property

lease not exceeding 7 years

if it is made by deed so legal, it will be an overriding interest if it has not been registered, regardless of occupation

spouse rights

legal ‘home right’ to marital home. not an overriding interest so must be protected by notice in charges register

implied legal easement

occurs when it is read into a legal document on a transfer when the easement has been exercised in the year prior to the transfer. acts as an overriding interest so no registration needed

legal mortgage

must be registered to be legal. even if it is made by deed, it will only be capable of being legal up until it is registered

forfeiture for breach of covenant other than non-payment of rent

even if the landlord has reserved the right to forfeit (or has re-entry clause) if the tenant breaches any of its covenants, the landlord has to serve a s146 notice for breach of disrepair covenant.

The notice must: specify the breach, require it to be remedied within a reasonable time (if capable of remedy), and require the tenant to pay compensation for the breach. S146 is not excludable for a lease. No s146 notice is required for nonpayment of rent (as long as the lease contains a forfeiture clause).

effect of assigning a lease on title guarantee

standard conditions of sale for a lease contain term that title guarantee does not extend to any breach of the tenant’s covenants relating to the physical state of the property. even if included in contract this needs to be included in TR1 form as TR1 implies that all repairs have been done when assigned with full title guarantee so this act as a limitation to the guarantee. needed to uphold principle of caveat emptor (buyer beware). can copy and paste from contract if available. should look like: The covenants for title set out in section 4 of the Law of Property (Miscellaneous Provisions) Act 1994 will not extend to any breach of the tenant’s covenants relating to the physical state of the property contained in the lease dated [4 years previously] and made between (1) Arcadian Investments Limited and (2) the transferor ("the Lease")

assignee of lease and deduction of freehold title

no automatic right to deduction of the freehold title. if freehold is registered there is no need for deduction of title but where it is unregistered you need to include a special condition in the standard conditions of sale to allow for the freehold title to be deduced so that on registration of the lease it can be given full title guarantee

SDLT for sale of a lease

only payable where there was payment for the assignment and only payable on the purchase price. it will not be payable on the rent as this should have been paid when the lease was first granted. must be paid within 14 days of completion of the lease. payable on full purchase price (deposit and VAT included)

contracting out of security of tenure

to contract out of landlord and tenant act 1954, must give proposed tenant 14 days notice to contract out of the act. tenant must then complete a declaration that they have received this notice. to give a valid notice less than 14 days in advance the proposed tenant must complete a statutory declaration before an independent solicitor

requirement for security of tenure to apply

there must be a lease, premises must be in occupation by the tenant, occupation must be for business purposes, there must be no applicable exclusions

lease for a term not exceeding 6 months is excluded. but if it contains a provision for extending the term beyond six months it will not be excluded.

permitted use vs planning permission

an alteration that may not require planning permission because it is not seen as development (like change of use within the same class) doesn’t necessarily mean that it is a permitted use under the lease agreement. always check what has been explicitly permitted (if anything)

old and new leases

1995 is the cut off. determined whether landlord can bring a claim against the original tenant and the current one, or the previous tenant (if they entered an AGA) and the current one.

effect of exchange of contracts on lease

after exchange of contracts no terms can be changed even if the lease has not been completed yet because the standard conditions require the lease to be in the form of the draft attached to the contract

alterations when there is a full prohibition

commercial tenant can still serve a notice to landlord detailing their proposals and landlord has three months to reject. if rejected, tenant has the right to apply to court for authorisation, as long as the alterations count as improvements. if the landlord does nothing after three months tenant can lawfully carry out plans

recovering costs for self-help remedy to repair

should make debt claim to fully recover the costs. damages would be limited to the amount by which the reversionary interest of the landlord has diminished in value as a consequence of the disrepair

severance of equitable estate

where there has been no mutual agreement can be done by alienation but has to follow formal steps to be effective. must be written and signed and show an immediate intention to sever. deemed served if sent by registered post and not returned undelivered.

period for enforcement notice for local authority

local planning authority has 10 years to serve an enforcement notice from the date of any breach of planning control

searches needed when there is a mining provision

search with the coal authority (reveals whether property is in an area where mining has taken place or is likely to take place in the future, the existence of underground workings which may cause problems with subsidence, and whether compensation for subsidence damage has been paid in the past or any claim is pending), Index Map search (to check that the mines and minerals are not registered under a separate title to identify the owner of those mines and minerals and any associated rights), and advise client to instruct a surveyor to check if there are any subsidence problems.

flood search

should be done for all properties even if not near water as there may be risk of surface water flooding everywhere. If residential likely that flooding will be insured under flood re scheme.

considerations for s25 notice

requirement that the landlord has had an interest in the property for at least five years applies only if seeking to rely on ground (g) to terminate the tenancy (intention to occupy property). if relying on another ground, like intention to take possession because they need to reconstruct, this requirement does not apply.

always best to rely on ground where tenant is at fault if applicable as landlord then doesn’t have to pay compensation

landlord cannot unilaterally withdraw notice once given

cannot give s25 notice when tenant has already given s26 notice but must serve counter-notice within 2 months saying it opposes a new tenancy and giving s.30 grounds. otherwise loses the right to oppose

landlord and tenant act 1954 where new tenancy has not been agreed

if s25 notice has been served and negotiations for new tenancy have begun but not agreed, tenant advised to apply to court before notice expires (as specified on notice) if they have not already agreed an extension in writing. otherwise lose the right to apply for a new tenancy after expiration date.

right to apply for new tenancy: when landlord and tenant cannot agree, court can order and determine a new lease but this cannot exceed 15 years and rent will be the open market rent.

where any application is made, current lease will end 3 months after disposal of the application, either with the beginning of a new tenancy that the court allows/orders, or with termination of tenancy (if court accepts landlord application to terminate).

tenant actions for lease subject to security of tenure

terminate the lease on contractual expiry date: give landlord three month notice of intention

continue with current lease: position where no action is taken. no automatic new lease begins but current lease continues until terminated or a new lease is granted

begin a new lease: serve s26 notice between 6 and 12 months of expiry of current lease. if landlord has already served s25 this is not an option and must apply to court instead

pre-contract searches always needed for registered property (5)

official copies of the register and title plan and associated documents, local land charges search, local authority enquiries, drainage and water search, environmental search

what official copies of the register and title plan tell you

title class, owner, property description, proprietorship, and charges registers (mortgages, restrictive covenants, easements, notices, restrictions)

local land charges search (5)

statutory register of charges like financial charges (like road works), tree preservation orders, listed building status, conservation areas, smoke controlled zones

local authority enquiries (6)

planning history and decisions, building regulations, road adoption status (for highways), proposed road schemes, enforcement notices, compulsory purchase orders

drainage and water search

whether connected to public water supply and sewers, whether public sewers run within the boundaries (which have build-over issues), water pressure

environmental search

contaminated land or risk of contamination which a current owner is liable for if original polluter cannot be found

optional pre-contract searches (7)

optional enquiries of the local authority, chancel repair and liability search (applicable if land has not been sold since october 2013 otherwise will be in the charges register), mining searches, companies house search (if seller is a company), canal and river trust search, railway search, energy and infrastructure search

optional enquiries of local authority (5)

public rights of way, common land and village greens, pipelines, noise abatement, street works

searches for unregistered land

index map search tell you whether the land is actually registered or has a pending application; land charges department search which lists the land charges against the names of estate owners since 1925

pre-completion searches

land registry priority search (whether entries have been made since the official copies were obtained and gives 30 days priority period to protect registration), bankruptcy search against buyer (if buyer is individual and needs mortgage which protects lender priority, companies house search if company), bankruptcy or insolvency check on seller (which could affect transaction)

canal and river trust search

whether the trust owns or controls nearby water or land, attached rights and liabilities, condition of embankments and flood or breach risk

energy and infrastructure search (7)

nearby or planned HS2 routes, wind or solar farms, power stations, oil and gas licences and fracking, pipelines, overhead lines. useful for rural sites near major infrastructure.

railway search

shows proximity to a railway, network rail rights, easements and planned works

notice of interest in unregistered land

constructive: buyer fails to carry out searches that a prudent buyer would

imputed: solicitor had actual or constructive notice and this is imputed to buyer

registrable land charges for unregistered land

class C(I): puisine mortgage (2nd mortgage); class C(iv): estate contract (option to buy, contract for sale or lease); class D(ii): equitable easement, restrictive covenant; class F: matrimonial home right

meaning of full title guarantee

implied covenant that land is disposed of free from incumbarances other than those that the seller doesn’t or could not reasonably know about

impact of landlord consent on contract for sale of lease under standard conditions

SC: either party can rescind by notice if consent not given 3 working days before completion date. can agree to postpone

SCPC: completion is automatically delayed until 5 working days after notice of consent has been given. can rescind after 6 months

parol lease exception

lease for term under three years doesn’t need to be by deed or registered to be legal. no formalities can even be agreed orally (3+ but less than 7 needs to be created by deed but not registered to be legal).

CRAR

remedy for unpaid rent available only for commercial lease. landlord can enter, seize and sell good to recover unpaid rent but must give 7 days notice and do so via an enforcement agency.

rules governing lease covenants for old lease

spencer’s case: common law rules for when lease covenants bind a successor - must have privity of estate and touch and concern the land

s141 LPA 1925: benefit of covenant passes from one landlord to another

s142 LPA 1925: burden of covenant passes from one landlord to another

late completion under standard conditions of sale (residential)

seller can give notice to complete on the day of completion. time is of the essence and have 10 working days (2 weeks) to complete.

delay gives seller automatic right to compensation at contract rate depending on number of days of delay

can claim damages as well as compensation if seller experiences loss as result of delay. should mention even if not apparent on facts.

if unable to comply with notice to complete, seller can cancel contract, keep deposit and accrued interest, resell property, claim damages

SDLT general

filed within 14 days of completion date with HMRC by buyer solicitor. SDLT certificate needed to register purchase at HM Land registry, charged on VAT inclusive price.

first time buyer relief - must have never owned residential property anywhere in the world and for joint buyers must apply to all.

higher rate for additional dwelling - refundable if previous main residence sold within 36 months. companies always pay these rates.

non-uk resident - additional surcharge

corporate purchase 500k+ - flat rate

non residential taxed differently (lower rates). mixed-use property counts

SDLT on rent

taxed on net present value of rent over the term

land transaction tax ltt

administered by Welsh Revenue Authority not HMRC. due within 30 days of completion. no first time buyer relief. higher rates are not a surcharge but have different rate bands. can claim refund if sell main residence home within 3 years.

VAT

sale of new residential dwelling by builder or developer freeholder or 21 year + leasehold - zero rated

second hand residential property - exempt

new commercial building (less than 3 years since completion) standard rate

older commercial building - exempt unless seller opted to tax

tenanted commercial building where buyer will continue letting business is ‘transfer of a going concern’ no VAT to pay if buyer is VAT registered.

VAT option to tax

seller pov: recover input VAT like building and refurbishment costs

buyer pov: VAT registered can recover the VAT but VAT exempt cannot so poses real cost (insurers and banks eg). SDLT is VAT inclusive so impacts this too.

notify HMRC of option to tax within 30 days

SC - price treated as VAT inclusive so seller beware if tax later applies

SCPC - exclusive of VAT so buyer beware that VAT to be paid on top. seller make sure to state plus VAT if it is to apply

CGT

relevant for seller making a gain on disposal. remember companies pay corp tax not cgt. developer buying and selling property as part of business will pay income tax on property or corp tax, not cgt,

private residence relief (PRR): gain on only or main residence is exempt. lived as main residence for full period of ownership or relief is proportionate if main residence only for part of ownership period. certain periods of absence allowed eg for work. final 9 months still qualify even if seller had moved out. garden and grounds count up to 0.5 hectare. if sell garden after house, they will lose relief. if part of house used for business they los relief proportionately.

paid within 60 days of completion

contract and transfer form

always make sure they are the same. if name change like for marriage need evidence of this.

TR1 tenants in common unequal shares

hold property on trust: for themselves alone as tenants in common in the following unequal shares: a) one third to NAME and; b) two thirds to NAME

TR1 form additional provisions

any definitions used in form drafted here. include indemnity for covenants if required (if there is positive c, for restrictive will be automatically binding if registered). note: requirement will not be included in contract so rely on entries in register as indemnity already included in standard conditions. remember positive can be attached to restrictive eg obtain vendor consent for change of use.

drafting indemnity clause for tr1

the transferee covenants with the transferor to:

11.1 (by way of indemnity only) observe and perform the covenant referred to in entry (number) of the charges register of title number (title number) (‘the Covenants’) so far as they are subsisting and capable of taking effect; and

11.2 indemnify the transferor against any liability incurred for any breach or non-observance of the Covenants occurring after the date of this transfer.

execution for tr1 form general

transferees sign if panel 10 or 11 completed I.e. theyre holding on trust or have made indemnity. one party of transfer cannot witness signature of another. only one witness needed per signature for deed. best to avoid relatives as witnesses even if not a party to avoid claim of undue influence. same person can witness more than one signature.

execution clause tr1 form drafting

signed as a deed by [FULL NAME] …. [signature]

in the presence of: …. [signature]

NAME OF WITNESS PRINTED

ADDRESS OF WITNESS

OCCUPATION OF WITNESS

standard conditions for sale ‘specified incumbrances’

the entries in the charges register [excluding entries (number) those relating to a mortgage where the mortgage to be discharge]

include any restirctions that appear outside charges register like mines and minerals

contract rate

The Law Society’s interest rate from time to time in force - if instructions say 4% above base rate this is what it means

additional special conditions for contract

do not include discharge of mortgage as this will have been dealt with under specific incumbrances.

TR1 form additional provisions drafting definitions

definitions

in this transfer:

a) ‘the Driveway’ means the land shown coloured grey on the Plan;

…

c) Words importing the singular shall be construed as importing the plural and vice versa; and

d) Words importing persons shall be construed as importing a corporate body and/or a partnership and vice versa.

TR1 form additional provisions where easements expressed

should include declaration to avoid implied easements when the easements have been carefully negotiated:

This transfer does not include any easement other than those expressly granted in this Transfer and shall not be construed or operate as implying the grant of any easement.

execution by company

signed as a deed by COMPANY NAME

acting by a (director) and its (secretary)

not witness needed when deed signed by two authorised signatories

TR1 form for assigning lease

need to include AGA where one has been agreed in the additional provisions section: The transferee covenants to indemnify the transferor against any liability for any future breach of the tenant’s covenants in the Lease and to perform such covenants from and after the date of this transfer

intro to letter for requisitions on title

Thank you for sending us the pre-contract package. We have begun our investigation of title and have the following requisitions on entries contained in the official copies of title number AV781022, which we would be grateful if you would reply to

structure for requisitions on title

subheading for each entry you are asking about. no need to state what the entry says. followed by numbered questions eg 1. Please provide details as to who has the benefit of the exception, 2. Has the right to mine been exercised in the past and has it caused any damage to the property; or is the seller aware of any proposals to mine in the future? If so, please provide detail.

requisition when tenant in common has died

1.        We understand that the seller’s sister has died. Please confirm that this is Jennifer Ruddles and, if so, provide a copy of her death certificate.

2.        We note that the seller and Jennifer Ruddles were tenants in common. Please confirm that the seller will be appointing a second trustee, at their own cost, and that the second trustee will be joining in the transfer to ensure that any beneficial interests in the Property are overreached. Please also confirm the identity of the second trustee.

requisition for unknown covenant

1.        Please provide a copy/details of the restrictive covenants in the conveyance of 24 April 1939.

2.        Has the seller, or any of his predecessors in title, obtained a restrictive covenant indemnity insurance policy in respect of these covenants? If so, please provide a copy.

3.        Is the seller aware of any disputes in relation to these covenants?

letter to opposing party enforcing rights

begin with: We are advising your neighbour Donald Behra who has consulted us about breaches of the covenants affecting Meadowcroft.

remember you are not advising so don’t need to explain enforcement and meaning of types of covenants. just state what they are and how they are being breached and ask parties to stop.

end with: Our client wants to resolve this matter by agreement, but if matters are not resolved within four weeks from the date of this letter he will take further action.