1
Q
a client can only rescind a contract when time is
A
of the essence
2
Q
Common time window for completion
A
2 weeks from exchange (traditionally, it was 4 weeks, but clients prefer sooner) - the Standard Conditions provide that the completion date is 20 working days after the date of the contract.
3
Q
Under the SCS and SCPC, who drafts the contract and who drafts the transfer deed?
A
contract - seller’s solicitor
transfer deed - buyer’s solicitor
4
Q
Where a deed is executed by a private individual, why is it important to ensure that the witness is independent?
A
to prevent potential allegations of undue influence
5
Q
Conventionally, which solicitor typically drafts the transfer deed?
A
the buyer’s solicitor completes the transfer deed (usually TR1) and sends it to the seller’s solicitor for agreement immediately after exchange of contracts
6
Q
When should the transfer deed be dated?
A
on completion
7
Q
What correspondence address should be included in the TR1 form for the buyer?
A
the address of the Property they are buying as this is their new address
8
Q
Who executes the transfer deed?
A
the seller executes the transfer deed to transfer the land
9
Q
If the seller client has signed the transfer deed but does not intend it to come into force yet, what should their solicitor do?
A
their solicitor needs to expressly say so in the covering letter when sending
the deed
10
Q
Buyer’s solicitor’s checklist before completion
A
- draft the transfer deed (eg TR1 form) for the seller’s solicitor’s approval
once approved by the seller’s solicitor; - arrange for the buyer to sign if it contains indemnity covenants (or any other obligation on the part of the buyer)
- if the buyer is taking a mortgage loan, arrange for the buyer to execute the legal charge
- send requisitions on title to the seller’s solicitor (e.g. ask the seller’s solicitor for an undertaking to pass the redemption moneys to the seller’s lender)
- carry out relevant pre-completion searches: OS1 search - send the buyer a statement of money needed to complete the purchase, including SDLT, legal fees, disbursements etc.
- Ensure that SDLT form approved by client
11
Q
When should the buyer’s solicitor make pre-completion searches?
A
as close to the completion date as possible
12
Q
Why are pre-completion searches necessary?
A
- ensure that the seller has not further encumbered the title since investigation of title took place;
- check the financial circumstances of the borrower when acting for the lender
- To gain priority for the buyer, and the lender, over anyone else making an application before the buyer applies to register the change of ownership at the Land Registry
- If the seller is a company, to check that the company has not gone into liquidation before the balance of the purchase price is paid over on completion.
13
Q
time is of the essence
A
the contract must be performed by the specified time, and if not, the non-defaulting party can walk away from the contract and claim damages for the breach
14
Q
How are common law damages calculated for a failure to complete on time?
A
aim to put the claimant in the position it would have been in had the contract been correctly performed
15
Q
What are damages for delayed completion likely to cover?
A
losses naturally flowing from the breach as well as for any reasonably foreseeable CEL e.g. wasted legal costs, putting furniture into storage, the cost of renting another property, the cost of bridging finance and any rebooking removal costs.
16
Q
If a party does not complete on time, what can the other side do?
A
the party who is ready to complete can serve a notice to complete and make time of the essence
17
Q
benefit of an OS1 search
A
Confers a priority period of 30 days, which provides protection to the applicant against any subsequent entries which may be placed
on the register after the date of the search but before the buyer is registered as proprietor.
18
Q
For an OS1 search, what do you search against?
A
title number
19
Q
To ensure that the buyer takes the Property free from entries made during the OS1 priority period, they should…
A
submit their application for registration by 12 noon on the last day of the priority period
20
Q
When would you need to perform a Companies House search pre-completion?
A
to check that a seller company is solvent
21
Q
A transfer of land must be in the form of a
A
deed
22
Q
Execution clause for a TR1 form
A
Signed as a deed by
X
in the presence of
Signature of witness
Name
Address
23
Q
The witness of the transfer deed must be
A
independent ie not a party to the deed
24
Q
Land registry form to transfer the whole of a freehold or leasehold title
A
TR1 form (can be used for registered and unregistered land)
25
Land registry form to transfer part of a registered title
TP1 form
26
TR5 form
transfer of a portfolio of registered titles (may include unregistered titles)
27
Transfer forms for unregistered land
may still be transferred in the form of a conveyance but TR1 form is standard
28
Does unregistered land have a title number?
No
29
If the transferor is not giving full title or limited guarantee, how is this represented in the TR1 form?
The tick boxes are left blank
30
What part of the TR1 should be left blank until completion?
the date because this completes the transfer
31
If using TP1 for transfer of part, how is the part of land usually identified?
A plan will be attached to the TP1
32
Executing the transfer deed – an individual
Signed in presence of an independent witness, who writes their full name and address
33
When is a transfer deed "delivered"?
when it is dated
34
What search is used for unregistered land instead of an OS1?
K15 Central Land Charges Search
35
For a K15 search, what do you search against?
the names of all of the previous owners during their period of ownership
36
Fee for a K15 Central Land Charges search
fee for each name searched
37
What priority period does a K15 search confer?
priority period of 15 working days from the date of the result
38
When acting for the lender, what solvency searches must you carry out?
Registered land -bankruptcy search (Form K16) against the buyer to protect the lender
Unregistered land - Add the buyer's name to the K15 search
39
Why should a company search be carried out as late as possible/immediately before completion?
A company search gives no priority period
40
Where can you check if the seller is bankrupt for registered land?
Check the OCEs for a notice or restriction relating to bankruptcy
41
requisitions on title
the questions that the buyer’s solicitor needs answering before completion
42
The practical arrangements for completion are agreed in which form?
Form TA13
43
Requisitions on title for residential transactions are usually in which form?
TA13 → ‘Completion information and undertakings’
44
Contents of TA13 form (completion information and undertakings)
- Vacant possession: Asks about arrangements for collecting the keys; for example, whether they are left with the agents.
- Deeds and documents (unregistered land only)
- Completion: Asks for confirmation that completion will take place according to the Law Society’s Code for Completion by Post.
- Money: Asks for the seller’s solicitor’s client account details (to send the money), and for the exact amount payable on completion
- Mortgages and charges
45
Equivalent of the TA13 for commercial property transactions
CPSE SCR or the firm’s own precedent may be used
46
Once the seller's mortgage has been redeemed, how can the lender discharge the charge?
Submit Form DS1 or Form eDS1 (electronic)
47
Remainder of purchase price paid to the seller is often sent by
telegraphic transfer (TT)
48
Procedure for the landlord to fill out the DS1 to discharge the mortgage
The lender will complete Land Registry Form DS1 and send it to the seller’s solicitor for onward transmission to the buyer’s solicitor.
49
By what method does completion typically happen?
Law Society Code for Completion by Post
50
Why is it normal for residential property transactions to take place on a Friday?
So the buyers can move in over the weekend
51
The Law Society Code for Completion by Post says that the the TR1 must be sent to the
buyer’s solicitor ASAP after completion and in any event by the end of the working day following completion
52
If either party fails to complete by the time and date specified in the contract, then they are obliged to pay
interest for each day’s delay
53
How is the interest rate calculated?
Calculated at the interest rate specified in the contract. If none is specified, the Law Society interest rate applies
54
How is the number of days delay calculated for compensation for the seller?
Calculated from the agreed date until the actual completion
55
Calculation for interest
(1) The purchase price less the deposit
(2) Multiply the number by the interest rate
(3) Multiply by 1/365 to find the daily rate (1/366 in a leap year)
(4) The daily rate x no. days of delay = amount due
Buyer must add the amount to the purchase price when they complete.
56
If the buyer is the defaulting party, and they have not given a full 10% deposit, what must they do to the deposit?
make it up to 10% without delay
57
After a notice to complete has been served, the parties must complete within
10 working days (starting from the day after the notice to complete has been served)
58
Once served, can a notice to complete be withdrawn?
only if both parties agree
59
Seller's remedies if buyer fails to complete
The seller may rescind the contract, and:
- forfeit the deposit and any interest accrued on it
- resell the property and any contents included in it
- claim contractual damages
60
Buyer's remedies if seller fails to complete
demand return of the deposit with any interest accrued on it;
claim contractual damages or specific performance
61
SCS provide for rescission in which circumstances
- failure to comply with a notice to complete;
- seller has misrepresented something, which amounts to fraud or recklessness;
- the buyer would be obliged to accept a property differing substantially
(in quantity, quality or tenure) from what the error or omission had led them to expec
62
What is the remedy for less serious misrepresentations?
damages only, not rescission
63
Can you claim interest if completion never happens?
No, interest only applies to delayed completion so where completion does not take place at all, the remedy is damages
64
A charge eg mortgage given by a company must be registered at CH within
21 days of the creation of the charge, which starts the day after the creation of the charge (ie date of completion)
65
If the 21-day deadline for registering a charge at CH is missed, what can you do?
apply for a court order to allow the filing out of time.
66
Consequences if a company does not register a charge at CH
the charge is void against any liquidator or administrator, and the lender is not protected
67
Application for Land Registry registration for registered title
Form AP1
68
What documents must be provided with Form AP1 for updating the register for a registered title?
- The transfer deed (eg TR1)
- SDLT5 or WRA certificate to prove payment of SDLT or LTT
- Form DS1 to discharge the seller’s mortgage if appropriate
- Mortgage deed in favour of the buyer’s lender
- If appropriate, certificate of registration of charge at Companies House
- Other documents as appropriate (eg, death certificate for deceased joint proprietor if the seller is a sole surviving beneficial joint tenant)
69
Will the Land Registry accept certified copies?
No, they only accept original deeds and documents
70
Forms AP1, DS2 and FR1 require the details of
the conveyancer acting for each party.
71
Forms for first registration of an unregistered title
- Form FR1
- The enclosures are listed separately on Form DL
72
In unregistered land, legal title passes to the buyer...
on completion
73
In registered land, when does legal title pass to the buyer?
when the buyer is registered at the Land Registry as proprietor of the land
74
Which documents should be included when registering an unregistered title?
- The epitome of title and the deeds and documents referred to in it
- Land charges searches for the seller and previous owners in the chain of title
75
What form should be submitted to the Land Registry if the Property is subject to overriding interests?
Form DI
76
An application for first registration can be submitted by
post or document exchange (DX)
77
After registration, who should the original mortgage deed be sent to?
the lender
78
A certified copy
a copy that has been stamped and signed by a solicitor to confirm that it is a true copy of the original.
79
Deadline for first registration of unregistered land
within 2 months of completion
80
First time buyers relief (SDLT)
DLT relief applies to first time buyers of residential property for £500,000 or less
- No SDLT up to £300,000
- 5% SDLT just on the portion from £300,001 to £500,000
81
Additional SDLT for second homes
If the buyer is buying a second property, then additional SDLT of 5% is charged on top of SDLT rates
82
First-time buyers relief in Wales
No relief for first-time buyers in Wales
83
Benefit of Private Residence Relief (PRR)
a person does not pay CGT if they sell or dispose of their home
84
Conditions for PRR to apply
it has been the person’s main home for all the time that they lived in it;
they have not let it out (other than taking a lodger);
it has not been used for business purposes;
the grounds including all buildings are less than 5,000 square metres;
it was not bought just to make a gain
85
How does PRR change for married couples and civil partners?
They can only treat one property as their main home between them
86
Correct form of transfer for the purchase of the whole of a registered or unregistered freehold estate?
TR1 executed by deed
87
When must the transfer deed also be executed by the buyer?
where it contains a covenant or declaration on the buyer’s behalf.
88
WRA Certificate
Certificate to prove payment of LTT if the property is in Wales
89
Form DS1
discharges the seller's mortgage
90
If the seller's solicitor uses e-DS1 or the Electronic Discharge system, what confirmation will they give to the buyer?
confirmation that notice of release or discharge in electronic form has been given to the Land Registry.
91
How can the buyer's solicitor ensure that the seller will discharge the mortgage?
They can submit a requisition on title requesting the seller's solicitor to give an undertaking to pass the redemption moneys to the seller’s lender
92
To discharge the seller's mortgage, what can the seller's solicitor do?
Send a DS1 form or EDS1 form directly to the Land Registry, who will remove the mortgage from the Charges Register on the Official Copies
93
Seller’s solicitor’s checklist before completion
- approve the transfer deed (eg TR1) drafted by the buyer’s solicitor
- arrange for the transfer to be executed by the seller
- reply to requisitions on title
- request a redemption statement from the seller’s lender (if any)
in a residential sale
- ask the seller or agent to take final meter readings
94
Form FR1
first registration form to send to Land Registry if land is unregistered
95
The amount of CGT payable depends on the rate of
income tax an individual pays
96
Completion methods
- in person;
- by post using The Law Society’s Code for Completing by Post.
97
under the Law Society Code for Completion by Post, the seller's solicitor is obligated to redeem the mortgage and provide the discharge documentation (such as Form DS1 or electronic discharge) to the buyer's solicitor
promptly
98
under the Law Society Code for Completion by Post, when must the TR1 be sent to the buyer's solicitor?
ASAP after completion and in any event by the end of the working day following completion.
99
default interest rate in the SCPC
the Law Society's interest rate from time to time
100
On submitting the SDLT1, buyer's solicitor receives what certificate?
SDLT5 certificate
101
Consequence of failure to pay SDLT or WRA
fines and penalties and any application to the Land Registry to register the buyer as the new registered proprietor will be rejected unless the SDLT5/WRA certificate accompanies the application.
102
Certificate received for LTT payment for property in Wales
WRA certificate
103
Where VAT is payable on the purchase price, SDLT calculation is based on
the purchase price including VAT
104
First-time buyers relief for SDLT
there is no SDLT for the first £300,000 of the purchase price and 5% on any part of the price between £300,000 - £500,000
105
If the buyer is buying a second property, what additional SDLT is charged?
additional SDLT of 5% is charged on the whole of the purchase price
106
In England, SDLT must be paid within
14 days of completion
107
In Wales, LTT must be paid within
30 days of completion
108
What examples of allowable expenditure can be deducted to the CGT gain on the sale of a property?
acquisition costs;
costs incurred that contribute to the value of the asset (such as repairs, building works);
disposal costs (estate agency fees etc.)
109
Calculation for CGT payable on sale of a property
Disposal value -acquisition value
- allowable expenditure
(also CGT annual exemption of £3000)
110
When does Private Residence Relief (PRR) apply?
Applies if:
- it has been the person’s main home for all the time that they lived in it
- they have not let it out (other than taking a lodger)
- it has not been used for business purposes
- the grounds including all buildings are less than 5,000 square metres
- it was not bought just to make a gain
111
Restriction on PRR for married couples/civil partners
Married couples and civil partners can only treat one property as their main home between them.
112
Is there first-time buyers relief in Wales?
No
113
For individual sellers of a registered property, where could you find a bankruptcy notice?
in the Proprietorship Register of the OCEs
114
a party who fails to complete
the defaulting party
115
a party who is ready to complete
the non-defaulting party
116
Once the application for registration is complete, the Land Registry will issue
new official copies showing the buyer as registered proprietor, and the lender (if any) as the proprietor of the legal charge
- the buyer's solicitor should send the updated OCEs to the buyer
117
Do companies pay CGT?
No
118
What allowable expenditure can be deducted from the capital gain?
- costs incurred in acquiring the asset
- costs incurred that contribute to the value of the asset (eg building an extension)
- costs incurred in disposing of the asset
119
If the buyer is financing the purchase with the aid of a mortgage, before releasing the mortgage advance a lender will expect to receive:
- a certificate of title to confirm that the property is adequate security for the loan being advanced
- a solvency search against the borrowers
- a clear OS1R in the name of the lender (grants 30 day priority period)
- an executed but not completed mortgage deed
120
The buyer's solicitor should send a Financial Statement to the buyer pre-completion. What info should be included?
- the balance of the purchase price
- any SDLT/LTT due
- the registration fee
- the amount outstanding for any other disbursements, usually the solicitor’s fees and any other amount owing, eg a restrictive covenant insurance policy premium.
121
What documents will a company have to send to the Land Registry to register a new mortgage?
- the mortgage deed
- the certificate of registration issued by Companies House
- confirmation that the mortgage deed is the same as the one filed at Companies House and to which the certificate of registration relates.
122
An application to register a mortgage must be made before the
expiry of the priority period of the OS1 search
123
Which documents must be provided for first registration of unregistered land?
- A list of the docs in chronological order on Form DL
- all the documents which formed the evidence of title supplied by the seller’s solicitor;
- all the buyer’s pre-contract searches and enquiries relating to the title with their replies
- the contract
- requisitions on title with their replies
- all pre-completion search certificates
- the transfer deed (eg TR1)
- the seller’s mortgage, duly receipted
- SDLT/LTT certificate
- Form DI
124
Form DI
sets out the overriding interests burdening the title - these will then be entered in the Register and cease to be overriding
125
Main difference in contractual compensation for delayed completion under the SCS and SCPC
- under the SCS, both the buyer and the seller can be asked to pay this compensation
- under the SCPCs only the buyer can be required to pay compensation
Property
flashcards
Decks in class (15)
# Cards
-
Property PCON etc23
-
Freehold transactions / Title investigation83
-
Pre-exchange searches128
-
Exchange of Contracts66
-
Completion125
-
Planning permission78
-
Property Taxation6
-
Grant of a Lease82
-
Lease Structures54
-
Remedies for Breach of Leasehold Covenants81
-
Alienation/Assignment of a lease61
-
Business tenancies104
-
FRI leases11
-
Legal Drafting - Property32
-
SQE2 Land122
