Property Flashcards

Question

In the **completion stage** of conveyancing, what ONE step must the **buyer's solicitor** take?

Answer 1

1. Send balance of purchase price to seller's solicitor. (buyer takes possession of property)

Answer 2

1. Pay SDLT (or LTT if in Wales). 2. Apply to register title of property at HMLR. 3. Send copy of property register to buyer. (close file)

Answer 3

1. Send evidence of removal of mortgage (if any) from seller's title. (close file)

Answer 4

A statement of best practice, setting out the steps solicitors should take in a residential conveyancing transaction.

Answer 5

* **Contract incorporating the Standard Conditions** - The standard form of a contract used in most residential conveyancing transactions. * **Property Information Form** (known as a form TA6) - completed by the seller and forms part of the contract package, giving the buyer practical information about the property, such as boundary issues, disputes, planning and alterations or occupiers. * **Fittings and Contents Form** (known as a form TA10) - completed by the seller and attached to the contract on exchange, setting out items the seller intends to include.

Answer 6

* **Leasehold Information Form** (known as a form TA7) - completed by the seller and forms part of contract package, giving the buyer practical information about the leasehold residential property. * **Completion Information and Undertakings Form** (known as a form TA13) - completed by seller's solicitor and sent to buyer's solicitor at the pre-completion stage, giving the buyer's solicitor details about the keys to property, seller's solicitor's bank details, and gives the undertaking to redeem (pay off) seller's mortgage out of sale proceeds.

Answer 7

The Contract incorporating the Standard Commercial Property Conditions (3rd edition – 2018 revision) (SCPC).

Answer 8

The Commercial Property Standard Enquiries (CPSE).

Answer 9

Produced by the surveyor's professional body, designed to improve the quality and fairness of negotiations on lease terms between commercial landlords and tenants. It is not binding on solicitors or their clients, but should be adhered to by surveyors who are members of RICS.

Answer 10

* Obtaining client ID documents to comply with money-laundering requirements * Send client care letter setting out terms of retainer, legal fees, outgoings, terms, complaints procedure

Answer 11

The firm must write to the lender requesting release of the unregistered title deeds. The lender will only release the title deeds if the firm gives an undertaking to the lender confirming that the original title deeds will not be released to anyone until the loan is paid off.

Answer 12

England & Northern Ireland - SDLT, administered by HMRC. Wales - Land Transaction Tax (LTT), administered by the Welsh Revenue Authority.

Answer 13

False, it is payable on the profit made on *both* residential and commercial properties.

Answer 14

Because of the **Private Residence Relief** (formerly known as the principal private dwelling house exemption), which says if it was their primary home, they are exempt from CGT.

Answer 15

SDLT/LTT are **self-assessment** taxes, so the buyer is responsible for paying them to HMRC/WRA. In practice, their solicitor will usually do this after completion.

Answer 16

**SDLT:** 1. Freehold property is purchased 2. A new lease is granted 3. An existing lease is assigned **LTT:** 1. Freehold property is purchased 2. A new lease or existing lease is bought 3. Land or property are transferred in exchange for payment (e.g. taking on a mortgage)

Answer 17

£40,000 or more. For HMRC, the SDLT1 Form. For WRA, the LTT Form.

Answer 18

After receiving the buyer's SDLT1 Form (notifying them of the transaction), HMRC will issue an SDLT5 form. The SDLT5 form will then be sent by the buyer's solicitor to HMLR along the application to register the buyer's title.

Answer 19

1. No money / payment changes hands; **or** 2. Property is left in a will; **or** 3. Property transferred because of divorce / dissolution of civil partnership

Answer 20

Once WRA receives the LTT form from the purchaser, WRA will issue an **LTT certificate**. The LTT certificate will then be sent by the buyer's solicitor to HMLR along the application to register the buyer's title.

Answer 21

Yes, the SDLT/LTT rates apply equally to freehold and leasehold transactions. However, note that grants of *new* leases also pay net present value (NPV) on top.

Answer 22

False, first-time buyers do *not* enjoy relief from LTT when they purchase property in Wales. Only in England.

Answer 23

No stamp duty land tax will be payable by first-time buyers purchasing their main residence if the purchase price is below the threshold of **£300,001**. SDLT will then apply in usual way to portion of purchase above that threshold.

Answer 24

**Higher rates of SDLT:** 1. Buying a second home (e.g. holiday home) = 5% surcharge. 2. If a company buys a residential property = 17% rate if over £500k. **Higher rates of LTT:** 1. Buying a second home (e.g. holiday home). 2. If a company or trust buys a residential property.

Answer 25

1. Buying more than one property (multiple dwellings). 2. Moving property around a group structure. 3. Purchaser is a charity.

Answer 26

HMRC - within **14 days** of completion, or pay a penalty. WRA - within **30 days** of completion, or *may* pay a penalty.

Answer 27

The purchase price when a new lease is granted.

Answer 28

It refers to the additional element of SDLT that is payable upon granting of a new lease. It is calculated as a percentage of the rent payable under the lease. In practice, it only normally applies to commercial premises or short-term residential properties because long-term residential leases tend to have low rents.

Answer 29

The purchase price when a new lease is granted.

Answer 30

"Mixed use" - part of the property is for commercial use and another for residential (e.g. shops with flats above). "Non-residential" - commercial property (e.g. shops, offices, etc.) or **six or more** residential properties purchased in a single transaction.

Answer 31

Because VAT is charged when a business sells goods, services **and business assets** to another business or non-business customer. This includes when they sell property / land owned by the business.

Answer 32

£90,000 worth of taxable supplies in the tax year. It can reclaim any VAT paid out in business-related goods and services, but must pay the balance to HMRC.

Answer 33

A standard VAT rate of 20%. The effect is that in addition to the purchase price, the buyer will have to pay a further 20% on top of the purchase price.

Answer 34

The total purchase value **including VAT**. E.g. If the commercial property is sold for £100,000, the VAT will be £120,000. The SLDT/LTT will be calculated based on the £120,00 price tag.

Answer 35

Because a VAT-registered buyer can reclaim the 20% VAT on top of the purchase price. But a non-business buyer cannot, so it is literally 20% more expensive for them.

Answer 36

Taxable supply = anything that is made in the UK and isn't explicitly tax exempt. Zero rated = a taxable supply whose rate of taxation is 0%. Tax exempt = anything that isn't a taxable supply (i.e. not just 0% rate but not in scope of tax regime at all).

Answer 37

Because if the buyer or tenant is not registered for VAT (e.g. because not commercial or under £90,000 threshold for registration), the price they pay will be 20% more expensive. By contrast, a buyer or tenant who *is* VAT-registered can offset it.

Answer 38

* Sell * Gift * Transfer * Swap It becomes payable on exchange of contracts NOT completion.

Answer 39

False, the solicitor should advise the client to take advice from an **accountant**.

Answer 40

Residential property: * Report and pay CGT **within 60 days** of completion (note: no CGT if property being sold was primary residence). Non-residential property: * Paid via taxpayer's self-assessment tax return in the **tax year after** the property was disposed of.

Answer 41

Conditions: 1. Property was seller's only/main residence **throughout the period of ownership**. 2. Garden/grounds/building not more than **0.5 hectares**. 3. **Never used for any business purpose** e.g. using room as an office.

Answer 42

The contract clause means that in addition to the purchase price of £300,000, VAT will be payable on the purchase price at the standard rate of 20%. So, the purchaser will pay an additional £60,000 in VAT on completion, on top of the purchase price.

Answer 43

Yes, although it is their first home purchase in England, they are not first-time buyers. Moreover, because they own a property abroad, they must pay an additional 3%.

Answer 44

This is the sale of a new commercial property within 3 years of construction, so VAT is payable on the purchase price at the standard rate (20%).

Answer 45

No VAT is payable by the buyers as this is the purchase of a residential property.

Answer 46

SDLT in a commercial transaction is not payable if the purchase price is up to £150,000.

Answer 47

* **Residential** - the standard form produced by the Law Society. * **Commercial** - the standard form produced by the Law Society which incorporates the SCPC or based on industry precedents or the firm's own precedent.

Answer 48

1. Particulars of sale 2. Standard conditions 3. Special conditions

Answer 49

On exchange.

Answer 50

* Whether the property will be sold with vacant possession. * Time of completion. * Confirmation of any items to be included in sale. * A provision that neither party can rely on representation by the other.

Answer 51

A clause in a contract for sale of freehold or leasehold in which the non-owning occupier aged 18+ living in the property signed to say they will move out on completion.

Answer 52

True, although the seller is advised to disclose *any* defect to avoid any later dispute.

Answer 53

They are required to proactively disclose material information that may affect an "average" buyer from entering into the transaction e.g. title defects.

Answer 54

1. **Full title guarantee** (the default) - given by a seller who owns the full legal and equitable interest and has lived in the property. 2. **Limited title guarantee** - given by a seller with less knowledge or involvement with the property e.g. a personal representative. 3. **No title guarantee** - given by a seller who has no knowledge of the property e.g. a mortgagee in possession.

Answer 55

A penalty rate of interest that will apply in the event of late completion. Anything more than 4% or 5% above the base rate should be amended as too punitive.

Answer 56

Because overinflating the sum (with a corresponding reduction to the purchase price) would be defrauding the HMRC/WRA of SDLT/LTT.

Answer 57

That if the buyer defaults and does not have the money to make up the difference between the what the paid and the full 10% the seller is entitled to, then the seller will find it difficult to recover the shortfall.

Answer 58

Yes, this is known as Formula C exchange.

Answer 59

The seller's solicitor. Either as: * Stakeholder - held in the firm's client account on behalf off both parties and transferred only after completion. * Agent - the seller's solicitor can pay the deposit over the seller immediately after exchange.

Answer 60

Yes, which is why the buyer should be advised to purchase buildings insurance upon exchange of contracts.

Answer 61

A commercial contract that is conditional on financing and obtaining planning permission.

Answer 62

* Draft contract in duplicate * Evidence of seller's title * Property Information Form (TA6) * Fittings and Contents Form (TA10) * Guarantees e.g. boiler fitting * Any planning permission

Answer 63

To ensure there will be sufficient funds on sale to repay the mortgage out of the proceeds (the seller's solicitor will give an undertaking to do this).

Answer 64

* Joint tenants - all sellers. * Tenants in common - all sellers. * One surviving beneficial joint tenant - surviving seller. * One surviving beneficial tenant in common - seller named in contracts but second trustee appointed to overreach the transfer * Sole seller has died - seller's personal representative. * Seller is alive but has lost mental capacity - seller will be named but signed by their LPA. * Seller is a mortgagee in posession - the lender assuming they have power for sale.

Answer 65

No. The special conditions of sale already include an **occupier’s consent form**. It would only be necessary to insert the name of the seller’s spouse and the spouse will need to sign the contract to confirm that they will move out on completion.

Answer 66

If the solicitor cannot obtain any shortfall from their seller client (in addition to all associated costs of the sale) prior to exchange of contracts, the solicitor will probably **withdraw** from acting on the sale. This is because there will be **insufficient funds** for the solicitor to give the **undertaking to redeem the mortgage** out of the sale proceeds.

Answer 67

* The fact that the value of the transaction exceeds the level of cover does not necessarily mean that the firm would be in breach of the requirement. * The firm would need to **assess its likely maximum liability** (including claimant's costs) in the case of the firm's negligence. If this figure is less than £2 million or the firm can clearly meet any losses beyond the level of cover then the SRA would be likely to regard the firm as compliant with the requirement. * The SRA would expect to see that there has been **proper communication with the client** of these arrangements and that the client has made an informed choice.

Answer 68

The solicitor should inform the seller’s solicitor that no VAT is payable on the transaction and should request an amended completion statement. The Standard Conditions of Sale expressly state that the purchase price is inclusive of VAT, even if exemption waived.

Answer 69

Because if there is, the seller's solicitor would need to make an application to HMLR to register the title before drafting the contract.

Answer 70

1. Description - same address on contract? 2. Title number - same on contract? 3. Freehold or leasehold? 4. Easements enjoyed by property? - the words "together with" right of way, use of pipes etc. 5. Has any land been removed? - edged in green

Answer 71

1. Is the **class of title** correct? - aim for absolute title. 2. Is the seller the **registered proprietor**? - check spelling, if they've died then check Grant of Probate or Letters of Administration.

Answer 72

Are there any incumbrances? And how do these affect the buyer?

Answer 73

1. Is the land being bought included in the title? 2. Do any colourings / hatchings indicate rights of way, covenants, etc.?

Answer 74

Check HMLR's Map Search facility or index map (SIM) search for the title. If it is not registered with HMLR, enquire as to the whereabouts of the title deeds. Write to whoever has them. If the lender has them, also give an undertaking to the lender confirming that they will not release the original title deeds until completion (and redemption of mortgage).

Answer 75

1. At least 15 years old at the date of contract. 2. Deals with whole legal and equitable interest. 3. Contains adequate description of property. 4. Does nothing to caste doubt on title.

Answer 76

A chronological list of the documents of title with copies of those documents attached. It is sent to the buyer's solicitor as part of the contract pack to verify the seller's title.

Answer 77

The buyer's solicitor should insist that the seller's solicitor registers the title without delay. Once registered, the seller's solicitor should send an amended contract showing the registered title number along with the new register and title plan.

Answer 78

This will be indicated on the front sheet of the epitome of title. As a general rule, the buyer's solicitor would expect to receive all the originals unless there is a part transfer happening, in which case a certified copy will be provided instead.

Answer 79

No, they must be copies that have been certified as true.

Answer 80

Insist the seller's solicitor registers the title without delay.

Answer 81

Insist that the seller's solicitor registers the title without delay.

Answer 82

Without a stamp it will not be a good link in the chain, so will not be accepted by HMLR on first registration. Therefore, the buyer's solicitor should ask the seller's solicitor to arrange for the document to be properly stamped and any interest and penalties for late payment met.

Answer 83

Within **15 working days** of the search (known as the priority period).

Answer 84

Either: 1. A receipt endorsed on the mortgage deed itself. 2. A separate deed of discharge.

Answer 85

The mortgage would remain valid and bind the buyer.

Answer 86

Synchronized.

Answer 87

1. Submit pre-contract searches 2. Investigate the title 3. Raise enquiries 4. Consider the responses

Answer 88

**Mortgage valuation report** - buyer pays for mortgagee to inspect the property, to establish whether the property is good security for the loan. **Homebuyers' valuation and survey report** - buyer pays for surveyor to produce report on house. More detailed than the MVR and buyer can rely on this. **Full structural survey** - buyer pays for detailed survey, usally where property is old, high value, or buyer intends to make structural alterations.

Answer 89

False, the buyer cannot rely on a mortgage valuation report, only the lender.

Answer 90

True although they'd be advised to inspect personally too.

Answer 91

Signs of any non-owning occupiers (e.g. partners, adult children, parents). Rights of way across property.

Answer 92

**Pre-contract searches** happen before exchange of contracts and help the buyer decide whether to go ahead with the purchase. **Pre-completion searches** happen after exchange of contracts to prevent entries being registered against the property so that the buyer can complete safely.

Answer 93

1. Drainage search. 2. Environmental search. 3. Local search. 4. Physical inspection. 5. Pre-contract enquiries with seller.

Answer 94

Establishes whether there is anything happening on a local level that might adversely affect the property. The local authority provides the information requested, although the buyer's solicitor might make the request via an online search provider.

Answer 95

The search results cover only the address, not any information about adjoining land.

Answer 96

The lender, if the buyer is seeking a mortgage.

Answer 97

False, these are additional questions the buyer may choose to ask a local authority as part of the local search.

Answer 98

An optional enquiry to the local authority to reveal whether the property is on or adjacent to either: * Common land * A village green This is relevant because it gives local residents the right to use the land.

Answer 99

A search carried out on the seller where the seller is a limited company to establish it has not been liquidated and is entitled to deal with land.

Answer 100

Where the property the buyer wants to purchase is **unregistered**. It reveals whether some or all of the property is registered at HMLR or subject to a caution against first registration (which would require HMLR to inform the cautioner with interests in the land about an application for first registration).

Answer 101

A form of protection for interests affecting unregistered land. HMLR gives the person who applied for the caution (the cautioner) **notice of an application for first registration** of the legal estate. When the application is then made, HMLR notifies the cautioner who can then ensure their claim is considered and their **rights noted in the title**. HMLR keeps a **register of cautions** against first registration, with an individual caution register (and no.) for each caution.

Answer 102

Also known as a **K15 search**, it is carried out against the full names of all estate owners appearing in an unregistered title since the root of title. It reveals whether there are any third-party rights registered as land changes.

Answer 103

1. Correct spelling of **names**. 2. Appropriate **periods** of ownership for those names

Answer 104

To **avoid misrepresentation** - if the buyer is induced to proceed due to incorrect replies, the seller can be sued for misrepresentation.

Answer 105

False, this is not advisable as it may be taken as confirmation that the seller has carried out their own due diligence. Instead the seller should qualify with, **"but the seller has not carried out any investigation in this respect"**.

Answer 106

1. **Structural problems** - advise buyer to have survey done. 2. **Environmental matters** - built on / near contaminated land, risk of flooding, advise buyer to commission specialist reports and check that the buyer can obtain buildings insurance (and otherwise, advise not to proceed). 3. **Foul drainage and water supply** - whether property connected to mains water and/or sewage. Otherwise, make enquiries about alternatives like private drainage system. 4. **Roads fronting the property** - whether the road is "adopted" (or there are plans to adopt) by the local authority. If so, there is, an automatic right of way and the local authority will maintain the road. If not, investigate whether the property benefits from right of access over adjoining property. 5. **Tree preservation orders** - prevents buyer from cutting it down. Request a copy of the order. 6. **Public rights of access** - report to buyer and lender the route of the right of way. 7. **Planning** - planning entries for the property. Check that there are the appropriate consents.

Answer 107

The Commercial Property Standard Enquiries (CPSEs)

Answer 108

The lender will need to release the land being sold from the mortgage upon completion. A **DS3 form** should be used and signed by the lender, which the seller will then supply to the buyer's solicitor.

Answer 109

The seller must obtain a detailed **HMLR-compliant plan** showing the extent of the land to be sold so the buyer can see the extent of the land being purchased. An HMLR-compliant plan *must*: * Have a north point * Be to a recognised scale * Land being sold is edged in red * Be attached to the TP1 Form (appended to contract)

Answer 110

A **building regulations completion certificate** ("final certificate") on or before the completion date.

Answer 111

The developer usually enters into an agreement with the local authority and utility company confirming that they will build the roads and services to a good and workmanlike standard. The development will alco place a sum of money with the local authority or utility company, known as **'a bond'**.

Answer 112

The seller will usually insist it is held by their solicitor as **agent** i.e. the seller's solicitor holds on behalf of the seller.

Answer 113

A new build warranty lasting 10 years, requiring the developer to put right any **structural defects**. This usually includes a **deposit protection scheme**.

Answer 114

National House Building Council (NHBC)

Answer 115

False, they should arrange a **local authority search**.

Answer 116

To restrict or control building work and the use of premises. The local authority.

Answer 117

1. Planning permission - about local planning policy. 2. Building regulations - about health and safety.

Answer 118

Through the local search. ## Footnote Local searches provide essential information about a property's compliance with planning and building regulations.

Answer 119

Carrying out of building, engineering, mining or other operations in, on, over or under land, or the making of any material change in the use of any buildings or other land.

Answer 120

* A material change of use. * Demolition. * Rebuilding. * Structural alterations/additions. * Operations normally carried on by a builder.

Answer 121

* **England** - 3 years. * **Wales** - 5 years.

Answer 122

That building work does not require formal planning permission e.g. a small extension. It is also known as 'permitted development'.

Answer 123

1. In **conservation areas**, where formal planning permission is required to make even minor changes. 2. If they are **not adopted** by a local authority, e.g. the local authority excludes locations from permitted development under an Article 4 Direction.

Answer 124

1. **Outline** - broad permission as to the principle of development, subject to any "reserved matters" still to be decided like materials. 2. **Detailed** - full plans which, if approved, allow the development to commence. Full permission is usually subject to conditions.

Answer 125

* Enforcement notice to secure compliance. * Stop notice following an enforcement notice. * Planning contravention notice to flush out information about potential breaches. * Demolition. * Rectifying even at significant expense e.g. rebuilding.

Answer 126

A certificate confirming the proposed or existing building works or use of the land are lawful for planning purposes. This includes by reason of expiry of the time limit in which to take enforcement action.

Answer 127

Criminal sanctions.

Answer 128

A listed building cannot be demolished, extended, or altered without **listed building consent** from the local authority *in addition to* planning permission. Also, permitted development does not apply.

Answer 129

Maintained by Historic England (for England) and Cadw (for Wales). **Grade I** - a building of exceptional interest. **Grade II** - most other listed buildings.

Answer 130

A notice of the listing should be in the **contract pack**. But failing this, they can check the Historic England/Cadw website. The buyer's solicitor should advise the client to have a **full structural survey**.

Answer 131

An enforcement notice can be issued at any time and served on the current owner irrespective of whether they did the work.

Answer 132

Because non-compliance runs with the land, meaning their buyer client inherits liability.

Answer 133

The building control officer will inspect the work being carried out at certain stages, and issue a **building regulations completion certificate** (sometimes known as a **“final certificate”**) once the work is completed.

Answer 134

For works completed from 1 October 2023 - **10 years** from the date of completion of the works (or unlimited if serious risk of danger). For works completed *before* 1 October 2023 - **2 years** provided proceedings commence within 6 months of discovery.

Answer 135

1. Enforcement notice requiring alteration or removal of work. 2. Compliance notice to correct work. 3. Stop notice until breach has been addressed. 4. Injunction (in addition / instead of enforcement notice). 5. Prosecution incl. fine and/or imprisonment.

Answer 136

Injunctions are rarer but may be used in an urgent situation where there is a serious risk of danger to health and safety.

Answer 137

1. Planning permissions. 2. Building regulations consent. 3. Listed building consent. 4. Details of enforcement proceedings.

Answer 138

1. Obtain reasonably priced **indemnity insurance** to insure against the risk of a title defect being enforced (seller usually expected to pay this) - **most common option**. 2. Find the person(s) with the benefit of the covenant and seek their **consent** to do whatever it prohibits.

Answer 139

Because the use of buildings on a residential property is unlikely to change, whereas on a commercial property it often will.

Answer 140

* No planning permission for building works - **4 years** from breach. * No planning permission for material change of use - **10 years** from change. * Breach of planning condition - **4 years** from breach. * Concealed breach - **unlimited**.

Answer 141

1. **Source of funds** - where it is held along with bank statements in the client's name. 2. **Source of wealth** - income, inheritance, etc. and if unsure, the buyer's solicitor should consider reporting to the firm's Money Laundering Reporting Officer.

Answer 142

The solicitor must: 1. Check the source of funds and source of wealth of the person gifting the deposit. 2. Ensure the buyer declares the gifted deposit to any lender.

Answer 143

No, although the buyer must pay for the mortgage valuation report, they are not entitled to rely on it.

Answer 144

1. A **copy** is sent to the buyer and the buyer's solicitor. 2. If it is a *commercial property transaction*, the lender usually **appoints their own solicitor** (known as "separate representation"). Otherwise, the buyer's solicitor acts for both the buyer and lender. 3. The buyer's solicitor ensures the offer is **satisfactory** before exchange of contracts.

Answer 145

1. Amount of mortgage advance (the "capital sum"). 2. Type of mortgage product. 3. Interest rate. 4. Term. 5. Conditions e.g. credit card borrowing paid off.

Answer 146

* **Repayment** - the borrower repays capital and interest every month, and the loan is paid off at the end of the term. * **Interest-only** - the borrower pays only the interest, meaning they must have an investment plan to pay off the capital at the end of the term. * **Endowment** - a mortgage combined with a life insurance policy in which the buyer pays insurance premiums every month maturing at the end of the term to pay off the mortgage (rare). * **Pension** - linked to a borrower's pension and typically used by self-employed borrowers. * **Sharia-compliant** - offered by specialist lenders that is compliant with Islamic law.

Answer 147

True, they cannot recommend any particular mortgage product.

Answer 148

The Handbook.

Answer 149

**Due diligence:** * ID and due diligence on the borrower e.g. bankruptcy search. * Investigating title, making enquiries, raising searches. * Checking purchase price in contract = as it appears in mortgage offer. * Confirming source of funds and wealth (and declaring gift deposits to lender). * Consent form signed by any non-owning adult occupier. * Minimum residue of term in residential lease (usually 85 years). **Formalities:** * Stamp duty paid. * Mortgage registered at HMLR following completion. **Advising the borrower:** * Advise borrower on content and effect of mortgage offer.

Answer 150

The interests of both parties are generally the same, i.e. both want a property with a good and marketable title.

Answer 151

Their interests are different to that of the buyer or there is a substantial risk of such.

Answer 152

All borrowers.

Answer 153

Report the issues to the lender before exchange of contracts and await confirmation of consent to proceed from the lender before exchanging contracts.

Answer 154

Applying for **"drawdown"** of the loan. The buyer's solicitor sends the lender a **certificate of title** which: 1. Acts as a request for drawdown. 2. Confirms that the title to the property being purchased is good and marketable.

Answer 155

The buyer's solicitor must also register the mortgage at Companies House within **21 days** of completion. The certificate of registration with Companies House is sent along with the HMLR application to register the charge. Failure to meet this deadline means a court order will be needs to enable the company charge to be registered with HMLR.

Answer 156

* If **registered**, a pre-completion **OS1 priority search** is carried out in the lender's name and registration takes place within the 30-working-day priority period conferred by the search. * If **unregistered**, make an application for **first registration** with HMLR within 2 months of completion, including registration of lender's charge.

Answer 157

Mortgage deed.

Answer 158

Stamp Duty. Stamp Duty Land Tax replaced stamp duty on 1 December 2003. Prior to this date, a note that the appropriate stamp duty had been paid had to be affixed on the relevant document, in this case the conveyance dated 18 September 1972.

Answer 159

The friend does not have exclusive possession of the area, and also the arrangement is not a lease as the agreed term “until the gym was able to be opened again” was not a term certain. The person still has access to the take-away section at will, and the maximum term of the arrangement was not certain at the outset since the date of the relaxation of restrictions was not known at the date the parties agreed the matter Lace v Chantler 1944.

Answer 160

Both solicitors must obtain their client’s **irrevocable** authority to proceed to exchange of contracts and all parties in a chain must agree the completion date. They **usually** do so by phone, **and follow up in writing**.

Answer 161

The solicitor will usually provide co-ownership advice both at the **outset** of the transaction and before **exchange of contracts**. * If the buyers are a married couple or civil partners, they will usually advise to hold the beneficial interest as joint tenants. * If the buyers are contributing in unequal shares or are business partners, they will usually advise to hold as tenants in common.

Answer 162

That the registered proprietors hold the beneficial interest as tenants in common.

Answer 163

The conveyance will state whether they hold the beneficial interest as joint tenants or tenants in common.

Answer 164

1. **Legal title** - copy of title, freehold vs leasehold, registered vs unregistered, rights and burdens. 2. **Boundaries** - plan of propery, responsibility for boundary maintenance. 3. **Search results** - local search (roads, planning), drainage search (public drainage and water supply), environmental search (contaminated land or flooding), other non-standard searches. 4. **Information about the property** - property information form (/CPSE for commercial transactions), fittings and contents, planning permission, guarantees, EPC etc. 5. **Contract** - key terms, property address, price, additional sum for fittings and contents, request buyer to sign and return. 6. **Co-ownership** - confirm advice previously given. 7. **Mortgage** - main terms e.g. amount borrowed, interest, product type, request for mortgage deed to be signed and returned. 8. **Finances** - completion statement summarising finances (purchase price + legal fees, VAT, search fees, SDLT/LTT and HMLR fee), mortgage advance, 10% deposit payable on exchange. 9. **Next steps** - explain effect of exchange, buildings insurance required, preferred completion date.

Answer 165

"Synchronising" the transactions.

Answer 166

1. **Review contract** - ensure contract incorporates all agreed changes. 2. **Seller's existing mortgage (if any)** - ensure solicitor holds indicative redemption figure. 3. **Review replies to enquiries** - ensure replies provided. 4. **Seller to sign contract** - seller signs in readiness for exchange. 5. **Occupiers (if any)** - have non-owning occupiers taken their own independent legal advice and signed contract? 6. **Completion date** - seller confirms agreed completion date. 7. **Authority** - seller gives irrevocable authority to exchange. 8. **Sale proceeds** - who are sale proceeds payable to? Or transferred to purchase file for related purchase?

Answer 167

1. **Search results and replies to enquiries** - ensure all enquiries answered fully and search results received. Include any agreement on special conditions in contract. 2. **Survey** - if buyer commissions a survey, advise to ensure they are satisfied and aware of costs of remedial work. 3. **Financing the purchase** - if mortgage required, mortgage offer must be received prior to exchange and any conditions complied with. 4. **Report** - ensure all matters reported to buyer. 5. **Deposit** - solicitor requests 10% deposit, and funds cleared before they can be used. 6. **Buyer to sign contract** - buyer signs in readiness for exchange. 7. **Buildings insurance** - consider if buyer's insurance is ready to go on risk on exchange. 8. **Completion date** - buyer confirms agreed completion date. 9. **Authority** - consider if buyer has given irrevocable authority to exchange.

Answer 168

True, if the buyer’s solicitor relies on funds that are not cleared, this is a breach of the *SRA Accounts Rules* (30 May 2018).

Answer 169

False, irrevocable authority to exchange contracts must be given by each individual seller/buyer on whose behalf the solicitor works.

Answer 170

1. **In person:** Solicitors meet face to face and the transaction becomes legally binding at the agreed moment of exchange of contracts (rare). 2. **By post:** Each solicitor posts their client's signed part of the contract to the other, and becomes binding on postage (rare due to lack of certainty). 3. **By phone:** The solicitors have phone conversation and write the date agreed for completion and date of exchange on their client's signed part of contract and agree time of exchange (common).

Answer 171

1. Check the contract and confirm that both parts are identical. 2. Agree the date and time of exchange of contracts. 3. Keep a **written memorandum of exchange** of contracts for the file (e.g. solicitor's name, date, time, formula used, completion date, deposit amount). 4. (Implied) undertaking to post the signed contracts on the day of exchange.

Answer 172

Yes, if the solicitors mutually agree then they can vary the undertaking contained in the Law Society’s formulae for exchange.

Answer 173

Used where **one solicitor** (typically the seller’s) holds ***both* parts of the contract** together with the buyer’s deposit. * The buyer’s solicitor sends their client’s signed part of the contract and deposit to the seller’s solicitor in advance of exchange of contracts to be "held to the order" (i.e. subject to buyer's solicitor's authorisation) of the buyer’s solicitor pending exchange. * Both solicitors hold a phone conversation during which the seller’s solicitor confirms that both parts of the contract are the same. The seller’s solicitor inserts the completion date; the exchange date and the time of exchange will be confirmed. * The seller’s solicitor sends the contract signed by their seller client to the buyer’s solicitor on the day of exchange.

Answer 174

Used where **each solicitor holds their own client's signed part** of the contract. * The solicitors hold a phone conversation during which they confirm that the contracts they hold are in identical format. * They insert the completion date; the exchange date and the time of exchange will be confirmed. * The seller’s solicitor sends the contract signed by their seller client to the buyer’s solicitor. * The buyer’s solicitor sends the contract signed by their buyer client together with the agreed deposit to the buyer’s solicitor.

Answer 175

Used where there is a **chain of transactions**, and the deposit money is to be sent directly to another firm further up the chain. This formula relies on two sets of phone conversations: * In one series of conversations the solicitors in chain confirm that their clients are willing to proceed, and the completion date is agreed. * The second phone call confirms actual exchange of contracts.

Answer 176

Registering an estate contract against the seller's title to protect their buyer's position. Registered = **notice** on charges register. Unregistered = **C(iv) land charge** against seller's name. Upon completion, the buyer's solicitor must remeber to remove the estate contract charge.

Answer 177

1. **Damage to the property** - although the seller has a duty to keep the property in the same state and condition it was in at exchange, the buyer will be liable for this under the Standard Conditions/SCPCs, which is why building insurance is critical. 2. **Occupation by buyer before completion** - seller would need to approve this, but if they do, the Standard Conditions permit the buyer to occupy as a licensee. Note: the SCPCs do not have a similar provision so special conditions must have been arranged *prior* to exchange.

Answer 178

**"Synchronised"** transactions refer to when all parties in the chain complete (i.e. move in/out) on the same day. **"Simultaneous"** exchange and completion refers to when the parties chose to move in/out on the same day they exchange e.g. if there is a risk someone in the chain will pass way between exchange and completion.

Answer 179

Either party can withdraw, without penalty, even on the chosen completion date e.g. when moving company booked and paid for.

Answer 180

Contact *both* the husband and wife by telephone to seek their irrevocable authority to exchange and ask them to confirm in writing.

Answer 181

The solicitor could send the contract and deposit to the seller’s solicitor to exchange contracts by telephone using Law Society’s formula A.

Answer 182

1. Obtain **redemption figure** on the mortgage. 2. Reply to **completion information and undertakings form** (TA13). 3. Get seller to sign purchase deed i.e. **transfer (TR1 or TP1)**.

Answer 183

1. Submit **pre-completion searches**. 2. Obtain **funds** to complete the purchase.

Answer 184

1. Send **transfer** to buyer's solicitor. 2. **Redeem** seller's mortgage (if any).

Answer 185

1. Send **balance purchase money** to seller's solicitor. 2. Take **possession** of property.

Answer 186

1. Send evidence of **removal of mortgage** (if any) from seller's title. 2. Close file.

Answer 187

1. Pay **SDLT/LTT**. 2. Apply to **register** title to property at HMLR. 3. Send copy of **new title** to buyer. 4. Close file.

Answer 188

**Contract** - creates the agreement between seller and buyer for sale of property and comes into effect on exchange of contracts. **Transfer** - drafted by buyer's solicitor (using TR1 or TP1 form) and must be signed by seller *before* completion. It transfers the legal title in exchange for the balance of the purchase money.

Answer 189

A seller's undertaking to redeem mortgages on the sale proceeds represents one of the biggest risks in a property transaction, so they need to be clear that all mortgages will be redeemed.

Answer 190

When the seller's solicitor applies for an up-to-date redemption figure once they have the exact completion date (which will be inserted in the contract).

Answer 191

A **certificate of title** is sent to the lender to request drawdown of the mortgage advance prior to the completion date.

Answer 192

Any sum required from the buyer to complete, including: * All legal fees. * VAT. * Costs. * SDLT/LTT. * HMLR registration fee.

Answer 193

Every item of expenditure on behalf of the client, every amount of money due to the client and the balance of the account.

Answer 194

A bankruptcy (**K16**) search. An official search of registered title with priority (**OS1**) to provide a 30-working-day priority period within which completion and application for registration at HMLR must take place (to ensure the buyer takes the property free of adverse entries attempted during priority period).

Answer 195

True, it is only mandatory if there is a mortgage. However, it is still highly advised.

Answer 196

**Report on title** - sent to the buyer by the buyer's solicitor about the property before exchange of contract. **Certificate of title** - sent to the lender by the buyer's solicitor to request drawdown of the mortgage advance prior to completion.

Answer 197

Full land charges (K15) search.

Answer 198

**Company search** if the company is a **limited** company.

Answer 199

The buyer's completion statement will include: * All legal fees. * VAT. * Costs. * SDLT/LTT. * HMLR registration fee. The seller's completion statement will include: * All legal fees. * VAT. * Costs. * Net sale of proceeds (to be paid to client's bank account of transferred to onwards purchase).

Answer 200

The seller’s solicitor will usually obtain their client’s authority to pay the estate agent's fees out of the sale proceeds on completion.

Answer 201

* In writing. * Clear on its face. * Validly executed by seller i.e. signed in indelible ink and witnessed. Companies can execute a deed by affixing the common seal of the company in the presence of either: 1. The company secretary and 1 director *or* 2. 2 directors.

Answer 202

False, only the seller needs to sign, although the buyer often will too if the transfer contains a positive covenant by the buyer. For example, to indemnify the seller from ongoing liability.

Answer 203

1. The buyer (and lender) won't be able to take the land free of **adverse entries** registered against the title during that period. 2. A **negligence claim** if an adverse entry was registered after expiry but before the application for registration was submitted by HMLR.

Answer 204

**OS1 priority period** - essentially ringfences a 30-working-day period in which completion and application to register at HMLR should happen in order for the buyer (and any lender) to ensure its rights take priority over adverse entries over that period. *(registered system)* **K15 priority period** - searches against the full name of all legal owners on the root of title and is submitted to the HMLR. It locks in a 15-working-day priority period within which the transaction must complete to avoid adverse entries by third parties. *(unregistered system)*

Answer 205

**Methods of exchange:** * Person * Post * Phone **Methods of completion:** * Person * Agent * Post

Answer 206

1. **Personal attendance** - the buyer's solicitor attends the solicitor's offices with a banker's draft for the balance of the purchase money, handing this over in return for the transfer and other deeds and documents. 2. **Agent** - the buyer's solicitor appoints a firm near the office of the seller's solicitor to attend to complete in person as above. 3. **Post** - the seller's solicitor agrees to act as the agent for the buyer's solicitor on completion, meaning once they receive the purchase money, they post the transfer and other relevant deeds and documents.

Answer 207

A statement of best practice that solicitors can choose to adopt. If they do, the seller’s solicitor is warranting that they act for the **true owner** of the property and agrees to act as **agent** for the buyer’s solicitor.

Answer 208

Once the purchase funds are received.

Answer 209

Once the completion date has been inserted into the transfer (which has already been signed by the seller) and the purchase monies have been received.

Answer 210

1. Once the seller's solicitor redeems the mortgage on completion, the lender will confirm receipt. 2. The lender will then either directly seek to remove the charge from HMLR or provide a paper 'discharge of legal charge form (DS1 for whole; DS3 for part)' which will be shared with the buyer's solicitor for them to submit to HMLR with their application for registration.

Answer 211

1. The seller’s solicitor will send the **original mortgage deed** (signed by the seller) to the lender to **receipt **and return. 2. Once the original mortgage deed is returned receipted, the seller’s solicitor will send this to the **buyer’s solicitor**. 3. The buyer's solicitor will then send the original **receipted mortgage deed** to HMLR as part of the application for first registration.

Answer 212

By providing evidence of removal of the legal charge to the buyer's solicitor via a receipted mortgage deed (if unregistered) or DS3 / checking HMLR (if registered).

Answer 213

**Within 21 days** of completion. If the deadline is missed, a court order is necessary to register the charge instead.

Answer 214

By post or online. For SDLT, it must be submitted within **14 days** of completion together with the tax due otherwise a penalty is incurred. For LTT, it must be submitted within **30 days** of completion together with the tax due otherwise a penalty is incurred.

Answer 215

Once the SDLT1 form is submitted to HMRC within 14 days of completion, Form SDLT5 is issued which must be sent to HMLR with the registration application.

Answer 216

**AP1 form** if already registered title. **FR1 form** if unregistered (i.e. for first registration).

Answer 217

Check it carefully and send a copy of the updated registered to the lender (if any) and buyer.

Answer 218

**Registered** - title passes *upon registration* at HMLR. **Unregistered** - title passes *on completion*.

Answer 219

A transfer (TR1).

Answer 220

They will apply for a redemption figure calculated to the completion date.

Answer 221

Bankruptcy search (K16) and official search with priority (OS1).

Answer 222

Full land charges search (K15) and bankruptcy search (K16).

Answer 223

The solicitor must register the mortgage with Barclays Bank plc with Companies House in the next 14 days (i.e. **within 21 days** of completion).

Answer 224

Completion will take place within **20 working days** of exchange of contract.

Answer 225

False, completion must take place by **2pm** otherwise it will be deemed to take place on the following working day (unless the parties agree otherwise).

Answer 226

A seller with a related purchase might seek to complete on their sale by 1pm in order to complete by 2pm on their purchase.

Answer 227

The rate specified in the contract, usually 4-5% above the standard base rate on the vlaue of the contract.

Answer 228

True, although in practice the innocent party is not likely to consider this worthwhile to pursue.

Answer 229

No, because the Standard Conditions and SCPC do not make time of the essence.

Answer 230

1. The defaulting party has **10 working days** in which to complete (excluding the date of service) after which the innocent party can treat the contract as rescinded. 2. It makes time of the essence. 3. If the defaulting party is the buyer who has not paid a **>10% deposit**, they must *immediately* pay any balance to make it up to 10%.

Answer 231

1. Rescind the contract. 2. Keep the buyer's deposit. 3. Resell the property. 4. Claim damages for other losses.

Answer 232

1. Rescind the contract. 2. Demand return of deposit money with interest at standard contract rate (usually base rate + 4-5%). 3. Claim damages for other losses.

Answer 233

1. **Specific performance** - an equitable remedy given at discretion of the court to compel the defaulting party to perform and complete contract. 2. **Damages** - for losses flowing naturally from the breach plus reasonably foreseeable consequential losses. 3. **Rescission** - to restore parties to their pre-contract position (e.g. for misrepresentation, failure to complete following a notice to complete).

Answer 234

1. There is an element of **fraud or recklessness** (e.g. misdescription in particulars of contract), or 2. If the innocent party took the property, it would prejudicially be **substantially different** from the property the innocent party expected to take.

Answer 235

1. **Breach of title guarantee covenants** – in the contract, the seller will give either a full title guarantee, limited title guarantee or no title guarantee. If these have been breached, the buyer may have a claim. The only remedy is **damages**. 2. **Misrepresentation** – if there is an element of fraud or recklessness (e.g. misdescription in particulars of contract), or the innocent party took the property, it would prejudicially be substantially different from the property the innocent party expected to take. The remedies are **rescission** or **damages** (in lieu of rescission).

Answer 236

The buyer has 10 working days (excl. The day the notice received) to complete the transaction.

Answer 237

The seller must be ready, able and willing to complete.

Answer 238

The buyer could apply to court for an order for specific performance.

Answer 239

1. **Immediate landlord** - the party in the position of landlord to the *current* tenant. 2. **Landlord** - the *freehold owner* who carves leases out of the property and rents them to tenants under the terms of lease in return for money.

Answer 240

Property Register - the particulars of the lease will refer to the original parties named in the lease (i.e. freeholder and first leaseholder). Proprietorship Register - details of the current tenant and their class of title.

Answer 241

1. **Long residential lease:** The original developer charges a significant premium (purchase price) when the lease of 99, 125 or 999 years is granted. After which the tenant pays ground rent. 2. **Commercial lease:** Typically 7, 15 or 21 years' long. Rent is driven by market forces and is a significant amount per month.

Answer 242

For every year that passes, the “residue” of the term decreases.

Answer 243

The landlord or management company will covenant with the tenants in each lease to maintain these common/shared areas. Typically, the cost of this will be recovered via a **service charge**. Each tenant will covenant in their lease to pay their share of the service charge. As for positive covenants *between* tenants e.g. to keep their flat in good repair, the landlord can enforce covenants made by the defaulting tenants to the landlord on behalf of the innocent tenants.

Answer 244

Usually 6 months, and time is often of the essence (e.g. if they can only break on 5th anniversary, if they don't inform the landlord 4.5 years before, they will have to wait another 5 years).

Answer 245

The tenant cannot break the lease if it is in arrears of rent or has materially failed to comply with its repairing obligations under the lease.

Answer 246

These are a summary of the lease provisions that are in a standard format. This helps HMLR attend to registration of a leasehold estate more quickly.

Answer 247

The landlord will want the leases of all the premises in a block to start on the same date.

Answer 248

It applies to residential leases granted for a term exceeding 21 years entered into on or after **30 June 2022** and limits the rent in a lease to which it applies to no more than a “peppercorn” which effectively means that no rent is payable.

Answer 249

"To keep" in repair means to "put in repair" and then keep in that repair, which could be onerous. The tenant will likely attempt to negotiate a limitation to exclude liability for "fair wear and tear" and any inherent defects.

Answer 250

The *Landlord and Tenant Act 1985* requires service charges to be fair in proportion to the amount of the building which a tenant occupies or over which they have rights (e.g. garden, parking etc.).

Answer 251

The landlord will usually be responsible for insuring against the insured risks and the tenant will covenant to contribute to the insurance premium incurred by the landlord (known as **"insurance rent"**).

Answer 252

The tenant will covenant to insure the entire building.

Answer 253

1. Assignment (i.e. selling residue of lease). 2. Subletting. 3. Charging (i.e. creating a mortgage over tenant's leasehold interest).

Answer 254

False, in the absence of any clauses on alienation, the tenant is free to deal with the property as they wish.

Answer 255

1. **Absolute covenant** – prohibits the specified act from being carried out. 2. **Qualified covenant** – does not absolutely prohibit the tenant from doing something but makes it conditional upon first obtaining the landlord’s consent. 3. **Fully qualified covenant** – requires the landlord to act reasonably in deciding whether to grant their consent. Case law has interpreted what is reasonable behaviour.

Answer 256

s 19(1)(a) of the *Landlord and Tenant Act 1927* (LTA 1927) provides that where a lease contains a qualified covenant (that is, not to assign, sublet or charge without the landlord’s consent), such consent must **not be unreasonably withheld**.

Answer 257

* As these have to be pre-agreed, the tenant can choose **not to enter into the lease** if they are unreasonable. * This only applies to pre-agreed conditions for **assignment**, not any other forms of alienation like subletting or charges. | s 19(1A) of the *Landlord and Tenant Act 1927* (LTA 1927)

Answer 258

True, so tenants should ensure the user provisions in the lease are acceptable for their use case.

Answer 259

1. Solicitor advice. 2. Surveyor advice. 3. Compensation if the tenant's alterations diminish the value of the landlord's reversion.

Answer 260

Where the alteration amounts to an **"improvement"** of the demised premises (most alterations will be seen as improvements as they will be considered from the tenant's viewpoint).

Answer 261

* Change of use. * Alterations.

Answer 262

Section 3 of the *Landlord & Tenant Act 1927* permits the tenant to serve **notice** of the proposed works on the landlord (accompanied by plans and specifications). * If the landlord does not **object within 3 months** then the tenant can carry out the works. * If the landlord does object, the tenant can **apply to court** for an order authorising the improvements.

Answer 263

Ensure the lease contains a **rent review clause**.

Answer 264

***Either:*** 1. There is a provision in the lease allowing the landlord the right of re-entry ***or*** 2. The tenant's obligation is termed a condition in the lease, so forfeiture arises if they breach the condition

Answer 265

The right to forfeit a long residential lease on the bankruptcy of the tenant is not acceptable to any mortgage lenders.

Answer 266

* Landlord must make a **formal demand** for the rent due (that is, demand the sum, at the property, on the day rent is due, between sunrise and sunset) *unless* this requirement is excluded in the lease or the rent is at least 6 months in arrears. * If rent is still not paid, the landlord may seek a **court order** for possession. * If dealing with ***commercial property***, the landlord may also effect forfeiture by **peaceable reentry**.

Answer 267

It is an offence to use or threaten violence to secure re-entry. | Criminal Law Act 1977 s 6

Answer 268

After a right of re-entry has arisen as a result of a breach of covenant, the landlord can serve a **s146 notice** specifying the breach, requiring a remedy if possible (within a reasonable time period) and requiring compensation if desired. If the tenant fails to remedy the breach, the landlord may, 1. Seek a **court order** for possession. 2. Attempt **peaceable re-entry** (only for commercial properties).

Answer 269

When the landlord, * Knows of the tenant’s breach ***and*** * Does something or takes steps that recognise that the lease continues to exist (e.g. demanding or accepting rent when they want to forfeit for breach of covenant) ***and*** * Communicates that act to the tenant.

Answer 270

1. **For non-payment of the rent** - if all arrears and landlord's costs are **paid**, the tenant is usually entitled to keep the lease. 2. **For breaches of other covenants** - the tenant may apply to the court for relief before the landlord re-enters, but only if they have **remedied** the breach. 3. **Sub-tenants only** - if the head lease is forfeited, the sub-tenant can apply for relief and, if successful, will **become the immediate tenant** of the head landlord for the reside of the sublease.

Answer 271

Deed, ideally. But estoppel also possible.

Answer 272

It simply means that the lease terminates automatically when the fixed period for which it was granted comes to an end, without any need for either the landlord or the tenant to give notice or take any further action.

Answer 273

If the landlord transfers the reversion to the tenant, this is known as a “merger” since the lease term merges with the freehold reversion. The leasehold and freehold interest fuse.

Answer 274

1. Review the original lease to ensure there is no restriction on their ability to sublet. 2. If permitted, ensure the term of the sublease is less than the term of the original lease.

Answer 275

* Each of the leases must contain an obligation on the retailer as the landlord to **insure** the building and provide the shared services. * The leases must contain **service charge** provisions which compel each tenant to pay a share of the cost incurred by the retailer of providing the services. * These provisions may impose an obligation on the retailer to prepare **annual accounts** detailing the actual costs incurred.

Answer 276

Other charges such as insurance costs and service charges are expressed to be **reserved as rent** under a lease because this gives the landlord **more remedies** in the event of default.

Answer 277

No. The provision in the lease is a qualified covenant against assignment because it includes the words “without the landlord’s consent”. This means that the Landlord and Tenant Act 1927 s 19 implies an additional provision into the lease whereby the landlord cannot unreasonably withhold their consent to assignment. Merely wanting to withhold consent because the tenant was difficult would mean that the retailer was unreasonably withholding consent.

Answer 278

No, the landlord cannot forfeit the lease unless there is an express provision allowing them to do so. However, they can sue for non-payment.

Answer 279

No, because the landlord’s acts have waived their right to forfeit the lease.

Answer 280

Yes, the tenant's actions and the landlord's acceptance of the keys is likely to bring the lease to an end by surrender by operation of law (estoppel specifically).

Answer 281

Leases granted *before* **1 Jan 1996** are called "old leases". Leases granted on or before then are called "new leases".

Answer 282

* Under **old leases**, the **original landlord and original tenant remain liable** to each other under the lease for the entire lease term, irrespective of whether the lease has been assigned to someone else. * Under **new leases**, **tenants** are **automatically released upon assignment**. Reason: Privity of contract.

Answer 283

The landlord can require the outgoing tenant to enter into a written obligation called an **“authorised guarantee agreement” (AGA)** in which the outgoing tenant will act as guarantor for their **immediate successor in title**.

Answer 284

True, although the actual defaulting party will still be liable for the full amount (up to 6 years of arrears).

Answer 285

If commercial - the landlord can require an AGA on assignment in the lease terms. If residential - the landlord cannot include such a condition and it will be for the court to decide.

Answer 286

True, it only benefits a tenant who assigns the lease to someone else (automatically releasing them from liability unless there is an AGA in place).

Answer 287

* **Debt action:** Up to 6 years of arrears providing the landlord served notice within 6 months of the breach occurring. * **Taking possession of goods:** Peacable re-entry by bailiffs. * **Forfeiture:** As long as right expressly reserved in lease (and if for a breach unrelated to non-payment of rent, a s146 notice served). * **Deduction from deposit:** Landlord may take a rent deposit as beginning of tenancy. * **Pursue guarantors:** Provided evidenced in writing. * **Commercial Rent Arrears Recovery:** Implied into all new and existing leases from 6 April 2014. The landlord must give 7 days' notice after which time a certified bailiff / enforcement agency can enter the property.

Answer 288

* **Forfeiture:** As long as right expressly reserved in lease (and if for a breach unrelated to non-payment of rent, a s146 notice served). * **Deduction from deposit:** Landlord may take a rent deposit as beginning of tenancy. * **Pursue guarantors:** Provided evidenced in writing. * **Injunction:** To prevent breach e.g. subletting. * **Specific performance:** To remedy breach. * **Damages:** Not exceeding cost of the breach (and not possible if about to be demolished or altered). * **Self-help (*Jervis v Harris* clause):** Entitled to cary out the repairs etc. as long as expressly provided for in the lease.

Answer 289

* **Injunction:** To prevent breach e.g. subletting. * **Specific performance:** To remedy breach. * **Damages:** Not exceeding cost of the breach (and not possible if about to be demolished or altered). * **Repudiation:** Bring an end to the lease. * **Set off:** Tenant gives landlord notice of their failure to carry out repears and right to carry out themselves and set off from rent.

Answer 290

This is an **old lease** under the terms of the *Landlord and Tenant (Covenants) Act 1995* because it is dated before 1 January 1996. This means that the original tenant will **remain liable** for performance of the tenant covenants for the remaining term of the lease.

Answer 291

CRAR only applies to **wholly commercial** leases, not mixed or wholly residential ones.

Answer 292

No, because a forfeiture clause is not expressly included in the lease.

Answer 293

The landlord.

Answer 294

**Headlease** - when the freeholder enters into a lease with the tenant, becoming their landlord. **Underlease** - when the tenant of the headlease (or other sub-tenant further down chain) creates a lease from all or part of the demised premises.

Answer 295

**Rent deposit** - when incoming tenant pays a deposit at start of tenancy which is then held be the landlord in a deposit account and available in the event of tenant defaults, the terms of which are set out in a "rent deposit deed". **Guarantor** - upon granting or assignment of the lease, the guarantor become a party and guarantees the tenant's obligations.

Answer 296

It is typically **three months' rent**.

Answer 297

The company **directors** will likely be asked to personally guarantee the tenant's obligations.

Answer 298

* The landlord’s (seller’s) freehold title. * Property Information Form or CPSE if commercial * Details of any management company that may be responsible for maintaining the common parts. * If the property is residential and is less than 10 years old, a new build warranty.

Answer 299

1. Planning permission and building regulations consent. 2. Service charge budget.

Answer 300

No, not without a **deed of variation**.

Answer 301

(1) - (4) is the same. For (5), instead of executing a TR1/TP1, the parties enter into a **lease**.

Answer 302

Agreement for lease = the contract *to enter into* the lease. Engrossment = the final version of a lease (i.e. what happens on completion).

Answer 303

1. Original = signed by landlord. 2. Counterpart = signed by tenant (and guarantor if there is one).

Answer 304

SDLT/LTT is assessed based on the premium (i.e. the purchase price).

Answer 305

The annual ground rent on long residential leases is often very low.

Answer 306

False, SDLT/LTT applies to the premium (i.e. purchase price) of a lease irrespective of its length. The length is only relevant to whether it needs to be registered.

Answer 307

True, but not necessarily.

Answer 308

1. Leasehold title - compulsorily registrable because lease is over 7 years. 2. Freehold title - can remain unregistered. 3. Legal charge (mortgage) - compulsorily registrable on the leasehold title.

Answer 309

A lease is being granted out of the freehold title and as Midshire Building Society has a mortgage over the freehold, they must consent to the granting of the lease.

Answer 310

The seller (existing tenant) will need to negotiate a **deed of variation** of the lease with the landlord.

Answer 311

While a provision to obtain the landlord's consent to assign *may* exist in a long residential lease, as this provision is unacceptable to lenders, it is rare. By contrast, in a commercial lease, the landlord often reserves the right to require consent to any lease assignments.

Answer 312

To enable the landlord to check the incoming tenant can meet the rent payments. Without such a provision in the lease, the landlord cannot insist on this.

Answer 313

A **licence to assign**.

Answer 314

**How to obtain a licence to assign:** * The existing tenant applies to the landlord for a licence to assign, confirming that they will pay the landlord's legal fees for drafting it. * The existing tenant pays the landlord's legal fees to their solicitor at the beginning of the transaction. * Once they have the cleared funds, the existing tenant's solicitor gives an undertaking to the landlord's solicitors for the costs.

Answer 315

1. **Parties** - landlord, tenant, incoming tenant (assignee). 2. **Lease details** - address, duration, premium etc. 3. **Conditions** to the landlord's consent e.g. that rent is paid on time. 4. **Timeframes** within which the assignment must be completed (usually 3-6 months from completion of licence).

Answer 316

The landlord, outgoing tenant, and incoming tenant (assignee) to establish privity of contract between the landlord and tenant.

Answer 317

The landlord and incoming tenant's guarantor will need to sign the **deed of guarantee**.

Answer 318

It will be **void** because an AGA gets its legitimacy only through the lease provisions (and only for leases granted on or after 1 Jan 1996).

Answer 319

False, its inclusion in a commercial lease will depend on the relative bargaining position of the landlord and original tenant.

Answer 320

* Leasehold register of title and title plan. * Copy of lease. * Last 3 years' service charge accounts. * Service charge budget for the coming year.

Answer 321

The BSA 2022 is intended to ensure that those who have built buildings using **unsafe materials** or with **safety defects** that increase the risk of fire spreading rapidly are responsible for **remedial works** and some (but not all) of the associated costs.

Answer 322

* New fire safety measures. * Fixing structural defects that increase the risk of the building collapsing in the event of a fire.

Answer 323

1. Confirm whether the building comprising the residential flat being purchased has been or will be **remediated** under the terms of the BSA (i.e. unsafe materials or defects increasing risk of fire spreading rapidly). 2. Obtain a copy of a **leaseholder deed of certificate** (which is a prescribed form containing specified information relating to the tenancy). 3. Obtain a copy of the **landlord’s certificate** (which contains information enabling the parties to calculate how much money the landlord can charge the tenant for building safety works not relating to cladding).

Answer 324

The below standard forms have been amended since the BSA 2022 came into force to request the relevant information. 1. Leasehold Information Form (TA7). 2. Leasehold Property Enquiries (LPE1).

Answer 325

Lenders may also specify additional requirements.

Answer 326

Insist on the seller obtaining the freehold title (register entry / epitome of title) from the landlord and the applying to HMLR to **upgrade** the good leasehold title to **absolute leasehold title** *prior to exchange*.

Answer 327

True, because the buyer's solicitor must make an application for **compulsory registration** of the leasehold title within *2 months* of completion of the assignment.

Answer 328

1. Deed of assignment 2. TR1 transfer **(most common)**

Answer 329

Additional warranties applicable to transfer of a leasehold: 1. The **lease** is subsisting at the time of disposition and there is no subsisting breach of condition or obligation that would render the lease **liable to forfeiture**. 2. In the case of a *grant* of an **underlease**, the lease out of which it is created is subsisting at the time of disposition and there is no subsisting breach of condition or obligation that would render the sublease **liable to forfeiture**.

Answer 330

As the outgoing seller is likely to have paid the **rent and service charge** in advance, they will want to recover the amount covering the period *after* completion. Standard Condition 6.3.5 of the contract makes provision for apportionments on **best estimates**. These should be specified in the **completion statement**.

Answer 331

On completion.

Answer 332

1. Original lease 2. Original licence to assign (if applicable) 3. Signed TR1 4. Signed stock transfer form for management company (if applicable) 5. Original share certificate to management company (if applicable)

Answer 333

Grant of lease - SDLT/LTT payable on purchase price and rent element. Assignment of lease - SDLT/TT payable on purchase price only.

Answer 334

1. Notice of assignment of the lease to the buyer. 2. Notice of any new mortgage. Neither are required in the case of *granting* of a lease.

Answer 335

Underletting is where the existing tenant does not assign the residue of their lease but rather ***grants*** a new lease to an **undertenant**. The existing tenant becomes the **landlord** of the tenant of the new underlease.

Answer 336

The existing tenant must check the terms of their own lease to ensure underletting is permitted. The headlease may contain a provision that the tenant must obtain the landlord’s consent to underletting.

Answer 337

A **licence to underlet**, which needs to be signed by the tenant, landlord, and sub-tenant.

Answer 338

**How to obtain a licence to underlet:** * The existing tenant applies to the landlord for a licence to underlet, confirming that they will pay the landlord's legal fees for drafting it. * The existing tenant pays the landlord's legal fees to their solicitor at the beginning of the transaction. * Once they have the cleared funds, the existing tenant's solicitor gives an undertaking to the landlord's solicitors for the costs.

Answer 339

In the usual scenario - if it is for more than 7 years in length because an underlease is the grant of a lease still.

Answer 340

* Leasehold register of title and title plan. * Copy of headlease. * Copy of draft underlease. * Last 3 years' service charge accounts. * Service charge budget for the coming year.

Answer 341

1. Headlease 2. Licence to underlet (if applicable) 3. Signed TR1 4. Signed underlease 4. Signed stock transfer form for management company (if applicable) 5. Original share certificate to management company (if applicable)

Answer 342

**Same as freehold transaction** * Transfer of funds. * Transfer of title documents. * Transfer deed *(assignments only)*. **Additional steps for leasehold transaction** * Complete any licence to assign or underlet (if required). * Complete and date lease (or TR1 if assigning an existing lease).

Answer 343

Only assignment of lease since no transfer occurs where a *new* lease is granted.

Answer 344

No, the solicitor just needs to produce official copies of the leasehold register of title and title plan.

Answer 345

The solicitor will explain that the sum is payable to reimburse the seller for service charge paid in advance.

Answer 346

On first registration, a leasehold title will be created which will include a charges register. The Barclays Bank plc charge will appear on the charges register.

Answer 347

Under *Landlord & Tenant Act 1954 Pt II*, a business tenant is protected at the contractual end of their lease and does not have to vacate the property unless the landlord uses one of the statutory methods of terminating the lease. The tenant is said to “hold over” and can remain in the premises beyond the contractual expiry of their lease.

Answer 348

True, it does not apply to residential premises.

Answer 349

1. 1. **Qualifying tenancy:** Most tenancies which are either fixed or periodic. 2. **Occupation:** The tenant is in occupation (so has not sublet). 3. **Business:** The tenant carries on a business in the property, including sports clubs and charities (but not Sunday schools).

Answer 350

1. Tenancies at will. 2. Agricultural holdings. 3. Mining leases. 4. Service tenancies (e.g. caretakers). 5. A fixed term tenancy for fewer than 6 months (with no option to renew). 6. Tenancies that have been contracted out of the LTA 1954.

Answer 351

1. **Landlord's "health warning"** - before the tenancy commences, the landlord must serve on the tenant a so-called health warning notice. This should be served at least 14 days before the tenant commits to the lease period. The tenant must sign a declaration confirming that they have received the health warning and that they agree to contracting out of the Act and its consequences. 2. **Tenant's declaration** - The landlord can serve the health warning less than 14 days before commencement of the tenancy if the tenant signs a formal statutory declaration in the presence of an independent solicitor confirming waiver of the 14-day notice period. 3. **Reference in the lease** - the lease contains reference to (a) the health warning, (b) the tenant's declaration (or statutory declaration), and (c) agreement to contract.

Answer 352

False, they need to declare confirmation but this does not need to be witnessed by a solicitor unless the "health warning" is given less than 14 days before completion.

Answer 353

If the lease contains the right for the landlord to forfeit the lease, the landlord can do so in the event of tenant default. The LTA 1954 does not remove the landlord’s right to forfeit a protected lease in the usual way.

Answer 354

The landlord and the tenant can both agree to give up the lease before the end of the lease term by entering into a deed of surrender.

Answer 355

The landlord serves a **notice** in a prescribed format on the tenant, informing the tenant that the landlord requires the premises back at the end of term. The notice must set out one of the **statutory grounds** and whether it is a "friendly" or "hostile" to the tenant apply for a new tenancy (on new terms). The s25 notice must be served **6-12 months before** the landlord wants the tenancy to end.

Answer 356

Any time up to the day of the specified termination date unless extensions are agreed.

Answer 357

**"Friendly"** - the s25 notice states that the landlord will not oppose the tenant’s application for a new tenancy (friendly) but may want the old lease to be brought to an end so that a new lease can be created in which a higher/market rent is set and guaranteed. **"Hostile"** - the s25 notice states that the landlord will oppose the tenant’s application for a new tenancy and state their grounds for opposing (hostile). Either party can make an application to court: (i) if the landlord applies to court, the tenant will need to challenge it, otherwise the tenant will lose the right to renew, or (ii) if the tenant applies for a new tenancy the landlord will need to challenge it.

Answer 358

The tenant serves notice on the tenant’s “competent landlord” or agent, and request that the landlord grant a new lease to the tenant (and outline the required terms). The s 26 notice must be served **within 6 to 12 months** of the date on which the tenant wants a new lease to commence (which cannot be before the end of the contractual term). On receipt of this notice the landlord has **2 months** during which to inform the tenant if they intend to oppose the request. If the landlord is unwilling to agree to a new lease, they must specify the **statutory grounds** for opposition.

Answer 359

If a business tenant **does not want to renew** the tenancy at the end of the term, under s 27 the tenant can give not less than **3 months’ notice** to their immediate landlord of their intention to end the tenancy. The reason for doing this is that the tenancy will not come to an end at the end of the fixed term stated in the lease unless terminated in accordance with the LTA 1954.

Answer 360

If the landlord establishes the ground, the court **may** decide to order a new tenancy in any event: (a) tenant’s failure to carry out repairing obligations (b) tenant’s persistent delay in paying rent (c) tenant’s substantial breaches of other obligations (e) on subletting of part, landlord requires the whole property for subsequent letting

Answer 361

If the landlord establishes the ground, the court **must** decide to order a new tenancy in any event: (d) suitable alternative accommodation is available for the tenant (f) landlord intends to demolish or reconstruct the premises, and (g) landlord intends to occupy the holding

Answer 362

(e) on subletting of part, landlord requires the whole property for subsequent letting (f) landlord intends to demolish or reconstruct the premises, and (g) landlord intends to occupy the holding

Answer 363

**Compensation** from the landlord on quitting the premises, calculated using a statutory formula, unless the right to compensation is excluded by agreement betwen landlord and tenant.

Answer 364

True. Even though the concept of "overriding interests" do not apply to unregistered land, a non-owning occupier can still have rights that bind the proprietor or any person who acquires an interest in the unregistered land.

Answer 365

False, the occupier must have an interest in the property e.g. contribution to purchase price).

Answer 366

* Foreclosure * **Possession** * **Power of sale** (when made by deed and money due) - arises when either (i) 3 months' notice to repay in full not done, (ii) 2 months' arrears on interest, or (iii) breach of another mortgage term. * Appoint receiver * Action for repayment * Power to insure * Tacking * Consolidation - requiring all mortgages to be redeemed together if redemption dates passed

Property Flashcards

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