If couple is buying property as TIC with a certain % but will change the contribution after she sells her house, how do you reflect this change in contribution later?
Enter into a Declaration of Trust when they complete their purchase which will set out the circumstances of their purchase and their contributions and set out their shares in the property. When her property is sold, they should enter into a revised Declaration of Trust to evidence their respective revised shares.
How to register as TIC?
The Transfer Form.
If a couple are about to buy a house as TIC but are going to get married after completion, what should they do?
Make new wills in contemplation of their future marriage, leaving their respective shares in the new property to their children. They could also consider making it clear in their wills that, on the first death, the survivor is allowed to live in the property until their death or they decide to voluntarily sell the property. On either of these events, the sale proceeds should be distributed to their respective children in accordance with their wills. This will save the couple having to sell the property on the death of the other. This express reference in the wills to their future marriage will mean that their wills made after the purchase but before the union will not be automatically revoked by the marriage.
Who does security of tenure apply to? And for how long?
Business tenancies. 12 months.
What tenancies are excluded from security of tenure?
Tenancies at will (= that can be terminated by either party at any time), and you can also contract out of it (landlord serves a ‘‘health warning’’ telling them they wont be protected and tenant signs a declaration to say they understand that. Depending when the health warning is served, if theres less than 14 days before the grant of the lease, the tenant needs to make a statutory declaration infront of a solicitor. If its more than 14 days, just a written declaration.
Ways to terminate under the security of tenure and how to contract out of it to begin with:
Firstly, the parties can exclude the Act from the tenancy agreement by the landlord serving notice of opting out of the Act ‘‘Health Warning’’, before the tenancy commences.
How to end or amend security of tenure once in it:
Landlord-tenant s. 25 notice: Landlord who wants to end lease or enter new lease with tenant.
Must be serves six to twelve months before they want the existing tenancy to end.
Must be based on one of the statutory grounds:
a. Tenant failed to carry out repair obligations.
b. Tenant delayed in paying rent.
c. The availability of suitable alternative accommodation for the tenant.
d. Landlord will demolish or reconstruct premises.
e. Landlord intends to occupy it.
For the last 3: Court must grant it.
Note: if not tenant’s fault they’re being kicked out, they’ll be entitled to damages.
Tenant-landlord s. 26 notice:
Served on landlord six to twelve months before they want the new lease to start.
If owned for 14+ years, then they are compensated twice the rateable value of the property.
What is Section 25 and Section 26 of Landlord and Tenants Act? (Security of Tenure)
S. 25: need to give 6-12 months notice before end of the lease, from the serving of that notice. Also cannot serve it any earlier than the contractual term would’ve ended. I.e. If it’s 10 years in the contract, have to wait that long.
If landlord wants possession of the property: landlord wants to redevelop the property, in breach of the lease, wants to use it for themselves etc.
-> then Court cannot grant a new tenancy.
S. 26: 6-12 months. Tenant can say they want a new tenancy.
+ Ask if they opted out of the Act.
+ If no-fault ground for S.25, they’ll be entitled to compensation at 1x ratable value of the property (if any amount under 14 years. And 2x ratable value if over 14 years).
What if you don’t complete on the completion date?
Don’t look at normal contractual remedies. Look at the remedies in the Standard Conditions of Sale.
- Compensation to be paid at a daily interest rate % in the contract.
- Could be entitled to damages for other things like consequential loss from a related transaction.
- If buyer never completes, they forfeit their deposit.
But, seller cannot rescind the contract on the date of supposed completion. The innocent party can serve a notice to complete on the other party which gives them 10 days to complete. If not, then the innocent party can rescind the contract.
What risks are there if there is no access to the land they wanna buy and what can be done to remedy it?
Risk: Could face issues with that owner or whoever are the subsequent owners by them seeking to stop you using that access to your house or charge you for it. Could affect the future sale/mortgage.
Fix:
- If been used for over 20 years, could qualify for prescriptive rights.
- Could get indemnity insurance (usually given easily for long land use that’s been unchallenged). Can ask the seller to lower purchase price.
- If you can talk to the owners of the land, ask for a Deed of Grant for right of way.
- Get a Statutory Declaration from the sellers of the new house saying that there has been a long history of unchallenged use. In case of future challenges.
What if no maintenance agreement for the upkeep of the lane which provides access to your clients’ house? Risk + fix.
Risk: Could affect future sale/mortgage. Could become responsible wholly or partly to maintain it if no agreement in place.
Fix: Discuss with neighbours about shared maintenance responsibilities.
What can you do about an existing restrictive covenant?
Could affect resale value of the property.
- Buyer could walk away or keep it and accept them.
- Approach person with benefit and ask if they’ll consent (for $$ maybe).
- Ask seller to lower sale cost.
- Get indemnity insurance. It’s a one-off premium. If existing breach, current seller pay.
What can you do about an existing positive covenant?
What to do about it?
Find the person with the benefit.
Ask surveyor what the state of the thing is that they wanna positively covenant. I.e. keep wall repaired but its all broken down. Then you might be able to negotiate down the price or tell them to fix it.
How are positive covenants enforced?
Can’t be enforced directly, instead through chain of indemnity. When one person sells they acquire indemnity so they’re not sued for any future breach.
If a break in the chain, the positive covenant can’t be enforced. Can tell if theres a break if the current owner gave indemnity when they purchased the property. In reg land, itll be in the title - look to see if it says that the current reg proprietor gave indemnity.
For unreg land, what are the things that trigger registration (and thus the seller should reg before sale?)
- Long lease over 7 years.
- Mortgage.
- Death.
- Sale.
In property purchase:
- House can only be reached by footpath, electricity and water supply under footpath and there’s no easement. Been 20 years no issues. He’s also getting mortgage.
What are the risks of proceeding and what can we do? + professional conduct.
Risks:
- They may change their mind and obstruct your use.
- Impact on future sale or mortgage.
- Risk of exchanging contract without resolving issues (will have to proceed with purchase or damages).
Solutions:
- Trace owner and ask to grant rights.
- Obtain evidence of easements by prescription and register (20+ years).
- Indemnity insurance. Cost should be borne by seller.
Professional conduct:
- Duty to tell the lender about the issues. They may require a particular course of action.
Part of the garden is not included in the red edging on the title plan. They want our advice on why and what can be done about this.
WHY:
- The triangular area could be registered under a separate title number in the name of the seller;
- The area could be registered under a separate title number in the name of someone else;
- The seller could have an unregistered title to the area;
- The area could be owned by someone else but the seller had always used it as part of their garden
Professional conduct:
You would need to notify the lender of the extent of the discrepancy if this was not resolved before completion and also any agreed reduction in purchase price.
WHAT CAN BE DONE:
If the triangular area was registered under a separate title number in the name of the seller, we would need to see official copies of the register and title plan for that title. When we were satisfied that the triangular area was included in that title, the contract would need to be amended to include the title number of the triangular area. The Transfer to the client from the seller would need to include both title numbers.
If the triangular area was registered under a separate title number in the name of someone else, the seller would need to contact the registered proprietor to find out whether they would be prepared to sell the triangular area to them. This sale would have to be completed before contracts could be exchanged. Alternatively, the client could contact the registered proprietor to find out whether they would sell the land to the client and the purchase price for Bramble Cottage would have to be reduced to take into account the price paid for the triangular area.
The seller’s solicitor would have to deduce the unregistered title. The contract would have to be amended to refer to the triangular area. It would have to be separately conveyed or transferred to the client on completion and would need to be registered at the Land Registry.
If the seller had occupied and used the land for 12 years if the title was unregistered or ten years if the title was registered, they could have acquired title to it by adverse possession. We could ask the seller to apply to register the triangular area at the Land Registry based on their adverse possession.
You would do a search of the Index Map at the Land Registry.
You would explain to the client that you could not proceed to exchange contracts until the inclusion of the triangular area had been resolved.
How long for adverse possession of land for reg and for unreg?
Unreg: 12 years.
Reg: 10 years.
A client buyer is not able to get access to their funds by the completion date and are asking you if you are able to convince the seller to still go ahead with completion on that date even though the cash wont be avail for a few more days.
You asked me if it might be possible to persuade the seller and his solicitors to
complete on 30 May with confirmation from me that the completion money will
be forthcoming on 5 June. Unfortunately, this will not be possible as if I do this
it would be construed as an undertaking and a solicitor should only give an
undertaking for something within his or her control. In this case, I could only
give this undertaking if the completion monies were in my firm’s client account
on 30 May which will not be possible.
If money isn’t sent to seller on date of completion, when are they able to serve the notice to complete and how many days will buyer have to complete?
They can serve it on that same day and then the buyer has 10 working days to complete.
If buyer is not able to send the money on completion date, what can the seller get during the completion 10 days?
Seller automatically entitled to damages (related transactions) and compensation as soon as completion doesn’t happen. Usually, 5% rate.
Let’s say that they are 6 days late after completion for a 300k property with 30k deposit… it would be:
270k x 0.05 = 13,500 (annual).
13,500 divided by 365 = 36 (daily).
36 x 6 (days) = 221.
After the sale of the property, how many days until CGT needs to be paid to HMRC?
60 days after completion.
What are the elements of private residence relief for CGT?
- No part of the property has been used exclusively for business.
- Not greater than 0.5 hectares.
- He hasn’t been absent during his ownership.
- It’s been his only and main residence during the ownership.
If a couple is buying a new property but she has a rental house she wants to sell and he is selling his main residence, what can she do to get a CGT relief?
She can transfer her house to them jointly, so they can both deduct their CGT tax-free allowance from their share of the gain.
What are the main two docs needed when transferring a conveyance?
N.B. These can be edited to include additional info on positive and restrictive covenants, and easements.
A special condition can be added to the contract of sale.
Also a transfer form. Include a clause in there too.
