TRANSFER OF OWNERSHIP OF REAL PROPERTY

Question 1

What does real property refer to?

Answer 1

• The land or building that sits on the land

Question 2

Explain what contract must have?

Answer 2

• Must be legal
• Parties must have capacity to enter into the contract
• Must be signed by both parties
• Must be written
• Must name the parties to agreement w the property involved & price paid
• Must be an offer made & unconditional acceptance

Question 3

What is the process of typical sale of real property?

Answer 3

1. Buyer offers a price & negotiation starts
2. Once offer accepted searches carried out by buyers solicitor to verify; if vendor has title good to property, any planning issues or any covenants or restrictions
3. A survey may be carried out
4. Once agreed, vendor & buyer agree to exchange contracts, up to this point the sale is subject to contract & either party can withdraw
5. On signing contracts, deposit paid by buyer and agreement is now binding from time of exchange
6. Transfer of ownership is complete once balance of purchase is paid

Question 4

When does the buyer have insurable interest in the property?

Answer 4

• Up to exchange of contracts only the vendor has insurable interest
• From exchange of contracts the buyer has insurable interest and should arrange insurance from here

Question 5

Why does the seller still have insurance interest from exchange of contracts?

Answer 5

1. Sale may not go through
2. Buyer may not arrange cover so prudent for them to still have cover

Question 6

Law of Property Act 1925?

Answer 6

• Refers to how insurance monies should be applied where vendor has maintained an insurance policy
• After date of contract for sale/exchange of property, money can be paid to vendor insurance but must be transferred to purchaser (indemnity)

Question 7

Does the vendor need to insure the property from point of exchange?

Answer 7

No - unless contract states otherwise.

Question 8

if insured damage is caused after exchange of contracts and the vendor has
insurance cover?

Answer 8

• Be spent on repairing damage
• Be paid to buyer
• Vendor can assign claim proceeds to buyer

Question 9

Where both the vendor and buyer have arranged insurance from exchange of contracts?

Answer 9

• No contribution as cover different interests

Question 10

If vendor has insurance that is not required under sale contract?

Answer 10

Monies received should be deducted from sale price agreed

Question 11

Contracting Purchasers Interest Clause?

Answer 11

• Domestic insurance
• Provides cover for vendor in event buyer failed to arrange cover or if vendor required to have insurance
• Policy will only respond if buyer has not arranged cover

Question 12

Commercial Property?

Answer 12

• Law Society Standard Commercial property Conditions
• Property is at risk of the buyer from date of contract
• Prudent for seller to keep insurance as same with domestic

Question 13

Law
Society Standard Conditions of Sale

Answer 13

• Used when domestic residential property is sold.
• Section 5 of standard conditions relates to the risk and insurance requirements

Question 14

Law Society Standard Conditions of Sale summarised?

Answer 14

• Risk in property rests with buyer from exchange of contract, buyer should arrange insurance from this time.
• Unless contract says otherwise, vendor does not have to insure property from point of exchange
• If insured damage after exchange of contracts & vendor has insurance, insurance monies to be spent on repairing damage, paid to buyer or vendor can assign claim proceeds to buyer.