Stage 1 – Preliminary matters considerations

Context
- We are moving from introductory concepts into the actual conveyancing transaction.
- Stage 1 = Pre-Market Stage (everything that happens before the property is formally placed on the market).

Draft & send Client-Care / Engagement Letter
- Must scope work, set out fees & disbursements, identify service standards.
Client Due-Diligence
- Obtain photo-ID + proof-of-address.
- Carry out AML, CTF & sanctions checks (cross-reference Ethics & Legal-Services modules).
Advise on a Survey
- Regardless of freehold vs leasehold or residential vs commercial, the buyer’s solicitor should strongly recommend a survey to detect structural defects.
- Outcomes of the survey will affect later stages (valuation, mortgage lender’s position, price-renegotiation, special conditions, etc.).

Definition: **Tax on the *gain* (profit) realised on disposal of an asset that has risen in value.** $\text{CGT is charged on: (Sale Proceeds – Base Cost – Allowable Expenses)}$
Only the gain is taxed, not the gross sale price.
30-Day Residential Property Return Rule (NEW)
- On completion of a residential sale where CGT is due, the client (or solicitor/agent) must:
1. File a Residential Property CGT Return with HMRC, and
2. Pay the tax — both within $30$ days of completion.
- This tight deadline is recent & highly examinable.
Principal Private Residence Relief (PPR) – common reason no CGT arises
- Conditions for full exemption (any breach = partial or zero relief):
- Property was the owner’s only / main residence throughout ownership.
- Owner not absent except for permitted periods (employment abroad, etc.).
- Total land ≤ $0.5$ hectare (unless needed for normal enjoyment).
- No exclusive business use of any part of the dwelling.
- Watch for exam cues: buy-to-let, holiday home, large grounds, studio used solely for business ⇒ PPR fails ⇒ CGT payable.
Practical Tip: Advise clients to obtain specialist accountancy advice early so there is no surprise liability at the end of the transaction.

Definition: A professionally binding promise given by any person in a law firm; breach can lead to SDT, disciplinary & civil consequences.
Why crucial in conveyancing? The process depends on mutual trust and simultaneous steps.
Common Undertakings & Examples
1. Unregistered Title – Release of Deeds
- Seller’s mortgagee holds title deeds.
- Seller’s solicitor undertakes not to hand over deeds until in a position to redeem the mortgage on completion.
- Leads to creation of an epitome of title at pre-contract stage (photocopies only).
1. Contract Exchange (Law Society Formulae)
- Both solicitors undertake to post their client-signed part of the contract to the other immediately on exchange.
- Buyer’s solicitor also undertakes to forward the $10\%$ deposit (must be cleared funds to avoid breach of Solicitor Accounts Rules).
1. Stage 4 (Pre-Completion) – Seller’s Mortgage
- Seller’s solicitor undertakes to redeem the mortgage out of the sale proceeds.
- Solves the “catch-22”: Buyer won’t send money while mortgage exists; Seller cannot redeem until money received.

Duty of absolute confidentiality applies to all affairs of client, survives death, & covers telephone enquiries (estate agents, brokers, relatives).
Dual representation (Buyer + Lender)
- Usually permissible (common objective = good title) unless conflict or confidentiality clash emerges.
- Scenario: Buyer tells you they will shortly lose their job & instructs you not to tell lender.
- Cannot breach confidentiality.
- Must return mortgage offer to lender “without comment” and cease acting for lender (and possibly buyer) due to emerging conflict.

Rule: Cannot act where **interests conflict or there is a *significant risk* of conflict (SRA Code)**.
Classic exam pitfall
- Same solicitor acting for both Seller & Buyer of the same property ⇒ prohibited (risk too high).
Multiple clients on one side
- Must have instructions from each (e.g.
- Two sellers of matrimonial home.
- Two purchasers – check for divorce or disagreement over beneficial shares).
Co-ownership disagreement (see below) = conflict ⇒ must decline.

Land-Law interface: Legal estate can only be held as Joint Tenants (max 4). Beneficial interest can be Joint Tenants or Tenants-in-Common.
Buyer’s solicitor must:
- Raise co-ownership discussion at the outset.
- Explain consequences of JT (automatic survivorship) vs TiC (fixed shares, passes by will/intestacy).
- Where contributions are unequal, advise taking as TiC in unequal shares and drafting a Declaration of Trust.
- Worked example:
  - Jane contributes $\pounds20,000$ ; John contributes $\pounds200,000$ .
  - Recommended split could be 10 : 90 via Declaration of Trust + HM Land Registry Form TR1 restriction.

Best-practice framework for residential conveyancing.
Provides:
- Standard forms, checklists, timings,
- Encourages use of “protocol forms” (TA6, TA10, etc.).
Applies to freehold & leasehold Residential transactions only. Commercial work follows bespoke procedures.

Facts: Sale price $\pounds300,000$ . Seller’s indicative redemption figure (Stage 2) comes back at $\pounds350,000$ .
Analysis:
1. Undertaking problem – Seller’s solicitor cannot promise to redeem mortgage as sale proceeds fall $\pounds50,000$ short.
2. Must raise the issue immediately with client & lender; sale unlikely unless seller has extra funds.
3. Illustrates importance of obtaining indicative redemption figures in Stage 2 (pre-contract).
4. If discovered only after exchange => firm already bound by undertaking ⇒ firm would have to fund difference ⇒ severe financial & disciplinary risk.

Always mention survey & CGT advice in early buyer letters.
Memorise 30-day CGT rule & PPR criteria.
Identify & label undertakings; state who gives, when, purpose, and consequences of breach.
Constantly test for confidentiality vs lender’s interests and conflict triggers (same solicitor both sides, divorces, co-owner disputes).
Provide full co-ownership advice and suggest Declaration of Trust where shares unequal.
Refer to the Conveyancing Protocol whenever discussing residential transactions.
Use early redemption figure request to pre-empt funding gaps that compromise undertakings.

Ethics & Professional Conduct: AML, undertakings, conflicts, confidentiality.
Property Law (Land Law): Co-ownership structures, overreaching, severance.
Tax: CGT calculations, PPR rules, filing deadlines.
Practical Skills: Drafting engagement letters, Law Society exchange formulae, handling client & third-party communications.