Property 3: Stage 2

Question 1

When does title need to be investigated (seller vs buyer)?

Answer 1

Seller
- Beginning of transaction

Buyer
- after receiving contract package

Question 2

How might a solicitor investigate sellers title registered/unregistered land?

Answer 2

Stage 2

Sellers solicitor to investigate title

Registered
- download copy of title, title plan and any additional documents from HMLR portal
- check charges register

Unregistered
- find physical title deeds
- if property is mortgaged solicitor to give undertaking to lender not to part with deeds until mortgage is redeemed out of sale proceeds

Question 3

What must sellers solicitor do once title is located

Answer 3

Stage 2

Remedy defects in title
- if there are any (missing docs, name issues) seller’s solicitor must remedy these

Obtain confirmation of title plan
- solicitor to send title plan to seller, who should confirm these conform to land being sold

Deducing Title
- sellers solicitor to send copy of title to buyers solicitor who also investigates
- Leases: only if over 7 years

Question 4

What are the seller duty of disclosure. What are consequences of breaching this?

Answer 4

1. Must Disclose
   - latent defects / encumbrances
   - non-disclosure buyer may be able to withdraw after exchange AND claim damages
2. Need not Disclose
   - patent defects / encumbrances
   - physical condition
   - trying to cover up is wilful deceit or misrepresentation

Question 5

Contents of contract package for sale of freehold?

Answer 5

Contains:
1. draft copy in duplicate (each sign one copy)

2. property information form (PIF) and Fittings and Contents Form (F&C)
3. copy of title, title plan and any relevant docs
4. any guarantees or copy planning permissions

Question 6

Contents of contract package new lease?

Answer 6

1. draft contract and lease
2. sellers freehold title
3. property information form (PIF)
4. replies to standard pre contract enquiries
5. Details of management company (if applicable)

If newly built
- copy of planning permission and building regulation consent

If building under 10 years old
- new build warranty

If new build development
- service charge budget

Question 7

What must be checked before being able to assign existing lease?

Answer 7

1. Alienability Covenant (check if consent is required)
   - if qualified treat as fully qualified
2. Does landlord have reasonable grounds to refuse
3. If consent needed
   - need Licence to Assign
4. No consent
   - 3 working days before completion buyer can rescind

Question 8

Contract package for assignment of lease?

Answer 8

1. outgoing tenants leasehold register of title
2. Landlords freehold title
3. copy of existing lease
4. PIF and Leasehold Information Form
5. Copies of last 3 years service charge accounts

If property us under 10 years old
- copy of new build warranty, planning permission and building regulation consent

Question 9

Why might the landlords freehold title be needed by seller?

Answer 9

To get leasehold title absolute (as opposed to good leasehold title)

Especially if using mortgage

Question 10

How is a contract in contract package structured for residential transactions?

Answer 10

1. Particulars of sale
2. Standard Conditions of Sale
3. Special conditions of sale

Question 11

What is included in Particulars of Sale?

Answer 11

• date
• name of parties
• details of property (freehold/leasehold)
• specified encumbrances
• title guarantee
• completion date
• price
• contents price (items in or on property not included in purchase price)

Question 12

What are the Standard Conditions of Sale?

Answer 12

1. VAT
   - purchase and contents price include any VAT
2. Deposit
   - 10% of purchase price on exchange of contract
   - even if parties agree lesser amount 10% is recoverable for breach
3. Proof of Title and title Guarantee
   - seller to prove title
   - seller to provide full title guarantee (unless agreed otherwise)
4. Indemnity Covenant
   - for positive covenants
5. Risk and Insurance
   - risk passes to buyer on exchange of contract
   - seller need not insure after exchange
6. Completion
   - 20 working days after exchange

Question 13

Can a deposit be used for a related transaction?

Answer 13

Under Standard Conditions of Sale

Only if:
- other property is in England or Wales
- is to be used as primary residence

Question 14

What is full title guarantee?

Answer 14

Proposed by standard conditions of sale (can be amended)

Includes guarantee that
- seller is entitled to sell property
- seller will do all they can to transferrer title
- property is free from any charges or encumbrances not disclosed

Question 15

What is a Limited Title Guarantee

Answer 15

Seller warrants that they have not created any charges or granted any right during their period of ownership.

Given if they have lesser knowledge

Question 16

What are special conditions of sale?

Answer 16

Specificity to this transaction
- is property vacant on completion
- has different time for completion been agreed
- are there any occupiers of property

Question 17

What should buyer do to ensure there are no occupiers? What to do if there are?

Answer 17

Check PIF

Make any non-owning occupiers must agree to sign the contract

Question 18

What should you do if seller has a mortgage?

Answer 18

Sellers solicitor
- ask for indicative redemption figures (to ensure sale proceeds can pay it off)

• will give undertaking to pay of mortgage from sale proceeds

Question 19

Are standard conditions of sale used in commercial transactions?

Answer 19

NO - use Standard Commercial Property Conditions