SQE - Property Law and Practice (copy)

What are the key steps of the Seller in pre-contract to exchange?

• Deduce title (send over documentation to the buyer)

• Answer pre-contract enquiries

• Prepare the draft contract

What are the key steps of the Buyer in pre-contract to exchange?

• Take instructions

• Pre-contract searches

• Investigate title and raise queries

• Report on title

• Approve draft contract

The seller's steps pre-completion:

• Approve purchase deed (TR1)

• Reply to pre-completion requisitions

• Prepare for completion

A seller might prepare the purchase deed if it is a sale of part.

The buyer's steps pre-completion:

• Prepare purchase deed (TR1)

• Pre-completion requisitions

• Pre-completion searches

• Prepare for completion

The seller's steps post-completion:

• Send completed TR1 to buyer and discharge any mortgage (send evidence to buyer)

The buyer’s steps post-completion:

• SDLT / LTT

• Companies House application to register mortgage (if buyer is a company)

• LR application

What does ‘caveat emptor’ mean?

Let the buyer beware. It means the buyer takes the property as they find it and after exchange they cannot withdraw.

There is no onus on sellers to disclose physical defects.

What are the 3 different types of a survey a buyer can carry out?

• Basic survey

• Homebuyer report

• Full structural survey

What is a capital repayment mortgage?

A mortgage where the borrower repays both the capital and interest through monthly payments. At the end of the term, the loan is paid off in full.

What is an interest-only mortgage?

A mortgage where the borrower only pays the interest on the loan, with the capital remaining outstanding. The capital is typically repaid by selling the property, but the borrower may benefit from any equity in the property.

What is an endowment mortgage?

An interest-only mortgage supplemented by payments into an endowment policy, intended to repay the capital at the end of the term. Many policies have underperformed, leaving borrowers with a shortfall.

What are the 7 key SRA principles?

1. in a way that upholds the constitutional principle of the rule of law, and the proper administration of justice.

2. in a way that upholds public trust and confidence in the solicitors' profession and in legal services provided by authorised persons.

3. with independence.

4. with honesty.

5. with integrity.

6. in a way that encourages equality, diversity and inclusion.

7. in the best interests of each client.

What is an “own interest conflict,” and what should a solicitor do if it arises?

What is an “own interest conflict,” and what should a solicitor do if it arises?

What is the difference between a “conflict of interest” and an “own interest conflict”?

A "conflict of interest" arises when a solicitor's duty to multiple clients in the same matter conflicts, whereas an "own interest conflict" is a conflict between the solicitor’s own interests and their duty to a client.

What are the exceptions to acting when there is a conflict of interest?

Exceptions are allowed if the clients have a "substantially common interest" or are "competing for the same objective," provided informed consent is given, safeguards are in place, and it is reasonable to act (CCS 6.2).

What should a solicitor do when duties of confidentiality and disclosure conflict?

The duty of confidentiality takes precedence over the duty of disclosure.

Can a solicitor act for both a buyer and a lender in a residential transaction?

Yes, it is common in residential transactions as there is usually no conflict of interest. Both parties share a common interest in ensuring the property is good and marketable.

What is ‘deducing title’ and who is responsible for it?

Deducing title means the process of proving ownership to a would-be buyer. In this context, title means proof of ownership. The seller deduces title at the pre-exchange stage.

Where are the rights benefitting the Property set out?

on the Property Register

What needs to be considered for rights of way? (4 things)

1. Registration of the burden (to be enforceable it must be registered on both titles)

2. Adequacy

3. Maintenance

4. Adoption (there might be costs involved in bringing a road up to adoption standard).

What is Title Absolute?

Title Absolute (freehold or leasehold) is the best and most common class of title, indicating no issues. The proprietor has satisfied the Land Registry that they are the true and proper owner of the property.

What is Qualified Title?

Qualified Title (freehold or leasehold) is granted when there is a specific defect in the title, such as a missing deed that contains covenants or easements on first registration.

What is Possessory Title?

Possessory Title (freehold or leasehold) is granted when the proprietor has physical possession of the property but lacks title deeds or is claiming ownership through adverse possession, also known as 'squatters' rights.'

What is Good Leasehold Title?

Good Leasehold Title (leasehold only) is granted when the leaseholder cannot provide evidence of the landlord’s title to the land. It can often be upgraded if the landlord’s title has been registered since the lease was granted.

What is recorded on the proprietorship register?

• The registered proprietor

• Price paid or value stated

• any indemnity covenants or restrictions on right to sell (e.g a Form A restriction).

How is the legal title to a property held (always)

The legal title is held as joint tenants

How is the beneficial title to a property held

The beneficial title is held as joint tenants or tenants in common

What is overreaching?

Where a property is held as tenants in common, the restriction on the proprietorship register and beneficial interest must be overreached.

Overreaching means the process of transferring the beneficial interests in land to the money that the buyer has paid. This means that the land is freed from beneficial interests, and the buyer does not need to worry.

What will the buyers solicitor need to see if dealing with a surviving beneficial joint tenant?

the buyer’s solicitor needs to see a certified copy of the deceased joint tenant’s death certificate

What will the buyers solicitor need to see if dealing with a surviving beneficial tenant in common?

the buyer’s solicitor needs to see a certified copy of the deceased tenant in common’s death certificate and will also need a second trustee to be appointed

What types of rights are listed in the charges register?

Rights burdening the property. E.g

• Mortgage

• Covenants

• Easement

• Leases

How is a legal mortgage dealt with?

• Created by deed

• Burden entered on the Charges register

• Restriction entered on the Proprietorship register

What is a restrictive covenant?

A promise not to do something.

If detailed in the charges register it is assumed to be binding on the land.

What is a positive covenant?

A promise to do something.

If detailed in he charges register you need to check there is a chain of indemnity for the covenant to run with the land.

Indemnity covenants are located in the proprietorship register (if they aren’t you can assume the chain of indemnity has been broken).

What options does a buyer have to deal with covenants that burden the land?

1. Obtain indemnity insurance

2. Approach the person with the benefit

3. Application to Upper Tribunal (Lands Chamber) to discharge covenant - only if the covenant is restrictive

Which one of the following statements about insurance for breach of a restrictive covenant is correct?

• S.19(1) FSMA 2000 prevents a solicitor from arranging an insurance policy for breach of a restrictive covenant.

• Insurance must be tried before approaching the person owning the land with the benefit of the covenant.

• The buyer would have to arrange any insurance policy so that it was covered (ie protected) by the policy.

• The seller will pay the initial premium for the insurance policy and thereafter the buyer will pay the annual insurance premiums for the policy.

• Insurance for a future breach of a restrictive covenant is expensive because it is difficult for the insurer to assess the risk of the breach occurring.

Insurance must be tried before approaching the person owning the land with the benefit of the covenant.

Which of the following best sets out the remedies, in the order they should be attempted, for a future breach by the buyer of a binding positive covenant?

• 1) Approaching the PWB for consent to breach the covenant, 2) Insurance against the PWB claiming loss caused by the breach.

• 1) Seller to remedy the breach / reduce the purchase price, 2) Insurance against the PWB claiming loss caused by the breach, 3) Approaching the PWB for consent to breach the covenant.

• 1) Insurance against the PWB claiming loss caused by the breach, 2) Approaching the PWB for consent to breach the covenant.

• 1) Insurance against the PWB claiming loss caused by the breach, 2) Approaching the PWB for consent to breach the covenant, 3) Going to the Upper Tribunal (Lands Chamber) to have the covenant modified or discharged.

• 1) Seller to remedy the breach / reduce the purchase price, 2) Insurance against the PWB claiming loss caused by the breach, 3) Approaching the PWB for consent to breach the covenant, 4) Going to the Upper Tribunal (Lands Chamber) to have the covenant modified or discharged.

1) Insurance against the PWB claiming loss caused by the breach, 2) Approaching the PWB for consent to breach the covenant.

As the breach is a future one to be carried out by the buyer, the seller will not remedy it. The PWB should not be approached prior to an insurance quote being obtained as once the PWB is approached insurance will not be available (it will be a condition of the insurance that the PWB has not been and will not be approached). The Upper Tribunal (Lands Chamber) is not available for positive covenants (s.84 LPA 1925).

What are the key dates for compulsory first registration?

• 1 December 1990 - for sales

• 1 April 1998 - for gifts

What is an epitome of title?

A schedule of title deeds and documents showing the title to unregistered property.

Copies are sent to the buyer and the selling solicitor usually undertakes to send originals on completion.

What is the ‘root of title’?

• must be dated more than 15 years ago (conveyance / legal mortgage preferred over a consent or gift)

• deals with both the legal and beneficial title to the property (‘seised in fee simple’)

• adequately describes the extent of the land being conveyed

• does not cast doubt on the seller’s title (an example of doubt might be a document executed under a power of attorney)

What documents should be included in the chain of title for unregistered land?

• The root of title document

• Any prior deeds if they contain covenants and easements that aren’t referred to in the root of title

• Any powers of attorney if documents executed under it

• Death certificate of property passing via survivorship

• Grant / Assent for property passing under Will

• Any mortgages created after the root (even if discharged).

What documents need not included in the chain of title for unregistered land?

• Documents that only affect the beneficial interest

• Expired leases

• Land Charges searches

• Old searches, old planning permissions etc

What is a Search of the Index Map?

• Undertaken to establish whether there are any registered titles within the boundaries of the property

• any pending applications for registrations

• any caution against first registrations

How do you check validity of unregistered deeds (unlikely to have been caught by the MPMPA 1989 provisions relating to valid execution of deeds)

Check the common law application of deed validity:

• Clear on the face that it is a deed

• Signed in presence of witness (if a company, two directors or one director and company secretary)

• If dated before 31 July 1990 - a seal

• Delivering deed (dated)

Stamping

Each conveyance must have been stamped showing the correct amount of ad valorem stamp duty has been paid or have a certificate of value.

What should a purchaser of unregistered land ask for if the seller is the surviving joint tenant?

Certified copies of the deceased joint tenant’s death certificate

What should a purchaser of unregistered land ask for if the seller is the surviving tenant in common?

For a second trustee to be appointed in the conveyance to overreach the beneficial interest.

What is a Land Charges Search in unregistered land?

• It shows rights burdening the unregistered property (e.g second / third mortgages, estate contract, restrictive covenant, equitable easement, home right).

• Form K15 or on the portal

• The search is against the names and ownership (in years) of the property of each owner.

• First mortgages are not protected but second or third mortgages are because they do not have protection of holding the original deeds.

What is a vacating receipt?

Is wording written on the mortgage deed to confirm the mortgage has been repaid. It is signed by the lender.

How does the chain of covenants (both positive and negative) work in unregistered land transactions?

• Positive covenants only bind the land if there is a chain of indemnity

• Restrictive covenants only bind if they are registered as a d(ii) land charge

What year is the earliest you can search from on the land charges register?

1926

What is a report on title?

A report on title is the report in which a solicitor reports to its client on the its investigation of title, search results and replies to enquiries. It can take the form of a letter or a standalone document.

What are the ‘standard’ property searches?

• “Local search” – enquiries of the local authority (CON29) and search of the local land charges (LLC1)

• Drainage and water enquiries

• Desktop environmental search

• Chancel repair liability

Depending on type of title/seller:

• land charges search (unregistered land)

• search of the index map (unregistered or registered land subject to mineral rights)

• companies search

What are the ‘optional searches’ for property?

Optional searches:

• CON29O (including commons registration search)

• Highways search

• Coal mining search

• Cheshire Salt

• Tin, clay and limestone

• Phase I/Phase II survey

• Flood search

• Utility providers

• Railways – overground, underground, crossrail or HS2

• Waterways

What are the components of a “local search”?

The "local search" consists of:

1. Optional enquiries (CON29O)

2. Standard enquiries of the local authority (CON29)

3. Local Land Charges Search (LLC1)

What does the Local Land Charges Search (LLC1) reveal?

LLC1 reveals:

• Planning permissions

• Planning enforcement or stop notices

• Article 4 directions

• Tree preservation orders

• Smoke control orders

• Financial charges (e.g., road-making charges)

• Conservation areas

• Listed building status

What does a CON29 search cover?

A CON29 search covers:

• Planning permissions, refusals, and completion notices

• Building regulations

• Roads and public rights of way

• Environmental notices (e.g., contaminated land notices)

What are examples of optional enquiries (CON29O)

• Common land and town or village green (land which is designated for communal use is very restricted)

• Road proposals by private bodies

• Areas of outstanding natural beauty and national parks

• Pipelines

• Noise abatement zones

What is a drainage and water search?

A search conducted with the local water company to check:

• If the property drains to a public sewer

• Whether it's connected to a mains water supply

What does a desktop environmental search indicate?

It indicates:

• Whether the property has been used for potentially contaminative land uses

• Flooding likelihood

• Susceptibility to natural subsidence

• Industrial land use within 250 meters

What is a Chancel Repair search?

A search to check if the property is liable for repairs to the local parish church, which can be expensive. Indemnity insurance is available if liability exists.

When is a highways search necessary?

A highways search is necessary when:

• There is doubt whether the property abuts the public highway

• For most commercial properties

What is a Central Land Charges Search (Form K15)?

A search carried out for unregistered land to reveal entries against the seller and previous owners in the central land charges register.

What is a Bankruptcy Search (K16)?

A K16 bankruptcy search checks if:

• The seller (or buyer taking a mortgage) is bankrupt

• Usually done when the sale isn't at full market value

When is an Environmental Phase I survey used?

A Phase I environmental survey is more detailed than a desktop search and includes a site inspection to assess contamination risks.

What is an Index Map Search (SIM)?

It shows the extent of registered titles and unregistered land in a specific area, especially used for unregistered land or when mineral rights are referenced.

What is a Phase II environmental survey?

A Phase II survey involves testing soil or water samples to determine whether contamination is present, usually following a Phase I survey indicating risk.

When is planning permission required?

Planning permission is needed for "development," which includes carrying out certain building works on land or a material change of use of land (s55, Town and Country Planning Act 1990).

Exceptions include works that only affect the interior or do not materially affect the external appearance of the building.

What does sui generis mean in the context of use classes?

Sui generis refers to uses that do not fall within any use class, like theatres, pubs, and nightclubs.

What is "permitted development"?

Permitted development, outlined in the Town and Country Planning (General Permitted Development) Order 2015 (GPDO 2015) / 1995 for Wales, allows certain types of development without needing full planning permission. Conditions apply, and local Article 4 Directions may restrict permitted development.

What is an Article 4 Direction?

An Article 4 Direction restricts permitted development rights in specific areas, meaning planning permission may be required for work that would otherwise be permitted under GPDO 2015.

What are the grades of listed buildings?

Listed buildings are classified as:

• Grade I (buildings of exceptional interest),

• Grade II* (particularly important buildings),

• Grade II (buildings of special interest).

Listed building consent is required for alterations, extensions, or demolitions, separate from planning permission.

What is a conservation area?

A conservation area is an area designated by local authorities due to its special architectural or historic interest. Stricter planning controls apply, such as restricted permitted development rights and the need for permission to demolish buildings or cut down trees.

What are building regulations?

Building regulations are statutory rules governing the safety, health, and energy efficiency of buildings, covering issues such as structural integrity, fire safety, and water supply.

These are separate from planning permission and governed by the Building Regulations 2010.

What is considered ‘building work’ under the Building Regulations 2010.

• erection or extension of a building

• installation or extension of a service or fitting that is controlled under the Building Regulations (for example, windows, boilers)

• work required where there is a material change of use of the whole building

Building Regulations regulate issues that affect health and safety, such as the structural integrity of the building, fire escape, water supply, stairways, etc

What constitutes a breach of planning control?

A breach occurs when:

1. Development takes place without planning permission; or

2. A condition or limitation of planning permission is breached.

Who is liable for breaches of planning control?

The current landowner is liable for any breaches of planning control, even if they did not cause the breach.

What is an enforcement notice in planning control?

An enforcement notice requires the landowner to:

• Restore the land to its original condition before the unauthorised development; or

• Comply with conditions or limitations imposed by planning permission.
  If not complied with in 28 days, the landowner may be fined and the local authority can carry out the work at the landowner's expense.

What is a stop notice in planning control?

A stop notice requires specific activities to cease immediately. It can only be issued after an enforcement notice and cannot prohibit the use of a dwelling or activity carried out for more than four years.

What is a breach of condition notice in planning control?

It is similar to an enforcement notice but focuses specifically on the breach of conditions or limitations imposed by planning permission.

What are the enforcement time limits before 25 April 2024 for planning control?

• 4 years for building works and change of use to a single dwelling.

• 10 years for other changes of use and breaches of planning conditions.

What are the enforcement time limits on or after 25 April 2024 for planning control?

All planning breaches must be enforced within 10 years, regardless of the type of breach.

What is a planning enforcement order?

A planning enforcement order can be issued if a breach of planning control has been deliberately concealed, allowing the local authority to take enforcement action despite the time limits.

What are the enforcement options for breaches of building regulations in Wales and pre-2024 England?

• Prosecution – within 2 years of completion, 6 months after discovering the breach.

• Enforcement notice – within 1 year of completion.

• Injunction – no time limit for unsafe work.

What are the enforcement options for breaches of building regulations in post-2024 England?

• Prosecution – unlimited time to prosecute.

• Enforcement notice – within 10 years of completion.

• Injunction – no time limit for unsafe work.

What options are available if a breach of planning or building regulations is discovered?

• Withdraw from the transaction.

• Require the seller to regularise the breach (removal, alteration, or obtaining proper permissions).

• Obtain indemnity insurance for financial loss (does not cover health/safety risks).

Can a planning breach be enforced if it has been deliberately concealed?

Yes, the local authority can apply for a planning enforcement order to act despite time limits if the breach was deliberately concealed.

What standard form is used for pre-contract enquiries in commercial property transactions?

Commercial Property Standard Enquiries (CPSE), with CPSE1 applying to all commercial property transactions.

What standard form is used for pre-contract enquiries in residential property transactions?

TransAction forms, including TA6 Property Information Form, TA7 Leasehold Information Form, TA8 New Home Information Form, and TA10 Fittings and Contents Form.

What is CPSE2 used for?

CPSE2 is used where the property is subject to commercial tenancies (e.g., an office block or industrial estate).

What is CPSE3 used for?

CPSE3 applies when granting a new lease (e.g., when acting for a tenant in an industrial estate).

What are the residential property protocol forms?

• TA6 - Property information form

• TA10 - fittings and contents form

• TA7 - long leasehold

• TA8 - New build

What remedies are available for misrepresentation in property transactions?

Remedies include:

• Rescission of the contract

• Damages if there is a material difference between the represented and actual value or description of the property

What does The Law Society Conveyancing Protocol apply to?

Residential property transactions.

Observance of the Protocol is voluntary except for conveyancers who have the Conveyancing Quality Scheme accreditation

What is a facility letter, and how does it differ from a mortgage offer?

A facility letter is the commercial equivalent of a mortgage offer, outlining the terms and conditions of a loan in commercial property transactions.

What is a certificate of title, and who provides it?

A certificate of title is a document provided by a solicitor, certifying that the property title is satisfactory for lending purposes.

How does a certificate of title differ between residential and commercial transactions?

A residential certificate of title is typically a simple one-page form, while a commercial certificate of title is more complex and usually follows the City of London Law Society (CLLS) standard format.

What is the City of London Law Society (CLLS) certificate of title, and why is it important?

The CLLS certificate of title is a standardised document used in commercial property transactions. It contains a series of prescriptive statements, and any errors or omissions can lead to liability for the solicitor if the lender suffers a loss.

What are the requirements for the property contract in a conveyancing transaction?

A contract for land must satisfy the following requirements (s2, Law of Property (Miscellaneous Provisions) Act 1989):

• be in writing

• incorporate all the terms which the parties have expressly agreed

• be signed by, or on behalf of, each party to the contract

What is a latent incumbrance?

Latent incumbrances are rights burdening the property that are not apparent on inspection (e.g., covenants, easements)

What is a defect in title?

defects in title are issues casting doubt on the seller’s ownership or the rights affecting the property (e.g., lost deed containing covenants).