Freehold Property Transactions and Law (SQE1) Flashcards

Comprehensive vocabulary flashcards covering the key elements, structure, professional conduct, finance, taxation, and planning law principles of freehold property transactions for SQE1 preparation.

Conveyancing

The process of transferring the ownership of a property from one owner to another.

Exchange of contracts

One of the two milestones in a conveyancing transaction; it is the point at which the parties become legally bound to the transaction and the completion date is fixed.

Completion

The milestone stage when the bulk of the purchase money is paid to the seller and the transfer deed is completed to transfer the property to the buyer.

Caveat emptor

A Latin phrase meaning 'let the buyer beware', which dictates that the seller is not obliged to disclose information about the property (other than limited matters of title) and the buyer is responsible for discovering defects before exchanging contracts.

Requisitions

Queries raised on the property title by the buyer's solicitor after exchange of contracts, although usually prohibited by contract terms if the matter should have been raised during the pre-contract stage.

Transfer deed

The formal legal document prepared and executed during the pre-completion stage which transfers the legal title of the property from the seller to the buyer.

Law Society Conveyancing Protocol

A set of instructions and standard documents (under the 'TransAction' brand) designed to standardise the residential conveyancing process in England and Wales for members of the Conveyancing Quality Scheme (CQS).

Property Information Form (TA06)

A standard document issued under the 'TransAction' brand used by the seller's solicitor to provide pre-contract information about a freehold property to the buyer.

SRA Principles

A set of fundamental tenets, such as acting with integrity and in the best interests of each client, which underpin the SRA Standards and Regulations including the Code of Conduct.

Substantially common interest

A specific exception under paragraph 6.2(a) of the Code of Conduct that allows a solicitor to act for multiple parties if they share a common goal, though the Law Society states this does not apply to a buyer and seller in a property purchase.

Etridge guidelines

Guidelines derived from Royal Bank of Scotland v Etridge (no 2) [2001] UKHL 44 for solicitors to follow when advising a spouse or joint owner in cases where property is being charged for a loan that does not benefit all owners, ensuring no undue influence was applied.

Contract race

A marketing strategy where a seller sends pre-contract packages to multiple prospective buyers; the solicitor must disclose the situation to all buyers or stop acting to avoid misleading them under paragraph 1.4 of the Code of Conduct.

Undertaking

A statement made by a solicitor or firm to someone who reasonably relies on it, promising that the solicitor or firm will do, cause to be done, or refrain from doing something. Failure to perform is professional misconduct.

Regulated mortgage contract

A mortgage where the borrower is an individual, the lender takes a first legal charge over UK property, and at least $40\%$ of the property is intended for occupation by the borrower or their immediate family.

s 327 exemption

An exemption under the Financial Services and Markets Act 2000 (FSMA 2000) allowing solicitors to carry out regulated financial activities if they are incidental to the provision of professional services regulated by the SRA.

Repayment mortgage

A mortgage type where monthly payments consist of both interest and instalments of the original capital borrowed, ensuring the loan is fully paid off by the end of the term.

Interest-only mortgage

A mortgage type where monthly payments cover only the interest on the loan, leaving the original capital sum owed in full at the end of the mortgage term.

Stamp Duty Land Tax (SDLT)

The tax charged on property transactions in England, calculated based on the purchase price portion and payed to HMRC within 14 days of completion.

Land Transaction Tax (LTT)

The tax charged on property transactions in Wales (replacing SDLT on 1 April 2018), which requires a land transaction return to be submitted to the Welsh Revenue Authority within 30 days of completion.

Private residence relief (PRR)

A tax relief that exempts a seller from Capital Gains Tax (CGT) on the disposal of a dwelling house that has been used as their only or main residence throughout the period of ownership.

Output tax

The VAT charged by a supplier on their goods or services (their output), which must be delineated on invoices.

Input tax

The VAT paid by a business on goods or services it receives, which can generally be recovered by a taxable person by deducting it from their output tax.

Option to tax

The choice made by a seller of an 'old' (more than three years old) commercial building to charge VAT on the sale price to allow the recovery of input tax paid on refurbishments or professional fees.

Development

Defined by s 55 of the Town and Country Planning Act 1990 (TCPA 1990) as carrying out building, engineering, mining or other operations (BEMO) or making any material change in the use of land or buildings.

Use Classes Order 1987

Legislation that groups land uses into classes (e.g., Class E for commercial, business, and service); changes of use within the same class do not require planning permission.

Sui generis

A Latin term meaning 'in a class of its own', used in planning law to describe uses (like pubs, cinemas, or takeaways) that do not fall into standard use classes and generally require express planning permission for changes.

General Permitted Development Order (GPDO)

Legislation (the 2015 order for England and the 1995 order for Wales) that automatically grants planning permission for certain specific types of 'permitted development', such as minor residential extensions.

Article 4 Direction

An order issued by a Local Planning Authority (LPA) or Secretary of State to withdraw automatic planning permissions granted by the GPDO in a specific area.

Enforcement notice

A notice issued by an LPA for a breach of planning control, specifying the breach and the steps required to remedy it; it becomes effective 28 days after service unless appealed.

Building regulations control

Standards for design and construction concerned with health and safety, materials, and construction methods, requiring separate consent from planning permission.