Property SQE2

Question 1

What are the key principles of caveat emptor?

Answer 1

• Onus on buyer to find out everything need to know
• Seller to disclose latent defects in title only. No obligation to disclose defects in construction/design.
• Seller has contractual obligation to disclose and may be liable for misrepresentation/breach of title guarentee if do not disclose

Question 2

How can a joint tenancy be severed?

Answer 2

• Written notice.
• Automatic if bankrupt.

Question 3

What should be done if the seller is a surviving tenant in common?

Answer 3

Deceased’s share will pass to their estate.
If there is not 2 other owners, a second trustee will need to be appointed in the transfer deed so that the buyer can overreach the beneficial interest.

Question 4

How does overreaching occur?

Answer 4

Deceased TIC interest detaches from land and attaches onto sale proceeds.

Deed of appointment for second trustee and then they sign the contract.

Certified copy of death certificate and deed of appointment to be submitted to land registry.

Question 5

What needs to be submitted to the land registry when a joint tenant sells a property?

Answer 5

Certified copy of death certificate.

Question 6

What needs to be obtained on a sale by a PR?

Answer 6

Certified copy of grant of representation showing authority.

Question 7

When might the power of sale of a lender arise?

Answer 7

On default of borrower.

May be:
- in mortgage instrument
- statutory power - need court order. Must obtain best price reasonably obtainable and act in good faith.

Question 9

What rights does the lender have if the borrower defaults?

Answer 9

The mortgagee/lender has the right to:
- Sue for the debt owed
- Take possession of the property
- Foreclose
- Sell the mortgaged property to recover what is owed

Possession of a dwelling must be sought through the courts.

Question 10

What must occur before the right to foreclose arises?

Answer 10

The right to foreclose does not arise until after the contractual date for repayment of the mortgage has passed.

Foreclosure involves a court order that transfers the legal estate from the borrower to the lender.

Question 11

What does foreclosure involve?

Answer 11

Foreclosure involves a court order that transfers the legal estate from the borrower to the lender.

This process typically occurs after the repayment date has passed.

Question 12

When can a mortgagee sell the mortgaged property without applying to a court?

Answer 12

A mortgagee can sell the mortgaged property without applying to a court if the date for redemption of the mortgage has passed and the interest payments are more than two months in arrears.

This allows for quicker recovery of owed amounts.

Question 13

What is a power of sale in the context of mortgages?

Answer 13

A sale by a mortgagee under a power of sale is subject to any prior mortgages but will be free of any estates or interests over which the mortgage itself has priority.

This means that the mortgagee can sell the property to recover debts without being impeded by other claims.

Question 14

When is the power of sale exercisable?

Answer 14

Notice requiring payment served and no payment for 3 months or payment of interest not paid for 2 months or another provision in the mortgage breached.

Question 15

When is planning permission needed?

Answer 15

‘Development’ of land. Includes building operations, mining, material change of use, dividing a property into 2.

Not interior alterations or changes of use within same class.

Question 16

What is a permitted development?

Answer 16

Deemed permission.
- Fence/wall up to 2m hight
- Exterior painting
- Small extensions
- Re-fotting
- HMOs

Question 17

When do permitted developments not apply?

Answer 17

When article 4 direction passed - conservation area.
Listed buildings

Question 18

What are the consequences of non-compliance with planning permission?

Answer 18

Local authority has discretion to take enforcement action.

Can issue:
- enforcement notice
- stop notice
- require alteration/removal

Can also take direct action and charge the owner for doing so.

Can apply for injunction to restrain breach.

Question 19

What are the time limits for enforcement action for breach of planning permission?

Answer 19

Before April 2024
- Unauthorised works - 4 years
- Change of use - 10 years.
- Listed building regime/conservation area - no limit

After April 2024
- 10 years for all breaches.

Question 20

What works requires building regulation consent?

Answer 20

Windows, doors, structural alterations, construction, electrics, plumbing.

Question 21

How to obtain building regulations approval?

Answer 21

Apply to local authority building control department

Apply private sector registered building control approver

Instruct competent person

Question 22

What can be done if no planning permission obtained?

Answer 22

• apply for certificate of lawful development
• indemnity insurance
• retrospective permission
• renegotiation of price

Question 23

What can be done if no building regulation approval obtained?

Answer 23

• apply for certificate of regularisation
• indemnity insurance
• survey to check safe

Question 24

When might a person in actual occupation have an overriding interest?

Answer 24

If the person has an interest and is in actual occupation, may have an interest which overrides transfer. Means that the buyer will be bound by the persons interest.

Unless:
- when asked, failed to disclose their interest and would be expected to have disclosed it
- where occupation not obvious on reasonably careful inspection and buy has no knowledge of it.

Means that the buyer will be bound by the persons interest if knows of it or was obvious on reasonably careful inspection.

Question 25

If there is someone else occupying the property, what can be done to protect the buyer?

Answer 25

- Occupier to sign the contract - Occupier to sign a release to release any rights and confirm will vacate on completion - Overreaching

Question 26

When will a covenant bind a successor in title?(burden)

Answer 26

- Negative in nature - Registered - Touches and concerns the land - Intended to run - No common ownership since imposed.

Question 27

When will a covenant bind a successor in title? (benefit)

Answer 27

- Touches and concerns the land - Annexation (presumed), express assignment or building scheme.

Question 28

What can a buyer to if the land they want to buy is subject to a restrictive covenant?

Answer 28

- Indemnity insurance - Obtain a release or variation - Make an application to Land Tribunal (slow & long) - Seek a court declaration that not enforceable.

Question 29

When can a positive covenant bind a future owner?

Answer 29

General rule - they dont. Original party will remain liable. Options: - Require new owner to enter into a deed of covenant with person who benefits from covenant and then compel them to require their own successor in title to enter into a deed of covenant with the owner of the benefitted land again. Can add a restriction to the title to ensure that this is complied with. Restriction would be for solicitor or conveyance to sign a certificate confirming that DoC entered into. - Chain of indemnity covenants in the transfer. May fail if cant find an owner or insolvent or break in chain. - Mutual benefit/burden principle - Use leasehold title to ensure remain enforceable.

Question 30

What is an easement?

Answer 30

Easement is a right over another's land. Requirements: - Dominant and serviant land in proximity - Owned by different people - Must benefit dominant land - Capable of forming subject matter of grant - Must not amount to exclusive possession

Question 31

When is an easement a legal easement?

Answer 31

Express legal easement - created by deed and registered. If not registered or by deed, equitable Prescription - 20 years of long use. Wheeldon v Burrow - where owner disposes of part of land but retains another, easements may be implied if: - continuous, apparent and necessary for reasonable enjoyment and used by seller prior to sale. Implied under s62 LPA - easements benefitting the land at the time of conveyance are granted as easements. Less stringent than Wheeldon v Burrow. Implied by necessity/common intention

Question 32

When is an easement equitable?

Answer 32

Where not in deed or registered. Only binding if registered as notice in registered land or as a land charge in unregistered land.

Question 33

When is an easement enforceable against a future owner?

Answer 33

Legal easement Must be registered as a notice in registered land, or as a land charge in unregistered land. May be overriding easement if: - implied or presumed and buyer knew about it, it was obvious on reasonable inspection or it had been exercised in the last year. Equitable easement must be registered to be enforceable.

Question 34

What can a buyer do if the land is subject to an easement?

Answer 34

If express easement, approach person who benefits and request express release or variation then cancel it on the register Indemnity insurance If implied by necessity, once necessity gone easement will extinguish.

Question 35

What does absolute title mean?

Answer 35

Best class of title, means that person takes the land free of interests which are not registered (except for overriding interests)

Question 36

What does good leasehold title mean?

Answer 36

Can prove leasehold title but cannot prove freehold or superior title. Risk = someone may come with better claim and challenge lease

Question 37

What is possessory title?

Answer 37

Where ownership is based on possession only. risk that someone comes along with better right or risk that title affected by undisclosed interests. Can be upgraded after been registered for 12 years or producing evidence of the title.

Question 38

What does full title guarantee mean?

Answer 38

The seller covenants that the seller: - has the right to sell the property - will do all they reasonably can at reasonable cost to transfer the property to the buyer and - that the property is free from all charges, encumbrances and rights exercisable by third parties other than those disclosed in the contract other than those the seller doesn't know of or cannot be expected to know of. If it is a leasehold title, also covenants that the lease is in place and there is no subsisting breach that may render it liable to forfeiture.

Question 39

What does limited title guarantee mean?

Answer 39

Covenant is limited to - Seller has right to sell the property - Will do all can at own cost to transfer property to the buyer - The seller has not since last disposition charged or encumbered property or granted any 3rd party rights over which still exist.

Question 40

What happens if completion doesnt take place in time?

Answer 40

If after time specified in contract, deemed to take place next working day. Compensation payable by defaulting party on balance of contract, at contract rate. Cannot terminate until notice to complete served.

Question 41

When can a notice to complete be served and what is its effect?

Answer 41

Can be served by non-defaulting party if ready, willing and able to complete. If buyer in default, must make up deposit to 10%. Requires defaulting party to complete in 10 working days, if fail to do so, can rescind contract. If seller can retain deposit, claim damages and resell. If buyer can request return of deposit with interest and claim damages.

Question 42

What rights does someone have where someone has failed to complete?

Answer 42

Contractual damages Damages Return of deposit Specific performance Rescission for breach or vitiating factor

Question 43

What are the differences between a lease and a licence to occupy?

Answer 43

Lease = legal interest in land. - Exclusive possession, rent payable, offers security and rights, binding obligation. License = personal interest only. - No exclusive possession, no security of tenure, doesnt mind buyer. Lease - right to exclude landlord (exclusive possession) - fixed term2

Question 44

What is an authorised guarantee agreement?

Answer 44

Outgoing tenant guarantees the performance of the covenants and obligations of the incoming tenant under the lease. Must be in writing and signed.

Question 45

When can landlord's consent to assignment be refused?

Answer 45

If not to assign without LL consent, statute turns into fully qualified covenant so that consent cannot be unreasonably withheld. The landlord must within a reasonable time give consent (except if reasonable to refuse), serve on tenant written notice of their decision and pass on application to anyone else whos consent is needed. If fail to respond in reasonable time, can be unreasonable witholding of consent. Can only reject on reasonable grounds, if not reasonable, then must give consent. Burden on landlord to show it is reasonable If impose condition to consent, LL must show it is reasonable.

Question 46

Can a landlord specify when they may withold consent?

Answer 46

Yes, in new non-residential lease, can specify circumstances under s19(1A). If refused on basis that condition not met, not unreasonable.

Question 47

What can the landlord do if the tenant is in breach of the lease?

Answer 47

Breach of covenant (other than non payment of rent) - Forfeiture (if in the lease) - Self-help for breach of repair covenant (if in the lease) - Specific performance (if damages not adequate) - Damages for breach of contract - Injunctions Breach of covenant to pay rent - Action in debt - Commercial rent arrears recovery - Draw down on rent deposit - Pursue guarantor or prev tenant under AGA - Forfeiture

Question 48

What is forfeiture?

Answer 48

The landlord's right to terminate the lease and recover possession of the property due to tenants breach. Right to forfeit for breach of covenant must be expressly reserved. Will not be implied.

Question 49

What is a section 146 Notice?

Answer 49

If the breach is for something other than non-payment of rent, the landlord must serve a s146 notice on tenant before forfeiting the lease for breac. This warns tenants about breach and requires them to remedy. If they dont, LL can forfeit. Notice should specify all the breaches and give reasonable time to remedy, if capable of remedy. Purpose is to give the tenant opportunity to remedy and apply for relief from forfeiture. Tenant can apply for relief from forfeiture. If it is for breach of repairing covenants, if lease term is over 7 years and 3 years left to run, the tenant can serve a counter notice within 28 days, if they do so, the landlord cannot forfeit without court leave.

Question 50

What is a Jervis v Harris Clause?

Answer 50

Self help clause in lease. Allows landlord to enter the property and carry out repair works themselves. Allows to - enter property - carry out repair work - recover costs from tenant as a debt

Question 51

What are landlord's remedies for non-payment of rent?

Answer 51

- Forfeiture - Commercial rent arrears recovery - Action in debt (max 6 years) - Draw down on rent deposit - Pursue guarantor or former tenant - Serve statutory demand

Question 52

What is required for a landlord to forfeit for non-payment of rent?

Answer 52

S146 notice not required. Tenant can obtain relief from forfeiture if pays all arrears, interests and costs.

Question 53

What is involved with commercial rent arrears recovery?

Answer 53

Commercial leases only. LL can recover arrears using enforcement agent to take control of T's goods and selling them. Must give T 7 days notice.

Question 54

What tenancies does security of tenure apply to?

Answer 54

Business premises except from contracted out tenancies, 6 months or less or employment tenancies.

Question 55

What grounds can landlord oppose renewal on?

Answer 55

Grounds in s30 LTA 54 - Disrepair (discretionary) - Rent arrears (discretionary) - Substantial breaches relating to use of premises (discretionary) - Landlord can provide suitable alternative accommodation (mandatory) - Demolish/reconstruct premises (mandatory) - Landlord intends to occupy (mandatory)

Question 56

What are the requirements of a s25 notice

Answer 56

Must serve s25 notice to terminate and oppose grant of new lease. Serve on all tenants Prescribed form must specify grounds of opposition Between 6-12 months before wish for new tenancy to begin

Question 57

What is a s26 notice?

Answer 57

Tenants notice to the landlord to request a new lease

Question 58

What is a s27 notice?

Answer 58

Notice by tenant to bring lease to an end. Must be served 3 months before the end of the tenancy.

Question 59

What can a landlord do if he doesnt want to agree to a new lease?

Answer 59

Must respond to s25 notice within 2 months outlining ground of opposition. If doesnt file, must grant new lease.

Question 60

What can a tenant do if the landlord wont grant new lease?

Answer 60

Make an application to court to request new tenancy and challenging landlord's opposition.

Question 61

When might a tenant be able to claim compensation?

Answer 61

Where the opposition is based on a no fault ground, eg LL wishes to occupy whole or demolish/reconstruct. If been in occupation for over 14 years, 2 x rateable value. If under 14 years, 1 x rateable value

Question 62

How can security of tenure be contracted out?

Answer 62

Requirements for contracting out: - Health warning served by LL on T. Advices giving up rights and recommends seek advice - Tenant must sign declaration that received notice and accept consequences. If over 14 days before completion of lease can just sign, but if its less than 14 days before, needs to be a statutory declaration before a solicitor. - Reference must be made to the health warning, declaration and agreement in the lease.