Property Practice Flashcards

Question

Who sends contract package for FREEHOLD, what is included?

Answer 1

Stage 2 Sellers solicitor sends to buyers solicitor Contains: - draft copy in duplicate (each sign one copy) - property information form (PIF) and Fittings and Contents Form (F&C) - copy of title, title plan and any relevant docs - any guarantees or copy planning permissions

Answer 2

1. Parties to Agree From of Lease - parties to agree on form of lease and contract 2. Seller to deduce title if term is over 7 years - so tenant can register with absolute title 3. Seller to send contract package

Answer 3

- draft contract with draft lease annexed - sellers freehold title - PIF - replies to standard pre-contract enquiries (boundaries, disputes, services supplied etc) - copy of planning permission and building regulations consent (if newly built block) - new build warranty (if building is under 10 years old) - service charge budget (if new build development) - details of management company (if applicable)

Answer 4

- sellers solicitor to check if landlords consent is needed - seller to apply to consent at their expense and use all reasonable endeavours to obtain consent (provide all info needed by landlord) - buyer can rescind contract if landlords consent is not obtained 3 working days before completion - contract package

Answer 5

- copy of outgoing tenants leasehold register of title - copy of existing lease - PIF and Leasehold Information Form - Copies of last 3 years service charge accounts (if any) - copy of landlords freehold register of title If building is under 10 years old - copy of new build warranty, planning permission and building regulation

Answer 6

In writing and must include: 1. Particulars of Sale - date, name of parties, details of property, any specified encumbrances, title guarantee, completion date, purchase price and contents price (for fittings on land) - price to include VAT 2. Standard Conditions of Sale - formation of the contract - service of notices, matters subject to which property is sold - physical condition of property - right of buyer to occupy between exchange and completion - remedies for late completion/no completion - deposit of 10% to buyer on exchange of contract 3. Special Conditions of Sale

Answer 7

1. Even if parties agree to lower deposit, if the buyer breaches contract they are liable for 10% 2. Use - deposit can be used by buyer for deposit of related transactions for their residence in the UK/Wales - so not for a buy to let property 3. Deposit held by sellers solicitor as stakeholder - as stakeholder (rather than agent) means held on behalf of both parties and cannot be paid to seller until completion

Answer 8

Seller required to prove title and their ability to sell it Prove title by producing official copy of registered title or by epitome of title Unless provided otherwise SCS provide that seller sells property with full title guarantee. buyer can rely on these after completion. Full Guarantee of Title includes guarantee that: - seller is entitled to sell property - seller will, at own cost, do all in their power to transfer the purported title to buyer, and - seller is selling property free from all charges or encumbrances other than those disclosed in contract

Answer 9

Limited Title Guarantee - seller has not created any charges or granted any rights during their period of ownership that have not been disclosed - typically given by seller with less knowledge or involvement with property (eg. personal representative) No Title Guarantee - used when seller has no knowledge of property at all (eg. mortgagee in possession or someone disposing of property by way of gift)

Answer 10

Where contract discloses binding obligation relating to property (maintaining communal fence etc.) Buyer to agree to perform the obligation to indemnify seller if buyer breaches obligation

Answer 11

Risk in the property passes to buyer on exchange of contracts - so if property is destroyed or damaged between exchange and completion buyer must still purchase Seller does not have to insure property between exchange and completion - in practice it is insured by both parties in this period

Answer 12

Normally inserted into contract on exchange but if not then - completion will take place 20 working days after exchange Failure to Comply - if buyer does not provide funds by 2pm on completion then completion is treated as taking place on next working day - buyer liable to pay interest at rate specified in contract - applies even if buyer moves into property on agreed date - no penalty if buyer was ready and willing to provide funds by seller failed to vacate

Answer 13

- whether property being sold will be vacant on completion or whether there will be tenant in situ - Whether a different time for completion has been agreed (by 2pm is often preferred if there are chain of transactions) - Whether there are any occupiers on the property (in which case they need to confirm their relinquishment of any rights on completion)

Answer 14

completed by the seller to give buyer practical information about property. Buyer is entitled to rely on answers the seller gives and any pre contract enquiries raised by buyer solicitor

Answer 15

Info can typically be found in PIF but buyers solicitor should check this. Any non-owning occupier must agree to sign contract as confirmation that they will relinquish any rights in property and vacate on completion

Answer 16

Lists items which are at the property and included in the sale price and those excluded from sale price Annexed as part of contract - so seller can be sued for taking items included If buyer agrees to buy other items above contract price this sum is indicated on Particulars of Sale and items included in contract

Answer 17

By Sellers Solicitor - when they are drafting contract By Buyers Solicitor - when they receive contract package - to check that buyer will receive good title when they make application for registration after completion and to identify if there are any issues that they effect buyers future plans Buyer solicitor will ask questions on any issues (raising requisitions on title) - will require all to be resolved before advising client to proceed to exchange

Answer 18

Must ask lender for indicative redemption figure to ensure sale proceeds will be sufficient to redeem mortgage on completion Because solicitor will give undertaking to redeem mortgage out of sale proceeds

Answer 19

Should be discovered by sellers solicitor when investigating Might only be discovered by buyers solicitor's investigation - will raise inquiries and request sellers solicitor provide draft insurance policy that seller will indemnify for cost of policy and include this as special condition in contract Resolved - best way is to resolve is by entering deed of variation or deed of rectification - might not be possible (to long, costly or requires consent of neighbours etc.) - then use indemnity insurance policy to cover specific issues

Answer 20

Stage 2 Whether title number matches that in contract Encumbrances - are easements properly registered - is there a mortgage that sellers solicitor must give undertaking for Class of seller title

Answer 21

Any event that would have required compulsory registration - since 1st Dec 1990 - if so must insist seller register Whether there is good root of title If there is unbroken chain of owner ship from root of title to current seller If documents have been stamped correctly Whether third parties might have rights in relation to land

Answer 22

Stage 2 - Local search - Drainage and Water Search - Environmental Search

Answer 23

Local Land Charges - General and specific financial charges owed to local authority (should seek sellers undertaking to repay) - Planning charges including: tree preservation orders, any planning agreement and eateries against property - Listed building charges Enquiries of Local Authority for issues including: - Roads: if road fronting property is adopted by the local authority - Public Rights of Way: over property for public - Planning: ie planning entries and building regulation consent Optional Enquiries of Local Authority - if private road proposals have been made - any major has pipeline effecting property - any environmental pollution notices served - if property abuts common land/village green

Answer 24

There may be restrictions on access over common ground or restrictions on developing/enclosing common land

Answer 25

Stage 2 - check if property is connected to water and drainage system and any details on this (metering etc.)

Answer 26

Stage 2 Current landowner would be liable for any contaminated land (even buyer)

Answer 27

Search of index map - if title is unregistered - send address or plan to HMLR to see if it is partly registered Bankruptcy Search - if buyer is getting mortgage - if pending or actual bankruptcy then must be reported to lender Company Search - if seller is company - reveals if company is subject to winding up/liquidation proceedings - any fixed or floating charged

Answer 28

Coal mining search - if land is near coal mine then shows if this affects land Chancel Liability Search - shows if property is under obligation to contribute to upkeep of chancel of church

Answer 29

Stage 2 List is questions / issues sent from buyers solicitor to sellers Questions and responses to be give not parties before exchange of contracts

Answer 30

Stage 2 Commercial Property Enquiries = PIF Includes rage of pre-printed enquiries sent to seller at the beginning of transaction

Answer 31

- Carrying out building, engineering, mining, or other operations in, on, over or under land (includes structural changes or additions) - Making any material change of use of any buildings or other land (changing one property into flats or to business etc.)

Answer 32

Certain types of developments can be done without express permission (oe. small home extensions, porches, fences, conservatories etc.) However, local authority can exclude locations by passing article 4 direction. this will require applicant to get express planning permission.

Answer 33

If no deemed permission must make application to local authority for express planning permission Outline permission - gives broad permission as to principle of development on land in question subject to reserved matters (issues such as materials used) - if there are reserved matters there will have to be full application within 3 years of the outline permission to obtain approval on matters - work must start within 2 years of permission Detailed permission - involves submission of full plans to local authority - permission may be subject to conditions - development must start in 3 years of permission

Answer 34

Can take action against owner of occupier of property or against interested party. Action may require full compliance - problems run with property so b buyer can be liable for sellers breach

Answer 35

Enforcement Notice - must state nature of breach - steps required to remedy breach - time limit to complete required work - could also apply for injection to stop work or stop notice Time Limit enforcement notice must be served within - 4 years of the breach for unauthorised building works - 10 years of first breach for all other breaches (material change) - no time limit for listed buildings

Answer 36

Building its-self and everything within its curtilage (meaning garden and immediate area)

Answer 37

They cannot be demolished, extended or altered without listed building consent form from local authority

Answer 38

Applies to all building work not just that which requires planning permission (including installing windows etc.) Building control officer inspects building at various stages and once satisfied with completed work issues building regulations completion certificate

Answer 39

Local authority can take enforcement action within 12 months of breach Can enforce injunction to bring property up to standard any time

Answer 40

Indemnity insurance - seller to take out at own cost - important not contract local authority to discuss lack of documentation as insurance will no longer be available

Answer 41

Source of Funds Check - generally see that money has been in UK bank account in clients name for 3-6 months Source of Wealth - client to prove by documentary evidence where they got the money - includes (inheritance, bonus/income from job, sale of other assets etc,

Answer 42

Acting for: - seller of property subject to existing mortgage - buyer of property looking to borrow money - client seeking to transfer a mortgaged property from sole name into joint names with spouse etc. (or other way round)

Answer 43

Can only give generic advice (on mortgage type etc.) Cannot give specific advice and should advise client to see Independent Financial Adviser - can't give value judgements/opinions

Answer 44

Repayment mortgage - repay capital and interest in instalments Interest Only - instalments = interest only - capital to be paid at end of term Endowment Mortgages - mortgage combined with life insurance - pay premiums and hope life insurance policy will be sufficient to pay off mortgage at end of term Pension Mortgage - mortgage combined with pension policy Sharia Compliant Mortgage -

Answer 45

Lender will obtain mortgage valuation report to confirm the property is good security and that buyer can repay mortgage (with evidence). Once satisfied will issue a mortgage offer to buyer and their solicitor

Answer 46

In residential transactions provided that: - lender is institutional lender - standard certificate of title is provided - there are no conflicts of interest/ risk of conflict Commercial transactions parties will typically use different solicitors

Answer 47

1. Fraud Prevention - documents properly signed (good for lawyer to witness buyer signing) - seller has lawyer who will receive funds - details of property valuation - how long seller has owned - if price in mortgage offer is same as asking price - how buyer is funding rest of purchase (third parties lending may have interest in property) 2. Title Issues - solicitor to take reasonable steps to ensure no discrepancies between description of property as valued by lender and title - ensure all searches have been carried out (and report anything bad to lender) - ensure lender is named as applicant in HMLR pre-completion searches - ensure all searches are not more than 6 months old at completion - not release mortgage advance unless solicitor has sufficient funds to pay all stamp duty land tax and HMLR fees to perfect registration of mortgage (solicitor should give undertaking to register after completion and get fund from buyer before completion)

Answer 48

Must be by deed and executed by mortgagor prior to completion (normally before exchange of contracts)

Answer 49

Buyers solicitor to submit Certificate of Title to lender which: - confirms to lender that title is good and marketable, and - acts as a request for release of mortgage advance Time limit - typically given in mortgage offer (often 5--7 working days)

Answer 50

- Source of funds check - Source of wealth check - reveal this to institutional lender (if acting for them) - if private sources are to be repaid then institution will typically not lend

Answer 51

Their rights may interfere with lender right to possess Must advise lender to require all occupiers to sine waiver/consent form to ensure they do not require any rights in property (buyers solicitor cannot act for non-owning occupier)

Answer 52

Registered land - 30 working days Unregistered Land - 2 months Company borrower - must also register with companies house in 21 days of completion - certificate of registration from CH must be sent with application to HMLR

Answer 53

That these are synchronised so: - exchange on same day - have same completion date

Answer 54

In person By post - each solicitor posts their clients signed contract to each other. Exchange takes place when seller's part is posted to buyers solicitor. By phone - exchange takes place when completion date and date of the conversation are inserted

Answer 55

Formula A - when one solicitor has both signed contracts Formula B - when each solicitor has their clients signed part of the contract Formula C - Used for chain of transactions

Answer 56

Stage 3 After exchange of contracts both solicitors make a file memorandum recording: - their name - date and time of exchange - exchange formula used - completion date - amount of any deposit paid

Answer 57

Seller - duty of care to keep property in same condition it was on exchange Buyer - now responsible for risk of loss so must insure property from time of exchange

Answer 58

When - if it is likely that there will be a couple of weeks between exchange and completion How By registering it as an estate contract - Registered land: unilateral notice will be placed on sellers charges register, and - Unregistered: C(IV) land charge to be registered against sellers full name

Answer 59

- Must exchange contract again with variation included in new contract

Answer 60

- completion statement - completion information and undertakings form - execution of purchase deed -

Answer 61

Stage 4 - by Sellers solicitor If seller has existing mortgage solicitor asks lender for redemption figure (calculated to date of completion) Then prepare completion statement which subtracts redemption figure and estate agent fees (if relevant) to show net sale proceeds this is sent either to seller or towards a related transaction

Answer 62

Stage 4 - by Sellers solicitor Form that gives details of: - client account to which purchase of money must be sent on the day of completion - confirms amount due - where the keys to the property can be collected - (if property is mortgaged) gives undertaking to pay off mortgage out of sale proceeds and provides evidence of discharge when received

Answer 63

Stage 3 - for freehold purchase Typically drafted by buyer side and sent to sellers solicitor who must execute it with formalities before completion On completion it is handed to buyers solicitor

Answer 64

instead of Purchase Deed the parties execute a lease Prepared by sellers side (including all plans referred to) - final one is called engrossment - original signed by landlord and copy signed by tenant

Answer 65

- check completion information and undertaking (crucially if seller solicitor has undertaken to pay off mortgage) - pre-completion searches - completion statement and - certificate of title (if mortgage) - purchase deed (if buying freehold)

Answer 66

Official Search with Priority - either against the Whole of Registered Title or against Part of Registered Title (if buying new build from developer etc.) What these do - show any new entries (if so then require sellers solicitor to deal with these before completion) - priority period: 30 working day period where new entries are paused and fall away if buyer completes and registers transaction within period)

Answer 67

Buyer will be bound by what is on register even if they were no aware of it But may be able to claim an indemnity from HMLR for any loss sustained

Answer 68

Stage 4 Full land charges search to be made against full names of current estate owners again - gives priority period of 15 working days

Answer 69

- bankruptcy search (if mortgage) - company search (if seller is a company) - advise buyer to do another physical inspection

Answer 70

Must be signed before completion Must be signed by seller Has to be signed by buyer if the transfer includes covenants by buyer or if there is more than one buyer

Answer 71

Conveyance - when unregistered land is sold but not used in practice Transfer - used for registered and unregistered land - TR1 form - where the whole of land in a title is being transferred - TP1 form - used where part of the land in a title is being transferred Assignment - for unregistered leasehold land (not used in practice) Assent - when personal representatives transfer land to beneficiary - must be in writing and (by deed if it contains covenant by absentee)

Answer 72

Stage 4 if seller has paid service charges in advance parties should use best estimate to apportion the charges and buyer will have to pay shortfall

Answer 73

1. Personal Attendance - buyers solicitor goes to sellers solicitor 2. By Agent - buyer solicitor appoints local agent to go to sellers solicitor 3. By Post - sellers solicitor acts as agent for buyers solicitor and post relevant deeds/documents to buyer after completion

Answer 74

- parties to agree in advance to use it (although post is default unless agreed otherwise) - sellers solicitor gives warranty that they act for true seller (which B' solicitor can rely on) - S' solicitor to confirm in writing which mortgages are to be redeemed - completion money sent by bank transfer - B's solicitor must S's with list of deeds/documents to be marked as examined (against originals) - if unable to comply with code S' s to provide statement to B's before 4pm on day before completion - S's to list mortgages they can discharge - S's to agree to complete transfer docs upon receipt of sum - S's to confirm date/time of completion to buyers solicitor and to whomever holds keys (to be given asap after completion) - S's to agree to send executed transfer docs by first class mail or DX asap (cannot be later than 5pm of day after completion) - Once deeds are posted they are held by B's at risk of buyer

Answer 75

Registered Land - upon registration Unregistered Land - on completion

Answer 76

Contract will merge with deed - therefore buyer can no longer sue on contract terms Non-Merger Clause - part of Standard Conditions of Sale - means parties must still perform outstanding obligations in contract (which can be sued for under contract)

Answer 77

1. Report to Client - call to confirm completion has taken place, followed by written confirmation 2. Discharge Mortgages (if any) - repay redemption figure and discharge using HMLR form - or if unregistered original mortgage deed to be sent to lender for acknowledgment, back to buyer and then to sellers solicitor to comply with undertaking 3. Pay estate agent (if any) - seller to approve bill for solicitor to pay out of net proceeds 4. File Closure

Answer 78

1. report to client - call client to inform on completion, followed by letter of completion and bill for legal fees 2. Registration of Company Charges (if company) - if buyer is company with mortgage have to register mortgage with CH in 21 days 3. Payment of Stamp Duty - in 14 days post completion 4. Registration with HMLR - 30 days for registered land - 2 months unregistered land

Answer 79

1. Register lease if over 7 years - if also have mortgage then this is registered at same time and notice of mortgage must be served on landlord 2. apply for share in management company (if applicable)

Answer 80

Sell Side 1. send BS original lease and share certificate (for management company), and original licence to assign (if applicable) 2. prepare final service charge adjustment Buyers Side 1. Arrange payment of SDLT 2. serve notice to landlord of assignment to buyer (and notice of any new mortgages created) 3. arrange for registration at HMLR of transfer of lease and any new mortgages

Answer 81

Generally not for residential transactions (Standard Conditions of Sale) - therefore cannot cancel contract To be of the essence it has to be specified in the contract (in special conditions)

Answer 82

Any delay even of a couple of hours (past 2pm normally) of sending funds

Answer 83

Seller (who has reviewed funds) is entitled to interest Interest calculated at contract rate (for any amount outstanding) - Rental in lieu of compensation: if property has a tenant innocent party can choose to take rental income until completion instead If delay of a few hours then completion is treated as occurring next WORKING day and interest is due for time in-between

Answer 84

Where time is not of the essence this can be used by innocent party for delayed completion Notice makes time of the essence allowing innocent to cancel contract if completion does not happen in 10 working days

Answer 85

- Can be served at any time after completion date (that has been missed) - party serving must be ready, able and willing to complete - completion has not already taken place In practice - might not be needed if there is just a slight delay and party is clearly willing to complete

Answer 86

- needs to complete in 10 working days or risk contract being canceled - if they paid a reduced deposit must also pay balance necessary to bring deposit to 10%

Answer 87

Buyer = defaulting party seller can rescind contract and: - retain deposit - resell property - claim damages Seller = defaulting party Buyer can rescind contract and: - reclaim their deposit with interest at contract rate - claim damages

Answer 88

Notice to Complete Specific Performance - equitable at discretion of court - can be pursued with other remedies but must choose one by trial Claim for Compensation by way of damages - innocent party to be placed in position they would have been in had contract been executed - innocent seller can only recover difference between contract price and value on resale (advise not to pursue if resale is higher /but keep deposit) Rescission

Answer 89

Under SCS can be used when 1. there has been a misrepresentation made - fraudulently or recklessly or - if buyer took the property it would be substantially different in quality, or tenure from the property they expected to take 2. the landlord's consent for an assignment is required and the licence to assign is not forthcoming

Answer 90

Either by: Forfeiture Surrender Landlord serves valid Section 25 notice on tenant Tenant serves section 26 notice on landlord to requires new lease

Answer 91

- to fixed term tenancies not exceeding 6 months - service tenancies - tenancies where it has been contracted out

Answer 92

1. Landlords health warning - to be served 14 days beef tenant completes lease - tenant can waive 14 period for landlord by signing formal statutory declaration in front of independent solicitor 2. Tenants Declaration - tenant to sign confirming they have received health warning and agree to contracting out of the Act - can be signed privately 3. References in the Lease to: - health warning - tenants declaration - agreement to contract out

Answer 93

Informs tenant with security of tenure that landlord requires premises back/wishes to enter new lease

Answer 94

must be served 6-12 months they wish existing tenancy to end Grounds: - tenants breach of obligation (repair, delayed rent etc.) - if part of land is sublet by tenant, landlord requires full property - availability of suitable alternative accommodation for tenant - landlord intends to demolish or reconstruct premises - landlord intends to occupy premises

Answer 95

Request by tenant with security of tenure for a new lease. Requirements - served to landlord (or agent) and requirest grant of new lease - notice to include outline of required terms - serve 6-12 months before they wish new tenancy to start - on receipt of notice landlord has 2 months to inform if they intent to oppose the request - if they oppose must specify one of statutory grounds for this

Answer 96

If landlord uses no fault ground or is able to provide alternative suitable accommodation as ground - then compensation

Property Practice Flashcards

(121 cards)