Property Drafting

Question 1

Transfer Deed (TR1): What goes in Panel 1?

Answer 1

Enter title number(s) if registered. Leave blank if unregistered.

Question 2

TR1: What goes in Panel 2?

Answer 2

Brief description of the property (address). For leasehold, include lease date, parties, term, and title number.

Question 3

TR1: What’s the rule for Panel 3 (Date)?

Answer 3

Leave blank until completion. A pre-filled date before completion is a red flag.

Question 4

TR1: Who are the transferors in Panel 4?

Answer 4

Usually the registered proprietor(s) — the seller(s). Include certificates if name differs from title. Add a second trustee if needed for overreaching.

Question 5

TR1: When is a second trustee required?

Answer 5

When property is held on trust and sold by a sole trustee — needed to overreach beneficial interests.

Question 6

TR1: What goes in Panel 5?

Answer 6

The transferee(s) — maximum of four.

Question 7

TR1: What’s required in Panel 6?

Answer 7

Address for service — at least one UK address; email optional.

Question 8

TR1: What’s in Panel 8 (Consideration)?

Answer 8

Tick appropriate box: money, no consideration, or other (e.g. debt repayment).

Question 9

TR1: What happens if Panel 9 (Title Guarantee) is blank?

Answer 9

Defaults to full title guarantee.

Question 10

TR1: When must the transferee execute the deed?

Answer 10

If holding as tenants in common, providing an indemnity covenant, or any obligation under Panel 11.

Question 11

TR1: How does an individual execute?

Answer 11

Signed in presence of a witness who also signs and provides details.

Question 12

TR1: How does a company execute?

Answer 12

Signed by two authorised signatories or one director in the presence of a witness.

Question 13

TP1 vs TR1 — what’s the difference?

Answer 13

TP1 is for transfer of part of the property; TR1 is for whole title. TP1 must include a plan.

Question 14

Sale Contract (Residential): Who insures from exchange?

Answer 14

Buyer, unless otherwise agreed.

Question 15

Sale Contract (Residential): What’s the default deposit?

Answer 15

10%. If reduced, balance must be paid if completion delayed.

Question 16

Sale Contract: What is the default completion date if unspecified?

Answer 16

20 working days after exchange; default time 2pm.

Question 17

Sale Contract: What is the default title guarantee?

Answer 17

Full if not stated otherwise.

Question 18

Sale Contract (Commercial): Default VAT position?

Answer 18

Standard rated (20%), unless property >3 years old and no option to tax.

Once a property is over 3 years old, its sale is normally exempt from VAT, meaning no VAT is charged.

However — the seller can elect to waive this exemption by exercising an “option to tax.”

Option to tax

If the seller has “opted to tax,” they’ve notified HMRC that they will charge VAT on rents or sale proceeds for that property.

Once opted, they must charge 20% VAT even if the building is old.

This is often done so the seller can reclaim input VAT on development or improvement costs.

Question 19

Licence to Assign: Who pays landlord’s costs?

Answer 19

The tenant, on an indemnity basis.

“The Tenant shall pay the Landlord’s costs (including legal and surveyors’ fees) incurred in connection with considering and granting this licence, such costs to be payable on an indemnity basis.”

On an indemnity basis” = all reasonable costs, not limited by proportionality.

Question 20

Licence to Assign: What does AGA stand for?

Answer 20

Authorised Guarantee Agreement.

Question 21

Licence to Assign: What is the effect of an AGA?

Answer 21

Outgoing tenant guarantees incoming tenant’s performance of lease obligations.

Question 22

Licence to Underlet: What must happen to exclude security of tenure?

Answer 22

Serve warning notice, obtain statutory/simple declaration from tenant.

Question 23

Licence for Alterations: What must the tenant do before starting works?

Answer 23

Obtain all consents, use good materials, complete within time, and insure the works.

“The Tenant shall not commence the Works until all requisite consents (including the Landlord’s written consent, any statutory consents, and any consent required from a superior landlord or mortgagee) have been obtained.

The Tenant shall carry out and complete the Works:
(a) in a good and workmanlike manner using good quality and suitable materials;
(b) in accordance with the drawings and specifications approved by the Landlord;
(c) within a reasonable time (or such time as may be agreed in writing); and
(d) in compliance with all statutory requirements and the requirements of the insurers of the Building.

The Tenant shall maintain insurance against loss or damage arising from the Works for their duration.”

Question 24

Licence for Alterations: Who pays costs?

Answer 24

Tenant pays landlord’s costs and any costs for reinstatement or damage (often on an indemnity basis).

“The Tenant shall pay the Landlord’s proper and reasonable costs (including legal and surveyors’ fees) incurred in considering, negotiating and granting this Licence and in monitoring or inspecting the Works, such costs to be payable on an indemnity basis.”

Sometimes it’s phrased slightly differently:

“The Tenant shall indemnify the Landlord against all costs, losses, claims and expenses arising out of or in connection with the Works, including the cost of reinstating the Premises or making good any damage.”

Question 25

Notice under s146 LPA 1925: Who can serve it?

Answer 25

Landlord or landlord’s solicitor.

Question 26

s146 Notice: What must it contain?

Answer 26

Breached covenant, details, remedy period, compensation, re-entry warning, counter-notice info.

Question 27

s26 LTA 1954 Notice: What does it do?

Answer 27

Tenant’s request for a new business tenancy with proposed terms.

Question 28

s26 Notice: Deadline for landlord’s opposition?

Answer 28

Within two months of receiving the notice, or the right to oppose is lost.

Question 29

In a TR1, when might you add an indemnity covenant in Panel 11?

Answer 29

When the buyer takes the property subject to restrictive covenants — e.g. “The Transferee covenants with the Transferor to indemnify the Transferor against all actions, costs and claims arising from any breach of the covenants contained in the Conveyance dated…”

Question 30

In a TR1, what does “overreaching” mean in practice?

Answer 30

Where two trustees (or a trust corporation) convey the legal estate, beneficial interests are “overreached” and attach to the sale money, not the land.

Question 31

In a TR1, why is “full title guarantee” significant?

Answer 31

Because it implies that “the transferor has the right to dispose of the property and will do all acts necessary to give good title.”

Question 32

In a TR1, what ensures the deed only takes effect on completion?

Answer 32

The dating provision — leave the date blank until completion and add “This transfer is dated [insert completion date]” once completion occurs.

Question 33

Before execution of a TR1 by a company seller, what must be verified?

Answer 33

That authorised signatories execute, e.g. “Executed as a deed by [Company Name] acting by two directors.”

Question 34

In a property sale contract, what is the legal effect of “exchange of contracts”?

Answer 34

Creates a binding contract — “On exchange the parties agree to complete on [date] and the buyer assumes the risk.”

Question 35

What’s the difference between the Standard Conditions of Sale and the Standard Commercial Property Conditions in a contract?

Answer 35

SCS v5 = residential; SCPC v3 = commercial (includes VAT, capital allowances, business clauses). Typical clause: “This contract incorporates the Standard Commercial Property Conditions (Third Edition – 2018 Revision).”

Question 36

In a property contract, why specify a “contract rate”?

Answer 36

To set the late-payment rate, e.g. “Interest shall accrue at 4% above Barclays Bank plc base rate from time to time.”

Question 37

In a sale contract, what does “vacant possession” legally require?

Answer 37

The property must be “free from occupiers and goods not agreed to be included in the sale.”

Question 38

When are Formula A, B or C exchanges used in a contract?

Answer 38

To record method of exchange — e.g. “Exchange effected by Law Society Formula C at 4.35 pm.”

Question 39

In a contract, when is a “retained land clause” necessary?

Answer 39

When the seller keeps adjoining land — e.g. “The Transferor reserves for the benefit of the Retained Land a right of way over the roadway coloured brown.”

Question 40

In a contract, what does “time not of the essence” mean?

Answer 40

Deadlines aren’t fatal until notice is served — e.g. “Completion shall not be of the essence unless a notice to complete is served.”

Question 41

Who is a certificate of title addressed to, and why?

Answer 41

Usually the lender — beginning “To [Bank Name] – We certify that, subject to the matters disclosed below, the borrower will on completion be the registered proprietor with title absolute.”

Question 42

In a certificate of title, why confirm that the title is “absolute”?

Answer 42

To confirm “no defect or limitation affects the seller’s ownership.”

Question 43

In a certificate of title, what should the solicitor disclose about existing charges?

Answer 43

List and explain, e.g. “There is a registered charge dated 2 June 2013 in favour of City & County Bank plc to be discharged on completion.”

Question 44

Why include a “no undisclosed easements” confirmation in a certificate of title?

Answer 44

To state “we are not aware of any unregistered rights affecting the property.”

Question 45

When must a solicitor report separately to the lender despite the certificate of title?

Answer 45

Whenever a matter departs from assumptions — e.g. “We report separately that access is by private road subject to a maintenance contribution.”

Question 46

What is the effect of a lease “excluding security of tenure”?

Answer 46

The tenant signs a statutory or simple declaration acknowledging “I understand that the tenancy will not have security of tenure under the Landlord and Tenant Act 1954.”

Question 47

In a commercial lease, why include a service-charge clause?

Answer 47

To recover costs — e.g. “The Tenant shall pay a fair proportion (10%) of the Service Costs defined in clause 8.”

Question 48

In a lease, what’s the purpose of an insurance rent?

Answer 48

To cover the landlord’s premium — “The Tenant shall pay to the Landlord the Insurance Rent within 14 days of written demand.”

Question 49

What does the covenant for quiet enjoyment in a lease guarantee?

Answer 49

That “the Tenant shall peaceably hold and enjoy the Property without interruption by the Landlord or any person lawfully claiming through him.”

Question 50

What does a “yield-up” clause in a lease require the tenant to do?

Answer 50

Return the premises “in good and substantial repair and condition, removing all fixtures and making good any damage caused by removal.”

Question 51

What’s the legal basis for forfeiture of a lease?

Answer 51

Clause often reads: “If any rent is unpaid for 14 days after becoming due or if the Tenant breaches any covenant, the Landlord may re-enter and determine the term.”

Question 52

In a lease, why might a guarantor covenant be required?

Answer 52

To ensure compliance, e.g. “The Guarantor covenants to pay the rents and perform the Tenant’s obligations.”

Question 53

What is an “Authorised Guarantee Agreement” (AGA) under the Landlord and Tenant (Covenants) Act 1995?

Answer 53

An outgoing tenant’s guarantee, often starting “The Assignor guarantees to the Landlord that the Assignee will pay the rents and observe the tenant covenants.”

Question 54

Before serving a s.146 LPA 1925 notice for disrepair, what must a landlord do?

Answer 54

Serve the Leasehold Property (Repairs) Act 1938 notice first: “You are required within 28 days to serve a counter-notice if you intend to claim the benefit of the Act.”

Question 55

What happens if a tenant serves a counter-notice under the Leasehold Property (Repairs) Act 1938?

Answer 55

The landlord must obtain court leave before taking enforcement or forfeiture action.

Question 56

In a s.146 notice, why must the breach be described precisely?

Answer 56

Because wording like “You are in breach of clause 25 by failing to repair the roof” must clearly identify the covenant — vagueness can invalidate the notice.

Question 57

Under a s.26 Landlord and Tenant Act 1954 request, what is the time frame for service?

Answer 57

Serve “not less than six nor more than twelve months before the proposed commencement of the new tenancy.”

Question 58

What happens if the landlord fails to oppose a s.26 request within two months?

Answer 58

They lose the right to oppose renewal — “The landlord shall be deemed to have agreed to grant a new tenancy.”

Question 59

If the terms of a new tenancy under a s.26 request aren’t agreed, what can the court decide?

Answer 59

The court determines “the rent, term and other conditions under sections 34–35 of the 1954 Act.”

Question 60

Which grounds of opposition under s.30(1) LTA 1954 give rise to statutory compensation?

Answer 60

Ground (e) reletting as a whole, (f) redevelopment, (g) landlord’s own occupation — tenant entitled to “compensation at one or two times rateable value.”