property law

Some key terms found in the residential standard conditions of sale for residential property

Some key terms found in the residential standard conditions of sale for residential property

VAT inclusion in the purchase price
Deposit is 10% or as negotiated (even if negotiated lower and there is a breach the full 10% is available to claim)
Use of Deposit for related purchases if in england and wales and will be used as the residence
Deposit held as stakeholder by sellers solicitor on exchange (can also be as agent)
Proof of title and title guarantee (full title guarantee, limited title guarantee (by someone with less knowledge of the property like a personal representative), no title guarantee (if it was a gift and the person has no idea of rights)
Indemnity covenant if there are burdens on the land
Risk passes to the buyer on exchange
Insurance not mandatory
Completion after 20 days at 2 pm if not specified in the contract

What term should a solicitor advise against for a long lease?

an absolute prohibition against assignment

what must a solicitor do when meeting first deciding if they want to be in the conveyancing transaction

complete on boarding steps like client care letter setting out costs and do money laundering checks

Things that should be done in stage 1 of the buying process?

Survey of the property
think about capital gains

if any how when should CGT be paid on a property?

60 days from completion date

if you are acting for more than one buyer of a property what must you give?

co-ownership advice

what situations is the law society conveyancing protocol not designed for?

commercial and new builds

how long is a mandatory energy performance certificate valid for?

10 years; attached to the property not the owner

If a new energy performance certificate is needed when should it be completed and by whom? Which stage is this?

STAGE 1 the seller (usually done by the estate agent) before the house goes on the market

what is the only exception to Mandatory energy certificates?

Listed buildings

In a commercial lease that is being assigned what document must be drawn up finalising the ability to assign?

a licence to assign

what undertaking should be provided when drawing up a licence to assign? which stage is this?

STAGE 1 the land lords solicitors draw up the licence and should get an undertaking from the out going tenants solicitors that their fee will be paid for the documents

what is a deed of guarantee?

an agreement separate from a lease which allows the landlord to recover rental payments from another party in the event the tenant defaults.

what is an authorised guarantee agreement?

an agreement by which the outgoing tenant agrees to be a guarantor for the incoming tenant when a lease is assigned.

At what stage should the seller investigate title?

2 pre contract

What the is the process for investigating title from the seller's solicitor?

obtaining documents, deed or HMLR reg
remedying defects
getting an indicative redemption figure on the mortgage
obtain confirmation of title plan and send to seller.
deducing title

what is deducing title?

sending a copy of the title to the buyer's solicitor

what must the seller disclose in the pre-contract stage for the contract of sale?

latent defects and latent burdens (incumbrances) - things not revealed with inspection

what doesn't the seller have to disclose in the pre-contract stage for the contract of sale?

patent defect and patent incumbrances - things revealed with reasonable inspection
Physical defects of the property including those not visible

what are the consequences for breach of disclosure at the pre contract stage?

buyer may gain right to withdraw after exchange and claim damages for losses

can a seller cover up a patent defect and what happens if they do?

No, willful deceit may get them sued in tort

in the pre contract state what is in the contract package that the seller will send to the buyer in freehold property?

draft contract in duplicate
The completed property information form
The completed fittings and fixtures form
A copy of the title, relevant documents and the title plan
Any guarantees or copy of planning permission

What is the property information form and what is the duty to disclose and when should it be completed?

early stage 2, has a greater obligation to disclose than in the contract for sale. It is a detailed practical information and covers:
boundaries
disputes with neighbours
work done or alternations
notices
guarantees or warranties
insurance details
flooding
informal rights over the property
services (wires) that cross the property
parking
OCCUPIERS (will be needed in the special conditions if yes)
utilities the property is connected to

in the pre contract state what is in the contract package that the seller will send to the buyer in a new leasehold property?

draft contract with draft lease annexed
freehold title
property information form
replies to standard pre contractual enquiries
if new build then copy of planning permission
less than 10 years old a new build warranty
if new build a service charge budget and if applicable details of management company

when must a seller deduce title for a lease and why?

when it is over seven years and registerable, so the tenant can register the lease with title absolute

in the pre contract state what is in the contract package that the seller will send to the buyer in an assigned leasehold property?

check the head lease for assignment clauses
provide information to the landlord as required

Include in the contract package:
copy of outgoing leasehold register of title
copy of the existing lease
property information form and leasehold information form
copies of the last three years' service charge accounts
copy of the landlord's freehold title
less than 10 years old: new build warranty, p, planning permission and building regulations consent.

when can a buyer rescind in an assignment of lease?

when the landlord has not given consent to assignment three working days before completion

what will happen if the landlord does not provide the freehold title for the lease?

the tenant will get good leasehold title instead of leasehold title in absolute

what must be included in the contract of sale for all residential transactions?

particulars of sale
the standard conditions of sale
the special conditions of sale

what must be included in the contract of sale for all commercial transactions?

Basic information needed in residential transactions and more
part one - general conditions covering issues of notices, encumbrances and VAT, title risk insurance, completion and remedies (implied unless expressly exempted)
part two - only if expressly incorporated. detail on VAT, transfer of business as going concern, taxation allowances.

what is included in the particulars of sale in a contract?

date, names, details of the property (leasehold and freehold) encumbrances the title guarantee completion date and price for any items not included in the purchase price

what is included in the standard conditions of sale residential?

formation of the contract, service of notices, matters subject to which the property is sold, physical condition of the property, the rights of the buyer to occupy between exchange and completion, apportionment of service charges which are not easily ascertainable on completion, and remedies for late completion or no completion

What are special conditions?

a separate section of the conditions of the contract and are written as a separate document to describe conditions that are unique to a particular project or project site.

what are some common special conditions of sale in residential sales?

Sold vacant or with a tenant in situ (then the tenancy agreement subject to the property sold will be inserted)
Is a different time for completion agreed (other than 2pm)
Are there any occupiers who need to relinquish rights
Indemnity insurance

On getting the property information form what should the buyers solicitor do?

Check the property to make sure it accords with the contract and information form

when should the seller's solicitor investigate title?

when drafting the contract

when should the buyer's solicitor investigate title?

when they have received the contract package

what should the buyer's solicitor do if there is a defect in the title discovered and what stage is this?

stage 2 pre contract
they should raise it with the other solicitor and have them draw up a draft insurance policy at the seller's expense to be included in the special conditions of the contract

What can a seller do to remedy a defect in title and when should this be done?

in the pre contract stage or the pre material stage (1 or 2) and can be done by entering a deed of variation or deed of rectification, if not should enter indemnity insurance to cover any future expense.

You are acting as a solicitor for the buyer of some residential land. You find that there is a no-build covenant attached to the register of charges on the land. It was done to protect the view of the next-door neighbour, when you visit the property to make sure there is no one occupying the house you run into the neighbour who is very annoyed that the seller is selling the house and has indicated that they are going to make your client's life very difficult. The seller who has a souring relationship with the neighbour did not know that they were violating the covenant and had just before putting the house on the market built a lovely little annex at the back of the garden. The seller assures you they had planning permission. Both of the parties are keen to still go ahead with the transaction but you are worried about the breach in the future. What should you do?

Planning permission does not override the restrictive covenant on the land. Get the seller's solicitor to purchase indemnity insurance at their expense and have it included in the special conditions of sale.

What is a good root of title in unregistered land?

Must:
a. Deal with or show entire interest
b. Contain recognisable description of the land
c. Do nothing to cast doubt on title
d. Be at least 15 years old

what will a solicitor look for when investigating title in unregistered land?

breaks in the chain of title and defects to title. the best document is a conveyance of sale as opposed to a deed of gift because it is likely to have already been investigated.
Stamp duty has been paid correctly or HMLR won't accept registration.
Any documents referred to in the root which have no been provided.
Any third-party right enforceable after buying is registered as a land charge.

POV you are a buyer for a house. You just found out that the land you want to buy is unregistered :0. Your solicitor assures you this is fine and starts to investigate the title for you. They come back and say that there was a conveyance of sale in 1991 :0 :0. What does this mean and what should you do??????????

Any land subject to a conveyance after December 1 1990 is subject to compulsory registration. It is what is known as a triggering event for first registration. Since the land should have been registered you should insist that the seller's solicitor makes an application to HMLR for the land to be registered before the contract is drafted.

when should a local search be done on the property?

In the pre contract stages.

What are the general pre-contract searches done in every case?

Local Search, Drainage water search if connected to the mains, Environmental search

What local land charges are included in the Local Search and when is it done?

Pre contract stage.
General and specific financial land charges - improvement grant or fees paid to the land owner
planning charges - planning and tree preservation
listed building charges

What optional local land charges can be asked for in the local search and when is it done?

pre-contract stage
Any road proposals from private bodies, is a private body proposing to alter the road.
Major gas pipelines affecting the property
House in Multiple Occupation
Pollution notices served
Abutting common land (if suspected ask for a Commons Registration Search)

What enquiries of the local authority can be made in the local search and when is it done?

pre contract stage
Roads - is it adopted by the local authority and who will maintain it
Public rights of way
Detailed planning and building regulations - proposed rail, road or traffic schemes

Do you have to pay for the optional enquiries of the local authority search?

Yes there is an additional fee

What are transaction specific searches and when are they done?

Pre contract stage with the local search.
Unregistered land - Index Search
Mortgage - Bankruptcy Search
Company is the seller - Company Search

What is an index search?

Shows if the unregistered land is fully or partially registered by HMLR, do this by sending the property address or plan to HMLR by the online portal and pay the fee.

when should you use an index search?

At the pre contract stage, if the land is unregistered

What are some location specific searches?

Coal mining search
Chancel Liability search - church nearby (fix with indemnity insurance)

if the property is commercial what is used to find out the practical information about it?

the commercial property standard enquiries document (CPSE) these are preprinted enquires about the property.

what is the commercial equivalent to the PIF?

The CPSE (Commercial property standard enquiries)

Does planning permission override restrictive covenants against building?

NO.

When is permission required under the Town and Country Planning Act?

development on the land which is building engineering or mining or other actions on or under the land
making any material change of use to the buildings or land

do you need planning permission for minor internal works?

no unless listed

what is deemed planning permission?

for certain works permission is deemed granted, small home extensions, conservatories, fences and porches ect....

How can a local authority disapply deemed planning permission?

By passing a Article 4 Direction in a locality

once detailed planning permission is granted when must the work start?

within three years

How does outline planning permission work?

broad permission to the principle of the work subject to reserved matters which may need the local authorities approval

In outline planning permission if there are reserved matters what happens?

A full application for planning permission should be made within three years of the outline being granted and work should start two years after the reserved matters are approved.

can you get indemnity insurance for potential breaches of planning permission?

No.

what notices can the local authority serve on someone in breach of planning laws?

an enforcement notice requiring breach be remedied within a time frame
a stop notice injuncting the owner from carrying on anymore work

What is the time limit for the LA to serve an enforcement notice for building work?

4 years of breach

What is the time limit for the LA to serve an enforcement notice for material change in use?

10 years of first breach

is there a cut of point for enforcement of planning violations on listed buildings?

No

what should you do if the client wants to buy a listed building?

have a full structural survey done

do you needs consents from building control even if you don't need planning permission?

Yes

where will consents and certificates from building control show up in your search?

in the pre-contractual searches, local search, PIF

Do I need to comply with building regulations to install a boiler?

yes

What is the time limit for the LA to take enforcement action for non-compliance with building regulations?

12 months

Is there a time limit on when an LA can ask for an injunction in response to non-compliance with building regulations?

No

POV: You are a solicitor acting for a client buying a house which is not listed. Looking at the PIF it appears the seller installed a boiler and fitted new windows in the house three years ago. The local search has not indicated that there are any certificates for the building work. The client says they will check with the local authority. What should you do?

Make an enquiry of the seller. If they cannot produce the certificates or consents then advice the client of the consequences and ask the seller to take out indemnity insurance over the possible breach. The relevant enforcement period has passed for building control but an injunction might still be granted at any point for force compliance. Do not talk to the local authority yet because this might prevent insurance being obtained.

Does a commercial property wishing to change its business but will stay in the same use class of the premises need to obtain permission to change the premises?

No

can changes to use class in commercial settings fall under permitted development?

yes if there has been no article 4 direction, it is not listed and is not in a conservation area. Example: permitted development allows you to go from either a Casino, a betting office, a payday loan shop or a takeaway to a commercial, business and service.

if the buyer is a cash buyer when and what should the solicitor look for?

pre contract stage
where is the money (in British bank account?)
where did the money come from?

can a solicitor make a value judgment on whether a mortgage is good or not?

No, you can only give generic advice like stating the terms not advising on them

Name the five most common types of mortgage a buyer can get?

Repayment
Interest only
Endowment
Pension
Sharia compliant

What is a repayment mortgage?

where the customer makes regular payments to cover the full amount borrowed (the capital) plus interest

What is an interest only mortgage?

The borrower only pays the interest on the loan.
This means the borrower pays less per month, but the disadvantage is that the capital remains outstanding usually until the home is sold on. The borrower may, still, however, end up better off as he will have the 'equity' that is not required for the mortgage.

What is an endowment mortgage?

Generally no longer available - interest only mortgages topped up with a payment that is invested in an endowment policy - the idea is that the policy repays the capital at the end of the term

what is a pension mortgage?

Interest only, however a separate plan in the form of a personal pension which will benefit from tax relief and tax-free profits. Can get a lump sum of 25% of your pension for a deposit tax-free. Good for the self employed

What is a sharia compliant mortgage?

offers alternatives to payments of interest which may be a concern for Muslim clients

What steps will the lender take when issuing a mortgage?

1. property valuation report
2. Use report to check the property is good security
3. Offer mortgage offer

what is the handbook that should be used when acting for a lender?

The UK Finance Mortgage Lender's

What is included in The Handbook for lenders?

Fraud prevention steps
Title Issues and how to deal with them

what undertaking should the buyer's solicitor make in relation to the mortgage?

To register the mortgage after completion. Must obtain registration sums from client before completion

What are the formalities needed for a mortgage to be valid and released to the buyer?

Executed by deed prior to completion
Buyer submits a Certificate of Title within the timeframe required by the lender to get the funds

when is the mortgage completed?

After the purchase of the house

what is perfecting the mortgage?

On completion registering the mortgage against the property title as the first legal charge on the charges register

What are the time limits to register mortgages in registered land?

Within the 30 working day period granted with the OS1/2 priority search

What are the time limits to register mortgages in unregistered land?

60 days from mortgage completion if triggered first registration

What are the time limits to register mortgages if the borrower is a company?

21 days to register the charge with Companies House on completion.

Can you exchange and complete on the same day?

Yes

When is it desirable to exchange and complete on the same day?

Where there is a related purchase (you are selling/buying another house at the same time)

What are the pre-exchange tasks that must be done?

Seller side - confirm redemption figure for their mortgage and contract
Buyer side - confirm that they want to continue and confirm financing

when is the deposit passed to the seller's solicitor as either stakeholder or agent?

On exchange

How does exchange work in contracts for a new lease?

the contract states that the buyer takes the lease in the form of the agreed draft and the seller confirms to grant the lease of the agreed draft. Any changes after this must by mutual agreement usually by a new lease agreement.