lender surveyor confirmed, then clients to pay original agreed purchase price
SPA T
Drafting
Draft Contract for Sale of property
Clients: Neil and Samantha Brown
Matter: sale of 74 Hove Close Chichester West Sussex PO20 8SS
Date - leave blank
Seller - enter details, address from Entry 1 proprietorship register
Buyer - details
Property - freehold, found entry 1 property register
Title Number - absolute
Specified incumbrances: restrictive covenants in Entries 1 and 2 Charges register
Title Guarantee - full (if not full then include special condition in contract amend sc 4.6.2)
Completion date - leave blank - date inserted on day of exchange
Contract rate - law society’s interest rate from time to time in force
Purchase price
Deposit - 5% payable; override sc 2.2.1
Contents price
Balance
Special conditions
Delete para 3 if no contents
Delete para 4 if no lease/tenancies
Occupier consent
Sellers live on own so no amendment req
Restrictive covenant indemnity policy
Seller conveyance name - usually delete email
Buyer conveyance - again delete email
SPA V
Research
Client - Gareth Challenger, a director of Challenger Electrical Supplies Ltd
Company 15-year lease which was
granted to the Company on 20 October 2010 (“the Lease”).
intends to assign the remaining term of the Lease
Landlord noted conditional upon an authorised guarantee agreement being completed.
1.
Explain what an authorised guarantee agreement is and who should be a party to such an agreement.
2.
Explain what the client’s obligations will be and the duration of those obligations under an authorised guaran‐
tee agreement.
3.
Explain the process the landlord must follow if it seeks to recover rent arrears from the client by means of the authorised guarantee agreement after the lease has been assigned and such agreement has been completed.
Structure:
Client
Matter
Date
Advice
Summary:
-Act for
-Director confirm lease
-Now assign and landlord informed conditional AGA
I am asked to research and explain the following points
1
2
3
My research is set out below:
Issue 1 - what is an AGA and who will be the party or parties to it?
-Leases granted on or after 1 Jan 1996, on assignment, tenant released from obligations under LTCA s5
-If express condition then Assignor enter into AGA if requested LTCA s3
-AGA contract between landlord and assignor where assignor guarantee performance of obligations under lease by incoming tenant s16(2)9a)
-If fail, seek redress s16(5) LTCA
-In this lease, landlord reserved right to request an AGA from client assignor as condition of giving consent to future assignment of lease
-AGA must be completed, with ladnlord and assignor be party
Issue 2 - explain client obligations and duration
-LTCA s16(2) defines AGA and cover situations tenant guarantee performance
-s16(5) obligations
-Client contractually liable for AGA expressly states unless liability limited by statute
-Client guarantee performance of tenant’s covenants in lease by assignee e.g. client pay insurance and service charge arrears; enter new tenancy if new tenant bankrupt
-s16(4) duration and obligations; client not liable for additional liability and AGA void if so
-Client released from obligations under AGA at end of contractual term or tenant assign interest, whichever first
-Client released from obligations if variation of lease prejudice s18
Issue 3 - process to recover rent arrears
-s17 restrict liability of former tenants or guarantor
-If client required by landlord to pay outstanding rent arrears - fixed charge
-Landlord serve notice within 6 months sum becoming due
-Client liable to pay outstanding sum to landlord
-If landlord fail to comply then former tenant not bound by AGA or pay in relation to fixed charge
Notice must state
1. Charge now due
2. Specific sum landlord seek
Notice correctly served landlord cannot generally recover from former tenant that exceed amount claimed in notice
PFA
Interview/Attendance Note
Purchase of Bramble Cottage 260k
Contract not yet exchanged
Appointment discuss purchase
Copy fo reg and title plan AB654321
Part of garden not included in red edging title plan
Want advice
Estate agent Russell and Williams of Stevenage
Clients applying mortgage
Interview:
Structure
-Introduce
-Confirm client details
-Confirm why client appointment - purchase property
-Communicate will record minutes, not worry as fully listening and for documentation + research purposes
-15 minutes to take instructions, ask Q, final 10 analysis, advice
Questions
-Open
Tell me more about garden area
How old is fence
Check any issues missing
Any other facts clients wish to tell us
Attendance Note:
*
initial legal analysis,
*
advice to the client,
*
next steps,
*
and any professional conduct issues that arise.
If the triangular area was registered under a separate title number in the name of the seller,
we would need to see official copies of the register and title plan for that title.
If included then amend to include title number
Transfer to include both numbers
If reg under name of someone else, contact reg proprietor and ask whether sell
Sale before contracts exchange
Client can also contact reg proprietor and purchase reduced to take into account
Seller solicitor deduce unreg title
Contract amended to refer
Seperately conveyed or transferred to client on completion
Reg at land registry
If seller occupied and used land for 12 years if title un reg or 10 years if reg = acquired title by adverse possession
Ask seller to apply to reg triangular area
Search of index map at land registry
Explain client cannot proceed exchange contract until issue resolved
Additional PFA
Writing
Client: Ali Khan
Matter: Purchase of Hendall House
Mortgagee: Yorkshire Building Society
Investigation of title revealed issues
No right of way to use pipes and cables
No covenants re maintenance of Red Lane
Seller not know who own but lived there for 26 years
No repairs so poor state
*risks
*possible solutions
*next steps
Structure
Firm address
Our ref
Date
Client and address
Dear Mr Khan
Purhcase of Hendall House
I am writing following telephone conversation…
Register of title kept no formal rights
No maintenance, poor condition
Risks
-Owner of Red Lane prevent access, cut off water and electricity supply
-Undermine value, inconvenience, future saleability
-No arrangements for maintenance so no legal right to demand contribution
-Could withdraw as once exchange contracts legally committed
-Seller sue for damages for breach of contract
Solutions
1. Ask seller’s solicitors find out who owns Red Lane, negotiate, persuade seller pay costs; but timely and may not locate owner
- Legal rights for 20 years and no objection. Need evidence from seller and other people who used; seller’s solicitor to obtain but again timely
- Obtain insurance and ask seller’s solicitor to agree cost, make condition contract
Steps:
-Conduct land registry search
-Inform lender of issues
-Once preferred abroach, seller’s solicitor consider solutions
Understand frustation, let me know preferred approach, any Q
Your sincerely
