Property Flashcards

Question

What interests can be burdening the property

Answer 1

- mortgage in favour of the lender - leases - easements - covenants (restrictive or positive)

Answer 2

A legal mortgage must be created by deed. It must be entered in the charges register other the lender will not have a legal interest. Some lenders require a restriction on the proprietorship register

Answer 3

Proprietorship register - restriction will prevent the mortgage being sold.

Answer 4

- by examining the bundle of deeds and docs for the property - identify which docs are relevant and list them in the *epitome of title* - copies of the list docs are provided to the buyer solicitors. - most important doc to identify is root of title

Answer 5

Root of title means the deed can be relied upon as proving the title. 1. Must be date more than 15 years ago and date before the 1 December 1990. 2. Deals with both the legal and beneficial title to the property. 3. Adequately describe the land being converted 4. Casts no doubt on the sellers title

Answer 6

Establishes a chain of title from the root of title to the seller

Answer 7

Joint tenants if - 1. The conveyance form the the seller to the buyer state that the seller to the buyer state that the seller is beneficially entitled to the whole of the property. 2. There is n memorandum of severance 3. There is no bankruptcy order The surviving JT should provide a death certificate Tennants in common - if the above conditions are not met - then a second trustee should be appointed

Answer 8

Central Land charges register

Answer 9

charges register

Answer 10

positive covenants - will only bind unregistered land if there is a chain of indemnity covenants. Buyer solicitor should check each deed in the chain. you can not register positive covenants in unregistered land. restrictive covenants - will only bind unregistered land if the burden is registered a d iii Land charge. Unknown covenants may arise from missing deeds.

Answer 11

equitable easements as d (iii) land charges estate contract as c (iv) land charged

Answer 12

A report on title is the report in which a solicitor reports to its client on the investigation of title, search results and replies to enquires. The report will identify: - material facts of the property - issues and complications - solutions available

Answer 13

Interpretation 2. Scope of the review and limitation of liability 3. Executive summary 4. Purchase price and other contract terms 5. The Property 6. Matters benefiting the Property 7. Matters burdening the Property 8. Search results 9. Replies to enquiries 10. Planning and building regulations 11. Insurance 12. Stamp Duty Land Tax 13. Conclusion

Answer 14

The report of title should be based on the results from research of the property and documents BUT the solicitor is not liable if the report does not identify an issue that should of been revealed by a search but wasn't. The report should set put limitations to the solicitor's liability. CCS 6.4 requires that a solicitor inform their client fully of material facts to their transaction CCS 8.6 requires that a solicitor give their client information in a way that they can understand

Answer 15

Usually carried out by the buyer's solicitor Seller's solicitor might carry out searches, for example, if dividing land in plots to different buvers Lender's solicitor might carry out searches, particularly for a remortgage with no associated purchase Searches usually submitted as early as possible, as some searches can take several weeks

Answer 16

1. Enquires of the local authority (COG29) - the replies will reveal information about the property and immediate surroundings such as planning consents and building regs 2. Local land charges Search (LLC1) - is a search of the local authority register of local land charges that reveals matters such as whether there is a tree preservation order, or planning permission or if it is a listed building. 3. Drainage and water enquires - to the relevant water company of the area. 4. Desktop environmental search - based on historical records. Will indicate whether the property has been used for potentially contaminative land uses (that you would be liable to clean up). likelihood of flooding and industrial land uses within 250 meters of the property. 5. Chancel repair search - if the search shows potential liability then get indemnity insurance.

Answer 17

1. Central Land charges search for unregistered land. 2. Index map search - Where the property is unregistered, or comprises more than one title (registered or unregistered) or the registered title refers to mineral rights. The index map search shows the extent of registered titles and unregistered land within the area searched. It does not show ownership, and the official copies must be ordered if this information is required. 3. companies search when seller is a company. 4. Bankruptcy search - when property is not at its full market value

Answer 18

1. CON290 2. Highway search - CON29 shows whether there the roads of the property are adopted highways but where there is any doubt or for commercial properties - complete highways search. 3. Coal Mining search - When property falls within an area that could be subject to coal mining. The search identifies the risk of subsidence, and whether any compensation has already been paid. 4. Cheshire salt - When property falls within an area that could be subject to brine 5. Tin, clary and limestone 6. Environmental Phase 1 Survey - This is more detailed than the standard desktop environmental search and includes a site inspection. 7. Environmental Phase 2 Survey - This will be taken where Phase 1 study indicates risk of contamination. Soil/water samples are tested to indicate whether there is contamination or not. 8. Flood search - Desktop flooding search goes into more detail than desktop environmental search. 9. Utility providers - Where property is a new development or a site for development. Checks that the property has the benefit of utility connections (electricity, gas, telecom, broadband, etc) 10. Railways - Where a railway passes near the property or property may be within proximity of proposed railway. There is no standard railway search, but specific enquiries may be made of Network Rail or the relevant railway company (London Underground, Crossrail, HS2, etc) about such issues as access rights across the property. 11. Waterways - Where property has a waterway (river or canal) passing through or next to it. Search shows liability for maintenance of river bank or canal, rights of way for banks and tow paths, drainage and fishing rights, and owner’s liability for flooding (but do not use to assess flood risk).

Answer 19

Panning permission is needed wheneere there is development on land, unless: - the Building works only affect the interior of the building - the building works do not materially affect the external appearance of the building - the change of use falls within the same class - If it falls into the GDPO exceptions.

Answer 20

B2 - Genreral industrial C1 - Hotels C2 - Residential institutions C3 - dwellings (residential properties) E - Commercial, Business and Services (wide use class) - including retail, goods, food and professional services F1 - learning and non residential institutions F2 - Local community Sui generis - any uses that dont fall within a class.

Answer 21

The GDPO lists permitted developments that don't need planning permission. However, the GDPO can be excluded or amended by the local authority. Therefore an enquiry should be made to the local authority whether the GDPO has been excluded or amended. If so, you would need to apply for planning permission. if unsure whether the development falls within GDPO - apply for a certificate of lawfulness - confirms works does not constitute as a development or if it does, it falls within the GDPO.

Answer 22

Listed buildings are of special architectural or historic interest. Grade I listed buildings are buildings of exceptional interest (eg, Tower Bridge) Grade II*listed buildings are particularly important buildings of more than special interest (eg, Battersea Power Station) Grade II listed buildings are of special interest (eg, Adelphi Hotel, Liverpool) Listed building consent is needed to demolish, alter or extend a building. It is a separate requirement from planning permission, and may be necessary even where planning permission isn’t, such as internal alterations. Various matters in the GDPO does not apply to listed buildings.

Answer 23

Conservation areas are areas of special historic or architectural interest, the character or appearance of which it is desirable to preserve or enhance. The local authority is under a duty to designate conservation areas within its locality. Some effects of a conservation area – *The GPDO will be restricted, so changes to external appearance may require planning permission. * In England, planning permission is needed to demolish an unlisted building within a conservation area. * In Wales, conservation area consent is needed to demolish an unlisted building within a conservation area (conservation area consent in England was abolished in 2013) * Consent is needed to cut back or cut down trees

Answer 24

The Building Regulations 2010 (SI 2010/2214) ("BR2010") applies to "building work" which includes: - 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

Answer 25

Before carrying out work covered by the regulations, building regulations consent is needed. The work may be inspected by a building control inspector, who will issue a building regulations certificate of compliance if the work is in accordance with building regulations. Self-certification schemes exist for certain types of work.

Answer 26

A breach of planning permission is when: 1. development has taken place without the planning permission or a condition OR 2. limitation of planning permission has been breached? .

Answer 27

*1) Enforcement notice* Local authority gives 28 days’ notice that: - land must be restored to condition it was in before unauthorised development; or - comply with any conditions or limitations imposed by planning permission After 28 days, land owner may be fined, and the local authority can enter the land to carry out the work, recovering its expenses from the land owner *2) Breach of condition notice* Similar to enforcement notice, but only concerned with breach of conditions or limitations to planning permission. *3) Stop notice* Local authority can serve a stop notice only after serving an enforcement notice – requires that specified activity (for example, an unauthorised use) to stop immediately *4) Injunction* Local authority can apply to court for an injunction, but it is discretionary, and local authority needs to show good reason

Answer 28

The local authority must take enforcement action within the following time limits: *4 years* - Building works – starting with the date on which the building works were “substantially completed” Change of use to single dwelling house – starts with the date the use was begun *10 years* - Other changes of use - Breach of planning condition Where the time limit has expired, the local authority can apply to the magistrates court for a planning enforcement order.

Answer 29

*1) Prosecution* Local authority has six months after discovering breach to prosecute the person responsible (builder, installer or main contractor) for the breach in the Magistrates’ Court. Unlimited fines may be imposed. Prosecution may take place up to two years after completion of the building work. *2) Enforcement notice* Local authority has one year after completion of the building work to serve an enforcement notice. Gives the land owner 28 days to alter or remove the work. If the land owner fails to comply, the local authority can undertake the work at the land owner’s expense. *3) Injunction* Local authority can apply to court for an injunction. If the work is unsafe, then there is no time limit.

Answer 30

1. Withdraw from transaction 2. Invite seller to regularise matters before completion, whether by removing/altering work, or further paperwork. This may need to be a term of the contract on exchange. 3. Obtain indemnity insurance (usually at seller’s expense) for breaches of planning or building regulations. However, only covers financial loss for enforcement. 4. For breaches of building regulations, buyer should be advised of health and safety risk, and policy will not cover claims for personal injury or death. 5. In some circumstances, seller may be able to obtain: * retrospective planning permission for development; * regularisation certificate for works that did not have building regulations approval but otherwise comply.

Answer 31

Enquiries to the seller for information regarding the property. This helps to assess and manage risk.

Answer 32

*Commercial* Solicitors usually use the Commercial Property Standard Enquiries (CPSE), and may add enquiries specific to the transaction. *Residential* If the parties adopt the Law Society Conveyancing Protocol, enquiries usually use the relevant TransAction form. Under the protocol, the buyer’s solicitor should only add specific enquiries in limited circumstances.

Answer 33

*TA6 Property information form* - Always used. Covers such matters as: * boundaries * rights benefiting and burdening the property * disputes, complaints and notices * alterations * planning and building regulations * occupiers * services and utilities * energy efficiency *TA10 Fittings and contents form* - Always used. * Identifies any fittings and contents included or excluded in the sale. * Also identifies those fittings or contents that the buyer may buy in addition to the property. TA7 Leasehold information form * Used where the property is a long leasehold (eg, a flat on a 99 year lease) TA8 New home information form * used where the property has been newly built

Answer 34

Could be liable for misrepresentation - - A misrepresentation is when the seller misrepresents a fact (not an opinion). If the buyer relies upon the misrepresentation and suffers loss, the buyer could have an action against the seller in misrepresentation. The seller cannot deliberately mislead the buyer by concealing physical defects or answering enquiries dishonestly. A seller must take care if answering a question ‘not so far as the seller is aware’ as this implies that the seller has made reasonable investigations and has no actual knowledge of any defect. The seller should check its records and make reasonable enquiries. If the seller is unable to make such investigations, the seller should state this in their reply. Remedies for misrepresentation are rescission or damages. Most commercial and residential property contracts include standard conditions which limit the buyer’s ability to rescind the contract: - These provisions are in 7.1.1 of the Standard Conditions of Sale (Fifth Edition) for residential contracts and 10.1 of the Standard Commmercial Property Conditions (Third Edition) for commercial contracts. Thus if unamended, they apply.

Answer 35

Protocols used in conveyancing to ensure that all clients are treated fairly and the process is transparent in order for efficiency and reduction of wasted time and costs.

Answer 36

- There should be transparency - Buyer’s solicitor should only make enquiries that are essential to act in their client’s best interests The seller’s solicitor should confirm and update, where necessary, replies to enquiries if completed more than two months earlier.

Answer 37

A solicitor may breach the Protocol if they: - use non-Protocol ‘standard’ enquiries indiscriminately - raise enquiries that seek the seller’s opinion rather than fact Note - The seller’s solicitor does not have to deal with any enquiries that do not comply with the Protocol If a solicitor breaches the Protocol, then the Law Society may require an explanation, potentially leading to their being monitored and even removed from membership of the Conveyancing Quality Scheme.

Answer 38

Yes. A solicitor working for a lender and buyer will not have a conflict of interest as the parties have a substantially common interest (Clear common purpose and a strong consensus of how it will achieved).

Answer 39

1. The mortgage offer (Residential) A formal letter that set out the terms and conditions of the loan. 2. A facility letter (Commerical) A formal letter that set out the terms and conditions of the loan. 3. A certificate of title A document in which a solicitor certifies that the title to the property is satisfactory for lending purposes. The industry standard is the City of London Law Society (CLLS) Certificate of Title: - The format of the certificate is a series of statements that would be given if the property title is in perfect order. The solicitor completing the certificate must give a disclosure after a statement if any of these statements is incorrect. - The lender will rely on the solicitor’s certificate, and will be able to sue if there are any material errors or omissions. 4) The legal charge (or mortgage deed) Used to provide the lender with security over the property, and will give the lender the right to repossess and sell the property. Registered at the Land Registry.

Answer 40

A property contact must: 1. be in writing 2. incorporate all the terms which the parties have expressly agreed. 3. be signed by or on the behalf of each party to the contract. This does not transfer land as it is not a deed.

Answer 41

Standard form Residential transactions almost always use a standard form residential contract - Standard Conditions of Sale. The commercial standard contract incorporates the Standard Commercial Property Conditions. Tailor made Commercial transactions commonly use precedents from the firm’s own precedent bank or from sources such as Practical Law or the Encyclopaedia of Forms & Precedents They usually incorporate the Standard Commercial Property Conditions and amend them as required They may be weighted in favour of the seller in the expectation that the buyer’s solicitor will negotiate the terms

Answer 42

Special conditions are used to exclude, add to, or amend standard conditions of sale.

Answer 43

Sale conditions of sale: The seller needs to only disclose any incumbrances registered at the Land Registry, the Land Charges Registry (for unregistered land) and at Companies House. Standard commercial property conditions: The buyer is deemed to buy the property subject to any incumbrances which would be revealed by a prudent buyer’s searches and enquiries. This places the onus on the buyer to carry out all relevant searches and enquiries

Answer 44

*1. Full title guarantee* this is the default (SCS and SCPC), and should be offered unless there is a good reason not to. This means that the property is free of all incumbrances other than those disclosed in the contract, and those which it didn’t and couldn’t reasonably have known about. *2. Limited title guarantee* Is given by sellers with little knowledge of the property, such as executors of a deceased estate. This means that no incumbrances have been created over the property during the seller’s period of ownership. *3. No title guarantee* means that the seller does not guarantee the seller’s right to sell the property, or that the property is free of incumbrances. The buyer has no remedy against the seller if a title issue arises after completion. An administrator or liquidator selling property may offer no title guarantee.

Answer 45

To ‘the date that is 20 working days after the date of the contract’. The time for completion under both SCS and SCPC is 2 pm. For the buyer’s solicitor, this means that the money must be received by the seller’s solicitor before 2 pm.

Answer 46

This means that if a party fails to complete (the ‘defaulting party’) by the specified completion date and time, the other (the ‘non-defaulting party’) can claim damages for the breach, but cannot yet walk away from the transaction. However, the party who is ready to complete can serve a notice to complete and make time of the essence. The contract rate sets the interest that is payable by the defaulting party for the delayed completion.

Answer 47

Both SCS and SCPS require the buyer to pay a 10% deposit on exchange of contracts, but this can be varied by special condition (say 5%). - If the parties agree a lower deposit, but the buyer doesn’t complete on time and the seller serves notice to complete, the buyer must immediately pay the balance of the 10% deposit (unless this provision is also amended by special condition). Under SCS, the deposit can be paid by a cheque from the buyer's solicitor’s client account (not a cheque from the buyer) or electronically. Under SCPS, the deposit must be paid electronically. Both SCS and SCPC therefore provide for the deposit to be held as stakeholder - the seller’s solicitor must keep the deposit safe and not pay it to the seller until completion.

Answer 48

Residential properties are exempt. Commercial properties - SCPC - standard rated (20%) but can be amended by special condition.

Answer 49

Buyer takes the risk and thus should insure. Sometimes its better that the seller does it - thus can be amended by special conditions and rely on the SCS and SCPC standard obligations conditions of sellers insurance.

Answer 50

For unbroken chains of indemnity - Obligates buyer to give seller indemnity against future liability from the covenant. For broken chains of indemnity - obligation does not apply - amendable by special condition.

Answer 51

*Exempt from VAT* Residential properties Commercial properties over 3 years old and the owner has not opted to tax. *Zero rated supplies* - does not have to pay VAT because the output is taxable, the seller can recover its imput. Newly constructed residential property *Standard rated VAT* New constructed commercial property under 3 years old. Commercial properties over 3 years old and the owner has opted to tax.

Answer 52

1. check have received all search results and replies to enquiries, and followed up any issues arising from them as needed 2. check that buyer has received survey and is satisfied with it advise buyer that insurance must be in place from exchange of contracts 3. check that they have cleared funds from the buyer for the deposit. 4. ensure that the lender’s solicitor has approved the draft certificate of title 5. ensure that have reported fully to the buyer on title and advised on any issues of concern 6. send contract to the buyer for signature 7. obtain instructions on proposed completion date 8. obtain authority of the buyer to exchange contracts (do not rely on merely having a signed contract as authority to exchange!), and if necessary check again just before exchange

Answer 53

1. obtain a redemption figure (ie, the amount needed to pay off the loan in full) from the lender to check that the proceeds of sale will cover it 2. reply to any outstanding additional enquiries (the buyer’s solicitor will likely refuse to exchange without this in any case) 3. prepare engrossments (final versions) of the contract and send one copy to the seller for signature, and the other to the buyer’s solicitor 4. obtain seller’s authority to exchange contracts ( do not rely on the signed contract as authority), and if necessary check again immediately before exchange

Answer 54

1. Solicitors received their respective client’s signed contract. 2. The buyer’s solicitor and seller’s solicitor will let each other know when they are ready to exchange: - identifying any blanks left in the contract and agreeing what wording/figures need to be inserted - agreeing any handwritten amendments or special conditions - agreeing and writing in the completion date in the appropriate space 3. Once both solicitors are happy that the contracts are complete and identical, they agree that they will exchange the contracts under Law Society Formula B, agree the date and time of exchange, and give each other their names to write on the contract. 4. The contract is then exchanged, and from that time onwards, the parties are legally obliged to complete.

Answer 55

A solicitor’s undertaking is a formal promise in the course of acting as a solicitor to take some action. A solicitor can be disciplined for breaching an undertaking, so a solicitor should only give an undertaking that they know they can perform. After exchange, Law Society Formula B imposes the following undertakings on the solicitors: 1. to hold the signed contract to the other solicitor’s order – this means that the buyer’s signed part belongs to the seller and vice versa 2. to post the signed contract to the other solicitor that day by first class post or DX (the document exchange used by solicitors and certain other professionals) or by hand delivery 3. in the case of the buyer’s solicitor, to send the deposit in the form of payment specified by the contract (eg, solicitors’ client account cheque in the first class post, or same day electronic transfer)

Answer 56

*Law Society Formula A* - used when the same solicitor holds contracts signed by both seller and buyer. It might be appropriate, for example, where a solicitor knows that they will be abroad at the time of exchange. The solicitors have a similar telephone conversation as with Formula B, but the solicitor who holds both parts undertakes just to send their client’s signed contract to the other solicitor. *Law Society Formula C* - Law Society Formula C is for chain transactions, meaning that the money from one property is used to buy the next. A chain may involve two or more properties. Although chain transactions are common, Law Society Formula C is not, as it is complex.Instead, the parties use Formula B, but care must be taken to tie the transactions together.

Answer 57

1. draft the transfer deed 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) 2. send requisitions on title to the seller’s solicitor 3. carry out relevant pre-completion searches send certificate of title to the lender, and request the loan advance in time for completion (usually to arrive the day before) 4. send the buyer a statement of money needed to complete the purchase Stamp Duty Land Tax form approved by client

Answer 58

1. approve the transfer deed drafted by the buyer’s solicitor 2. arrange for the transfer to be executed by the seller 3. reply to requisitions on title 4. request a redemption statement from the seller’s lender (if any) 5.. in a residential sale, ask the seller or agent to take final meter readings

Answer 59

By deed. Registered Land - the land registry forms must be used. TR1 – the most common, this transfers the whole of a freehold or leasehold title TP1 – this is used for the transfer of part only of a registered title TR5 – this is used for the transfer of a portfolio of registered titles (and may include unregistered titles Unregistered land: Unregistered title may still be transferred in the form of a conveyance, but TR1 is commonly used.

Answer 60

Individual (1) Signs and intends for it to take affect (2) in the presence of a witness (3) who also signs (4) must be clear on the face of it, it is a deed. The transfer is delivered when it is dated. Company - different ways you execute the transfer but check companies policy. 1. Company seal attached and signed by either 2 directors or one director and company sectary 2. signed by either 2 directors or one director and company sectary 3. Signed by director and witnessed by an independant witness. 4. Signed by a senior employee who is authorised by a power of attorney.

Answer 61

The seller but sometimes the buyer need to do as well when they enter new covenants

Answer 62

to update the information provided before exchange and to confirm the solvency of the seller and buyer as well as arrangements for completion.

Answer 63

HM land registry search - updates the official copies provided and investigated pre-exchange to confirm whether any adverse entries have been made to the title since the issue date AND provides the buyer solicitor with a 30 day working period to submit the HM Land registry application to register the transfer (and any mortgage). if submitted on time, it will priority then other submitted applications.

Answer 64

OS1 - an official search for priority of the whole of the land in a registered title OS2 - an official search for priority of the PART of the land in a registered title. A plan or plot number must be entered.

Answer 65

Pre-completion Land charges search - the search is made against the seller. the results give the buyer a 15 day working period to complete the transaction. This means they are not be subject to any land charges registered against the name of the seller after the date of the search (provided completion took place within priority period)

Answer 66

If solicitor is acting for both lender and buyer - solvency check. If a companies involved - companies check if the company is solvent. Buyer wouldn’t need to do any checks really on the sellers solvency as it should be covered by HM land registry and pre-completion land charges search

Answer 67

To redeem or discharge specified or listed mortgages on or before completion - send either form DS1, DS3 and - the receipted charge or confirmation that the notice of release/discharge in electric form has been given to HM Land Registry, as and when it is received. If the code is not adopted, the seller solicitor must confirm they are the duly authorised agent of the proprietor of every mortgage or charge which an undertaking ha been given to redeem or discharge.

Answer 68

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 under SCS. This is calculated at the interest rate specified in the contract. If none is specified, then SCS 1.1.1(e) provides that the Law Society interest rate applies. - If the seller is late in completing, then the seller pays interest on the full purchase price. - If the buyer is late in completing, then the buyer pays interest on the purchase price less any deposit paid.

Answer 69

common law damages - unless it is a large value transaction or long delay - interest is low. OR Serve notice - rescind. 1. If the non defaulting party is ready, willing and able to complete then after the contractual date and time for completion has been missed they can *serve notice to complete*. 2. The effect of the notice to complete is to make time of the essence - giving both parties 10 workings days from the notice to complete. 3. If either of them fail to complete within 10 days working period, then the non defaulting party (at that point) can rescind the contract.

Answer 70

*Seller’s remedies:* The seller may rescind the contract, and on doing so, may also: * forfeit the deposit and any interest accrued on it * resell the property and any contents included in it * claim contractual damages *Buyer’s remedies:* The buyer may rescind the contract, and on doing so, may also: * demand return of the deposit with any interest accrued on it * claim contractual damages or even specific performance (an equitable remedy forcing the seller to complete the sale) Note that contractual compensation (interest) only applies to delayed completion, so where completion does not take place at all, the remedy is damages.

Answer 71

England - stamp duty dependant on purchase price - 14 days after completion Wales -Land Transaction Tax (LTT) -Dependent on purchase price (but different thresholds and rates apply) - 30 days of completion to avoid penalties

Answer 72

within 21 days

Answer 73

Capital gains Tax

Answer 74

Land Registry form AP1 is used to set out the details of the application and the documents provided. For a purchase, these will include: 1. The transfer deed (eg TR1) 2. SDLT5 or WRA certificate to prove payment of SDLT or LTT 3. Form DS1 to discharge the seller’s mortgage if appropriate (this can be sent on later if not yet available) 4. Mortgage deed in favour of the buyer’s lender 5. if appropriate, certificate of registration of charge at Companies House 6. Other documents as appropriate (eg, death certificate for deceased joint proprietor if the seller is a sole surviving beneficial joint tenant)

Answer 75

An application for first registration is usually a little more involved than for a transfer of registered title. Form FR1 is used, which contains additional boxes relevant to unregistered title. The following documents are included: 1. The transfer deed (eg TR1) 2. SDLT5 or WRA certificate to prove payment of SDLT or LTT 3. Form DS1 to discharge the seller’s mortgage if appropriate (this can be sent on later if not yet available) 4. Mortgage deed in favour of the buyer’s lender 5. if appropriate, certificate of registration of charge at Companies House 6. Other documents as appropriate (eg, death certificate for deceased joint proprietor if the seller is a sole surviving beneficial joint tenant) 7. The epitome of title and the deeds and documents referred to in it 8. Land charges searches for the seller and previous owners in the chain of title Application for unregistered to be made by post only and best to send certified copies of the transfer deed and mortgage deed.

Answer 76

- For both registered and unregistered land, the buyer’s conveyancer should either tick the AP1 or FR1 to state that there are no overriding interests, or if there are, complete a Form DI.

Answer 77

30 days after OS1 to protect priority, otherwise registered land - no limit unregistered land - 2 months after completions otherwise transactions is void.

Answer 78

The grant of a right to exclusive possession of land for a determinate term less than that which the grantor has himself in the land.

Answer 79

1. right to exclusive possession 2. Fixed term or periodic tenancy 3. must follow the formalities - a legal lease must be created by deed if 3 years and over. A tenancy of 3 years or under may be created in writing or orally. 4. The reversion is the interest that the landlord holds subject to the lease.

Answer 80

A lease that sets out that all costs are met by the tenant whether directly or indirectly.

Answer 81

- Generally for a fixed term. -The rent is usually expressed as a yearly figure but payable quarterly. - An FRI lease of 10 years or more will usually contain a rent review clause as an institutional investor will want to ensure that their rents are keeping up with the market. Open market rent review – this is the most common type of rent review adopted by FRI leases, and involves ascertaining the rent based on comparable premises and certain principles - A full repairing obligation is typically expressed as an obligation to keep the premises in repair but extends to putting the premises into repair if they are not.

Answer 82

commencement date is the date on which the lease term starts - can start whenever - specified in the lease agreement

Answer 83

1. If the term of the lease is "from and including" a certain date if the year, the term expires on the day before that day of the year in the relevant year. 2. If the term of the lease if "from" a certain day of the year, will expire on that same day of the relevant year (but start the next day)

Answer 84

- Allows a party to end the lease in the break period if they wish to - provides flexibility when scared of commitment. A break clause can be: 1. Landlord break 2. tenant break 3. a mutual break

Answer 85

*1. Stepped rent* – the lease may set out, for example, a yearly rent of £25,000 for the first two years, a yearly rent of £30,000 for the next two years, and so on… *2. Turnover rent* – the rent may be calculated based on the tenant’s turnover at the property. This is mostly commonly seen with retail leases. *3. Index-linked rent* – the rent is increased by reference to an agreed measure of inflation, such as the retail prices index. *4. Open market rent review* – this is the most common type of rent review adopted by FRI leases, and involves ascertaining the rent based on comparable premises and certain principles.

Answer 86

These can either Increase or stay the same! The rent will be agreed amongst the parties. if not agreed... then the lease will set out a mechanism for a specialist valuer to be engaged to determine the new rent. The valuer will consider: * The rent payable for comparable premises (ie, premises of similar size and location) AND * The terms of the hypothetical lease – an imaginary lease based on the actual lease but assuming certain matters and disregarding others 1. From the starting point of the actual lease (and premises), the rent review provision instructs the valuers on assumptions (matters to assume) and disregards (matters to be disregarded). 2. The hypothetical lease differs therefore from the actual lease (and premises). The basic assumptions enable valuation to take place: * the premises are vacant and available * there is a willing landlord and a willing tenant * Disregards generally operate to ignore what the tenant has done voluntarily, and not as an obligation of the lease. * The rationale is that the tenant should not be penalised with a higher rent if, for example, the tenant has improved the premises for its own use.

Answer 87

- If the rent review is before the 5th anniversary of the term commencement date, the tenant may have to pay further Stamp Duty Land Tax or Land Transaction Tax (as this is calculated on the first five years’ rent). - If the rent review is on or after the 5th anniversary of the term commencement date, the tenant will not have to pay further SDLT or LTT

Answer 88

Applies to regulated firms - to improve quality and fairness of negations process of lease terms and create efficiency in the process

Answer 89

The mandatory requirements: 1. Lease negotiations must be approached in a constructive and collaborative manner 2. An unrepresented party must be advised about the existence of the Code and recommended to seek professional advice 3. The landlord (or its letting agent) is responsible for ensuring that heads of terms compliant with the Code are agreed before the draft lease is circulated 4. Prepare written heads of term, covering specific areas. Good practice 1. Premises - The heads of terms should clearly define the demise, provide a lease plan and refer to all the rights that the tenant will need for its use of the premises. 2. Length of term, renewal rights and break rights - The heads of terms should clearly specify the length of term and any break rights. The Code sets out basic conditions to exercising the break that are acceptable; others may be included but must be specified in the heads of terms. (This is an area where landlord-weighted drafting of the lease can make it very difficult for a tenant to exercise the break.) Rent and rent review - The heads of terms should clearly state the initial rent, frequency of payment (eg, quarterly) and whether VAT will be charged. They should also state whether there is a rent-free period. If the landlord intends to review the rent, then the tenant should be advised how (eg, market rent, turnover, etc) and how often (eg, every fifth year). Landlord’s title - The landlord should be responsible for obtaining any consent needed to grant the lease (such as from a superior landlord, mortgagee or any other third party). Repairs - The tenant’s repairing obligation should be appropriate to the length of the term and the condition of the premises. (An extreme example might be that it would be unfair to ask a tenant on a 6 month tenancy to take a full repairing obligation of premises that are badly dilapidated!) - If the tenant gives a qualified repairing obligation (ie, limited to the initial state of the premises), a schedule of condition should be required. - Where the premises are newly built, the tenant should be given appropriate protection against inherent construction defects. Insurance and damage - The lease should suspend the rent if the premises are damaged by an insured risk (unless the damage is due to something the tenant has done or not done) or an uninsured risk

Answer 90

Pre exchange - Investigation of title (deduce title if landlord) searches and enquiries, draft the lease. Exchange Pre completion - circulate completion statement and pre completion searches completion - payment and dating the executed lease. post completion - pay Stamp duty or land transaction tax and register lease

Answer 91

Compeltion statement - is any money due upon completion. 1. Calculate a daily rate for the annual rent plus vat 2. Calculate a daily rate for the service charge (and anything else that is included in completion figure) plus VAT (if included in the lease) 3. Take the annual figures and divide by 365 to give a daily rate – this is the annual rent and service charge that is payable each day 5. Count how many days the tenant will owe on term start date for the remainder of the quarter 6. Calculate the total completion figure – remaining days x daily rate 7. Add the figures together

Answer 92

OS3 for unregistered leases (3 years and under) - wont give you priority but will let you check whether landlord is free to grant you this lease

Answer 93

The first step is to calculate a lump sum equivalent of the rent over the years it is payable, called the Net Present Value (NPV). Formula will be given - all you need is: - You will need the start date of the lease, and the lease term (eg, 10 years) - You will also need the rent payable for each of the first five years

Answer 94

Stamp duty * Up to £150,000, there is no SDLT payable. * Over £150,000 up to £5 million, SDLT of 1% is payable * Over £5 million, SDLT of 2% is payable Land transaction tax * Up to £225,000, there is no LTT payable. * Over £225,000 up to £2 million, LTT of 1% is payable * Over £2 million, LTT of 2% is payable

Answer 95

Term of lease up to 3 years – is not registered. Cannot be noted against the landlord’s title. Term of lease more than 3 years up to 7 years - does not need to be registered. Can be noted against the landlord’s title (it will appear in the schedule of leases to the landlord’s freehold title). Term of lease more than 7 years - must be registered at the Land Registry (and will be given its own title number). Will be noted against the landlord’s title (it will appear in the schedule of leases to the landlord’s freehold title).

Answer 96

1) OS1 (lease of whole) or OS2 (lease of part) search should be carried out before completion to give priority. 2) The tenant applies to register the lease using form AP1 (if the landlord’s title is registered) or FR1 (if the landlord’s title is unregistered). 3) A certified copy of the lease may be scanned and submitted electronically. 4) If the landlord’s freehold title is charged, then a letter of consent from the lender will also be needed. 5) On completion of the application, the tenant’s solicitor will receive two official copies (the new leasehold title and the updated landlord’s title) Note that if the tenant is a company, then usually the lease will not be charged, and so there is no need to register the transaction at Companies House.

Answer 97

If the lease is silent on alterations, then the tenant is free to carry out alterations. The only restriction imposed by law is the doctrine of “waste” which means that the tenant cannot carry out alterations which reduce the value of the premises.

Answer 98

Absolute covenant An absolute covenant against alterations means that they are not permitted. If the tenant wants to make an alteration covered by an absolute covenant, they can ask the landlord, but the landlord has no obligation even to consider such a request. Qualified covenant A qualified covenant against alterations means that they are only permitted with landlord’s consent. The landlord does not have to give consent. A fully qualified covenant Only permitted with landlord’s consent but the landlord must act reasonably in deciding to withhold consent.

Answer 99

when the tenant’s proposed alterations are improvements from the point of view of the tenant.

Answer 100

If the landlord consents to alterations under a qualified covenant, then the consent will usually be documented in a licence for alterations. As well as details of the works consented to, and any time limit for carrying them out, it will contain various tenant’s conditions.

Answer 101

If the landlord objects, the tenant can apply for the court’s permission to carry out the improvements. The court will give permission if the improvements: - add to the letting value of the property; - are reasonable and suitable to the character of the property; and - will not diminish the value of any other property belonging to the landlord. If the landlord does not object within three months, the tenant may go ahead and carry out the improvements. The landlord may offer to carry out the works itself and increase the rent, but the tenant does not have to agree to this. However, the tenant can then not ask the court for permission.

Answer 102

User refers to what the lease allows the tenant to use the premises for. If the lease were to be silent on user, then the tenant is free to use the premises for anything they like. - The user may be very specific (“as a tailor’s shop”) or more general (“as retail premises”) or may be by reference to the appropriate use class. Note that unlike a qualified alterations covenant (regarding tenant’s improvements), statute does not convert a qualified user clause to a fully qualified user clause. However, section 19(3) of the Landlord and Tenant Act 1927 does mean that if the landlord decides to give consent to a change of use, the landlord may not charge a lump sum or increase the rent for giving consent unless the change of use also requires structural alterations

Answer 103

The lease should only restrict alterations and change of use insofar as necessary to protect the value of the premises and any adjoining or neighbouring premises of the landlord. * The Code (subject to certain exceptions) requires a landlord to at least give the tenant a fully qualified covenant for internal non-structural alterations in a lease of part, and the tenant the ability to carry out internal non-structural alterations without consent in a lease of whole. *If the landlord will require any alterations to be reinstated at the end of the lease, this should be made clear in the heads of terms. Otherwise, the lease may only require this if it is reasonable.

Answer 104

1. Assignment - transfer your whole period of the lease 2. Underletting - transfer part of your period of the lease. 3. Charge - A tenant may create a charge over their lease. 4. Share occupation - A tenant may want to share occupation with a third party without creating an underlease 3– the landlord can still enforce the covenants against the tenant.

Answer 105

If the lease is silent, then the tenant is free to assign. Otherwise there can be a covenant restricting assignment. That being absolute, qualified or fully qualified. A qualified covenant is automatically fully qualified. Decision also needs to be given in reasonable time - 28 days (depending on circumstances).

Answer 106

The would-be assignee’s proposed use of the premises may be reasonable grounds to withhold consent. It is likely reasonable to withhold consent if the landlord has justifiable concerns about the assignee’s ability to pay the rent; for example, if the tenant cannot produce satisfactory references. Another example would be if the assignee is newly incorporated and cannot produce accounts. withheld. The landlord CANNOT withhold consent on grounds not related to the landlord/tenant relationship – cannot discriminate.

Answer 107

Old leases - tenant and original tenant. New lease (post 1 January 1996) - the original tenant is released from liability, and all of the tenant covenants are passed to the new tenant.

Answer 108

Authorised guarantee agreement – A covenant that you would be liable if the new tenant defaults You can only go back to the previous tenant once with an AGA, then when one tenant grants you and AGA, then the previous AGA gets cancelled. If the lease is silent, then the landlord can only insist on an AGA if it is reasonable to do so - doubt new tenant can keep up with rent.

Answer 109

No. Thus sometimes landlord wants undertenant to covenant with them directly.

Answer 110

A commercial lease will typically require that any consent is given by deed - thus license. -The licence will usually contain a time limit on consent.

Answer 111

Lease should allow tenants to assign or underlet the whole of the premises with the landlord’s consent not to be unreasonably withheld or delayed Leases should allow tenants to share with group companies without consent. Leases should allow tenants to charge the lease to a bank or reputable lending institution without consent (with a limited exception).

Answer 112

The tenant in a lease with security of tenure may continue to occupy the premises at the end of the contractual term and it can only end under specific procedures. Applies to 1. Any tennancy - fixed or periodic 2. occupied by tenant - has control and does not leave the premises vacant. 3. for the purpose of a business 4.

Answer 113

Agricultural tenancies (as they have their own statutory regime) Mining leases Service tenancies (a lease granted as part of a tenant’s employment, eg, a security guard’s flat) Fixed term tenancies of six months or less (but can become protected if the tenant has been in occupation for twelve months or more, whether through successive tenancies or if the tenancy is renewable beyond six months) Contracted out

Answer 114

1. Before the parties complete the lease the landlord must serve a warning notice on the tenant which details the consequences of contracting out the security of tenure provisions. before the parties complete the lease. 2. The tenant must provide a declaration in prescribed form to the landlord before completing the lease. - If lease completion is at least 14 days from the date of the warning notice then this can be a simple signed declaration. - If lease completion is less than 14 days away, then the tenant must provide a statutory declaration (declared before an independent solicitor). 3) The lease must contain reference to both the notice and declaration (or statutory declaration) of contracting out – thus you must record that it notice has been served – recording should be on the lease.

Answer 115

The landlord’s options are to: 1. forfeit the lease if there has been a breach of the tenant’s covenants and the lease allows this 2. Serve a section 25 notice, which may indicate an intention to recover the premises or offer a renewal lease.

Answer 116

The tenant’s options are: 1. simply to vacate the premises at the end of the contractual term 2. to surrender the lease with the landlord’s agreement 3. for a periodic tenancy, serve notice to quit to bring the tenancy to an end 4. serve a section 26 notice to request a new tenancy 5. serve a section 27 notice to leave the premises

Answer 117

The landlord’s section 25 notice states when the current tenancy will end (the date of termination). The date of termination must be on or after the date on which the contractual term ends. A section 25 notice must be served no less than 6 months and no more than 12 months before the date of termination. The section 25 notice must be in the form prescribed by statute. A ‘friendly’ section 25 notice indicates that the landlord is willing to renew the lease to start the day after the date of termination. It will propose the rent to be paid and principal terms of the new tenancy. A ‘hostile’ section 25 notice indicates that the landlord intends to oppose renewal of the lease. The landlord can only do this on certain statutory grounds, and must specify on which ground or grounds the landlord intends to rely.

Answer 118

1.The tenant must have a lease that originally granted a contractual term of more than one year. - For a tenancy of a year or less, the tenant cannot start the renewal process, although the landlord can with a friendly section 25 notice. 2. As with the section 25 notice, there is a minimum notice period of six months, and a maximum notice period of twelve months from the end date of the lease. Notice expires on date of proposed commencement. 3. The tenant has to request a new lease from the end date. A landlord has two months from the section 26 notice to serve a counter-notice - the landlord can only do so on one or more of the statutory grounds.

Answer 119

1. A section 27 notice must give three months of the intended termination date, which must be no earlier than the date on which the contractual term ends. Once a section 27 notice has been served, the tenant cannot serve a section 26 notice, nor can the landlord serve a section 25 notice.

Answer 120

1. Apply to the court - either party Section 25 - before the date if termination Section 26 - After the counter-notice by the landlord or 2 months after 26 notice. But before the commencement of proposed commencement. 2. Negotiations of new lease - - The landlord and tenant will usually try to agree the terms of the lease between themselves, and only if they are unable to reach agreement will they ask the court to decide. The court can grant a term up to 15 years, the rent will be open market rent, and other terms are determined by the court having regard to the terms of the current tenancy and relevant circumstances. 3. Interim rent - - During the period of holding over and negotiation, the tenant will continue to pay rent as it was last reviewed by the lease. - Either party may apply during this period to the court to fix an interim rent which is based on the open market rent which can go up or down. - The interim rent is payable from the earliest date of termination that could have been specified in the landlord’s section 25 notice, or the earliest date that could have been specified as the proposed commencement date in the tenant’s section 26 notice. 4. Court order Either party may apply to the court for an order to grant a new lease, even if the landlord opposed the renewal. - If the tenant is not happy or has simply changed its mind, it has 14 days to ask the court to revoke the court order. If asked, the court must agree, and the tenant will then have no right to renew. - A landlord who is opposing renewal on the statutory grounds, may apply to the court for an order for termination of the existing lease. - Both types of order bring the existing tenancy to an end three months and 21 days after the date of the order. (21 days from the date of the order is the time allowed for appeal.) - If the court order is for the grant of a new lease, the new lease will start the day after the termination of the existing lease.

Answer 121

The competent landlord - the first in the chain of landlords, starting with the immediate landlord to own a reversionary interest which is either freehold or a leasehold that will not come to an end in 14 months’ time.

Answer 122

1. Effluxion of time - ends at the contractual term or break clause. 2. Notice to quit for a periodic tenancy - either the landlord or tenant giving notice that they intend the tenancy to end. 3. Merger - Merger means either that the tenant acquires the landlord’s interest, or a third party acquires both interests. 4. Surrender - Surrender means that the tenant gives up its leasehold interest to the landlord (with the landlord’s agreement).

Answer 123

Unless there is a tenancy agreement that specifies otherwise, the notice period required depends on the period of tenancy: Weekly – four weeks (residential) or one week (other tenancies) Monthly – one month Quarterly – one quarter Yearly – six months - A notice to quit gives the other party a specific date on which to vacate, which must expire on the first day or the last day of the tenancy period.

Answer 124

1. Damages - to put the landlord back in the position before breach 2. Action in debt - limited to rent due in the six years before the issue of court proceedings. 3. Guarantor and action in debt - can recover debt from guarantor or pull it from the deposit whilst tenant is liable for excess. 4. commercial rent arrears recovery 5. equitable remedies - specific performance and injunction - to put the property back to same condition or stop it from unlawful use for example. 6. forfeiture - brings the lease to an end before the contractual term

Answer 125

CRAR may be used where: 1. the premises are purely commercial (it cannot be used, for example, where the premises comprise a shop and residential flat) 2. a minimum of seven days’ principal rent is owed (it can’t be used to recover service charge or any other sum reserved as ‘rent’ but does include VAT and interest) 3. the lease has not been forfeited CRAR requirements As it is a self-help remedy, there are strict requirements to the way in which CRAR must be conducted: 1. the landlord must appoint an enforcement agent who either has the required certificate from the court or is exempt from the requirement (eg, a police officer) 2. Seven clear days’ notice must be given of the intention to enter the tenant’s premises (clear days exclude Sundays and bank holidays) 3. The notice must include certain details, such as the amount of the debt and how to repay it, details of the power being used to enforce the debt, and contact details for the enforcement agent 4. If the notice expires without repayment of the debt, the enforcement agent can enter the premises and take control of goods belonging to the tenant up to the value of the debt owed. 5. The landlord must serve a further seven clear days’ notice if it intends to sell any of the seized goods.

Answer 126

1. Non payment of rent 2. For any other breach of the tenant’s obligations, the landlord must serve a section 146 notice - This notice details the alleged breach and gives the tenant a reasonable opportunity the opportunity to remedy it, failing which the landlord will be entitled to forfeit.

Answer 127

These rights can be waived when landlord acknowledges the continuance of the lease - impliedly or not If a breach is a ‘once and for all breach’, once the landlord waives the right of forfeiture, it will never be able to regain it for that breach.Examples include: * non-payment of rent, an unlawful assignment or underletting, an insolvency event Other breaches are ‘continuing breaches’ meaning that each day that the breach continues, the landlord regains the right of forfeiture. Examples: failure to keep the premises in repair, breach of the user covenant, failure to comply with an insurance obligation

Answer 128

As soon as the landlord serves a section 146 notice or starts the process of forfeiture, whether by peaceable re-entry or issuing proceedings, the tenant is entitled to apply for relief from forfeiture. Relief from forfeiture is a discretionary remedy. If the court award the tenant relief from forfeiture, then the lease is restored as if forfeiture had never taken place. The aim of the court is to put the parties back into the position in which they would have been had forfeiture not taken place. 1. If forfeiture is for non-payment of rent, then the tenant will normally be able to get relief from forfeiture by settling all rent arrears and landlord’s costs. 2. Other parties who derive an interest from the tenant’s lease, such as a mortgagee or undertenant are also able to seek relief from forfeiture. In the case of an undertenant, this may result in the under tenant becoming a direct tenant of the landlord.

Answer 129

1. Forfeiture - The landlord must serve a section 146 notice of its intention to forfeit, detailing the remedy and giving the tenant reasonable time to remedy the breach. - The Leasehold Property (Repairs) Act 1938 (LPRA38) applies to leases that meet the following criteria: * the lease is for a term of seven years or more; and * there are at least three years of the term left to run; If so, the tenant has 28 days to serve a counter-notice. This means that the landlord must get leave from the court before proceeding (and this is not easy). The landlord must advise the tenant of these rights in the section 146 notice. 2. Damages for breach of repairing obligation A landlord cannot issue proceedings for damages for a repairing obligation until it has served a section 146 notice, and given the tenant 28 days to serve a counter-notice. - the measure of damages is the loss of value to the landlord’s reversion, not the cost of putting the premises into full repair. 3. Specific performance is another possibility, but this is rarely granted for wants of repair Thus, remedies are not great!

Answer 130

A commercial lease will almost always contain a self-help clause (also known as a Jervis v Harris clause) that avoids the difficulties with other remedies. A Jervis v Harris clause will give the landlord the right to: * enter the property * carry out any repairs * recover the cost of doing so from the tenant. - The cost of carrying out the repairs is treated as a debt to the landlord, not damages, and therefore it can be recovered in full.

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