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Property > Steps in progressing a freehold and/or leasehold property transaction to exchange of contracts > Flashcards

Steps in progressing a freehold and/or leasehold property transaction to exchange of contracts Flashcards

1
Q

Key conditions in the standard conditions of sale (SCS):

A

*The SCS are a set of standard conditions to be incorporated into a contract for sale
OR a contract for the grant of a lease.
*The SCS are used in contracts relating to residential property
AND small commercial property transactions.
*The Law Society Conveyancing Protocol requires the seller to prepare a draft contract incorporating the latest edition of the SCS standard form of contract.

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2
Q

Amendments CAN be necessary to the SCS to reflect:

A

Current law
OR
Specific instructions from the client.
*Other amendments to the SCS that should be considered are:
Specified encumbrances – necessary to specify ALL restrictive covenants, easements,
AND other burdens on the property as the SCS states
the seller sells free from ALL encumbrances OTHER than those specifically listed in the SCS.
Title guarantee – the SCS provides, seller will sell full title guarantee UNLESS amended.
Full title guarantee implies a covenant that the seller is disposing of the land free from encumbrances (other than those it DOESN’T know OR couldn’t have reasonably known about).
Limited title guarantee, seller HASN’T encumbered the land AND ISN’T aware that anyone else has since the last disposition for value.
Seller should specify IF they are selling with full OR limited title guarantee.
Deposit amount AND method of holding a deposit – the SCS, 10% deposit payable on exchange of contracts AND seller’s solicitor SHOULD hold this as ‘stakeholder’.
If this amount AND/OR capacity is to be varied, the relevant SCS MUST be amended.

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3
Q

Key conditions in the Standard Commercial Property Conditions (SCPC):

A

*The SCPC are standard conditions MORE suitable for complex commercial property transactions where occupational leases are involved.
*The SCPC are based on the 3rd Edition of the SCS BUT were designed to reflect standard practice in commercial property transactions.

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4
Q

The SCPC is MORE suitable where:

A

Provisions regarding commercial leases involved such as, outstanding rent reviews.
OR
Options to deal with various tax positions.

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5
Q

Seller AND buyer to the contract CAN agree in the contract to accept the SCS in whole OR in part AND?

A

can agree to vary ANY of the SCS.

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6
Q

The SCPC been drafted to be a fair balance between?

A

a seller AND a buyer.

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7
Q

SCS 1:

A

General

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8
Q

SCS 1.1:

A

Definitions

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9
Q

SCS 1.2:

A

Joint parties

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10
Q

SCS 1.3:

A

Notices and documents

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11
Q

SCS 1.4:

A

VAT

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12
Q

SCS 1.5:

A

Assignment and sub-sales

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13
Q

SCS 1.6:

A

Third party rights

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14
Q

SCS 2:

A

Formation

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15
Q

SCS 2.1:

A

Date

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16
Q

SCS 2.2:

A

Deposit

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17
Q

SCS 2.3:

A

Auctions

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18
Q

SCS 3:

A

Matters affecting the property

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19
Q

SCS 3.1:

A

Freedom of encumbrances

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20
Q

SCS 3.2:

A

Physical state

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21
Q

SCS 3.3:

A

Leases affecting the property

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22
Q

SCS 4:

A

Title and transfer

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23
Q

SCS 4:

A

Title and transfer

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24
Q

SCS 4.1:

A

Proof of title

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25
SCS 4.2:
Requisitions
26
SCS 4.3:
Timetable
27
SCS 4.4:
Defining the property
28
SCS 4.5:
Rents and rent charges
29
SCS 4.6:
Transfer
30
SCS 4.7:
Membership of company
31
SCS 5:
Risk, insurance, and occupation pending completion
32
SCS 5.1:
Risk and insurance pending completion
33
SCS 5.2:
Occupation by the buyer pending completion
34
SCS 6:
Completion
35
SCS 6.1:
Date
36
SCS 6.2:
Arrangements and place
37
SCS 6.3:
Apportionments
38
SCS 6.4:
Amount payable
39
SCS 6.5:
Title deeds
40
SCS 6.6:
Rent receipts
41
SCS 6.7:
Means of payment
42
SCS 6.8:
Notice of complete
43
SCS 7:
Remedies
44
SCS 7.1:
Errors and omissions
45
SCS 7.2:
Late completion
46
SCS 7.3:
After completion
47
SCS 7.4:
Buyer's failure to comply with notice to complete.
48
SCS 7.5:
Seller's failure to comply with notice to complete
49
SCS 8:
Leasehold property
50
SCS 8.1:
Existing leases
51
SCS 8.2:
New leases
52
SCS 8.3:
Consent
53
SCPC 1:
General
54
SCPC 1.2:
Joint parties
55
SCPC 1.1:
Definitions
56
SCPC 1.3:
Notices and documents
57
SCPC 1.4:
Assignment and sub-sales
58
SCPC 1.5:
Third party rights
59
SCPC 2:
VAT standard rate supply
60
SCPC 2.1:
Standard rate supply
61
SCPC 2.2:
VAT to be paid
62
SCPC 3:
Formation
63
SCPC 3.1:
Date
64
SCPC 3.2:
Deposit
65
SCPC 3.3:
Auctions
66
SCPC 4:
Matters affecting the property
67
SCPC 4.1:
Freedom of encumbrances
68
SCPC 4.2:
Physical state
69
SCPC 5:
Leases affecting the property
70
SCPC 5.1:
General
71
SCPC 5.2:
Property management
72
SCPC 5.3:
Continuing liability
73
SCPC 6:
Rent reviews, and pending lease renewals
74
SCPC 6.1.2:
Rent review (who has conduct of the process}
75
SCPC 6.1.3:
Reviewed rent payable for a period after completion only
76
SCPC 6.1.4 and 6.1.5:
Reviewed rent payable for a period beginning before completion
77
SCPC 6.1.6 – 6.1.8:
Costs of rent review process
78
SCPC 6.2.3, 6.2.4, and 6.2.5:
Conducting negotiations and proceedings
79
SCPC 7:
Title and transfer
80
SCPC 7.1:
Proof of title
81
SCPC 7.2:
Requisitions
82
SCPC 7.3:
Timetable
83
SCPC 7.4:
Defining the property
84
SCPC 7.5:
Rents and rent charges
85
SCPC 7.6:
Transfer
86
SCPC 8:
Risk and insurance
87
SCPC 8.2.1:
Seller's responsibility
88
SCPC 8.1:
Buyer's responsibility
89
SCPC 8.2.5:
Leasehold property insured by a reversioner or other third party
90
SCPC 8.2.7:
Contractual purchaser's loss of rent
91
SCPC 9:
Completion
92
SCPC 9.1:
Date
93
SCPC 9.2:
Arrangements and place
94
SCPC 9.3:
Apportionments
95
SCPC 9.4:
Amount payable
96
SCPC 9.5:
Title deeds
97
SCPC 9.6:
Rent receipts
98
SCPC 9.7:
Means of payment
99
SCPC 9.8:
Notice of complete
100
SCPC 10:
Remedies
101
SCPC 10.1:
Errors and omissions
102
SCPC 10.2:
Recession
103
SCPC 10.3:
Late completion
104
SCPC 10.4:
After completion
105
SCPC 10.5:
Buyer's failure to comply with notice to complete
106
SCPC 10.6:
Seller's failure to comply with notice to complete
107
SCPC 11:
Leasehold property
108
SCPC 11.1:
Existing leases
109
SCPC 11.2:
New leases
110
SCPC 11.3:
Consent
111
SCPC 12:
Contents
112
SCPC 12.1:
Operates to incorporate
113
SCPC 12.2, 12.3, AND 12.4:
Into the contract when content (chattels) are included in the sale
114
Part 2 conditions only apply if?
incorporated by special condition
115
SCPC A:
Certain conditions on VAT
116
SCPC B:
capital allowances
117
SCPC C:
reversionary interests in flats
118
Special conditions are added to the standard contract for either:
*Accommodate the particular circumstances of a transaction OR *To vary the standard contract positions of the SCS OR SCPC
119
Special condition conflicts with a standard condition - which prevails?
special condition
120
Special conditions are often included with:
*Disclosing a defect in the title. *Listing of all encumbrances that affect the property. *Seller transferring title with limited OR no title guarantee (as opposed to full title guarantee). *Payment of a deposit that is less or more than the stipulated 10%. *Deposit being held as agent rather than stakeholder. *Payment of VAT if the sale of the property attracts VAT. *Removal of fixtures and fittings by the seller that would OTHERWISE automatically pass with the land. *The express inclusion of an indemnity covenant to be given by the buyer.
121
Methods of holding a deposit:
*10% deposit UNLESS otherwise agreed of the purchase price is payable by the buyer on exchange of contracts to the seller. *The SCS and SCPC requires that the deposit is paid by electronic means such as, BACS OR CHAPS from a solicitor’s account to the seller’s solicitor’s bank account. *Held by the seller’s solicitor EITHER as stakeholder OR agent for the seller. *Buyer fails to complete the transaction, the seller can forfeit AND keep the deposit. *Deposit is held by a solicitor as stakeholder OR agent, interest is payable under the SRA account rules.
122
Stakeholder (most common capacity):
*Deposit held by the seller’s solicitor as a stakeholder, means that the seller CAN’T pay over the deposit together with accrued interest UNTIL completion. *The SCS allows the seller to use the deposit as a deposit on a related purchase of a house for the residence of the seller provided it is held on the same terms (as stakeholders). *Interest on deposit WILL be payable to the seller on completion.
123
Agent:
*Deposit held by the seller’s solicitor as an agent, means the deposit can be released to the seller on exchange of contracts (before completion) AND used by the seller for any purpose. *Special condition WILL be required to state that the seller’s solicitor is to hold the deposit as agent. *Should the transaction fail to complete, there is a risk that the seller CAN fail to return the deposit.
124
Insurance and risk:
*Risk of damage AND destruction to the property passes to the buyer on exchange (under the SCS AND SCPC). *Buyer SHOULD insure the property from exchange of contracts. *Seller under no obligation to insure the property from exchange UNLESS required by its mortgage lender, lease, OR a special condition in the contract of sale. *Dual insurance in place over the property, by the buyer AND seller, contract SHOULD be drafted to protect the buyer AGAINST the possibility of the buyer’s insurer reducing the pay-out because the seller has also insured the property. Purchase price would be reduced by equivalent sum (in this situation).
125
Basics of VAT in a contract:
*Residential property transaction Sale OR lease of a dwelling by a private individual), DOESN’T involve payment of VAT since they aren’t made in the course of a business. *New build property, sale OR lease of a new home is zero-rated AND no VAT payable. *Sale of a new commercial property standard rate for VAT. *Sale of an old commercial building More than 3 years old, is exempt for VAT BUT subject to option of tax. *Purpose of the option to tax is to allow the person to convert an exempt supply into a taxable one, allowing him to recover any input tax incurred. *VAT chargeable on property acquisition, contractual provisions MUST be included to state whether the buyer WILL have to pay VAT in addition to purchase price.
126
Timing for issuing a certificate of title:
*Certificate of Title, given to lender (signed and dated by the buyer’s solicitor) immediately BEFORE completion of the purchase AND the drawdown of the loan monies. *Confirm to the lender that the property is proper security for the loan AND has good and marketable title.
127
The practice, method, and authority to exchange:
*Solicitor should obtain their client’s express written authority BEFORE exchanging contracts, as they will no longer be able to withdraw from the contract. *Contract must be signed by either: Both parties sign one contract OR each sign identical copies. *Exchange using Formula A, B, OR C (either by telephone, post/DC OR in person).
128
Formula A:
One solicitor holds both contracts: Solicitor holding both signed parts of the contract undertake they will, that same day, send their client’s signed part of the contract to the other side by 1st class post, DX or by hand, duly dated.
129
Formula B:
Each solicitor holds their client’s contract: Each solicitor will, that same day, send the signed part of the contract that they are holding to the other side by 1st class post, DX or by hand, duly dated.
130
Formula C:
For a chain of transactions in residential properties, each solicitor holds their client’s contract AND exchange is by telephone to synchronise the exchanges.
131
Following exchange, an attendance note SHOULD be made noting the following:
Date, time, AND parties involved in the exchange of contracts. *Formula used (and any variations) AND the undertakings given have been complied with AND discharged. *Record that the deposit has been paid as per the Solicitor Accounts Rules.
132
Consequences of exchange:
*Neither party CAN withdraw with incurring breach of contract. *Property is now at the buyer’s risk AND should be insured from this moment. *Solicitor should notify client, estate agent, lender, AND insurer exchange has taken place.
133
Register the contract if:
Long interval between exchange AND completion Dispute arises between the buyer AND seller. Doubts as to seller’s good faith. Completion is delayed BEYOND the agreed date.
134
Register as follows - Unregistered land:
class C4 land charge (an estate contract)
135
Register as follows - Registered land:
notice on the register as a minor interest in land.

Property (9 decks)

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