A solicitor has been instructed to act for the buyer of a house. They have written to the seller’s solicitor to confirm their instructions and to ask for the pre-contract package, however the buyer has just contacted them in a panic; the estate agent let slip that there is someone else interested in purchasing the house. The buyer is now worried that the seller could be actively engaged in negotiations with both parties without them even knowing about it.
Which of the following statements best summarises the advice which can be given to the buyer?
A. They do not need to worry because the seller cannot negotiate with another party after they have accepted the buyer’s offer.
B. They do not need to worry because as the buyer’s solicitor has already contacted them, the seller’s solicitor will be under a duty to only deal with a sale of the property to the buyer.
C. They do not need to worry because the seller’s solicitor should tell them if they intend to send a pre-contract package to other prospective purchasers.
D. They do not need to worry because the seller’s solicitor is prohibited from sending documents to more than one potential buyer.
E. They do not need to worry because the seller’s solicitor owes a personal duty of disclosure to the buyer so must tell the buyer if they intend to send a pre-contract package to other prospective buyers.
C. They do not need to worry because the seller’s solicitor should tell them if they intend to send a pre-contract package to other prospective purchasers.
Option C is the best answer. Paragraph 1.4 of The Code of Conduct states that a solicitor must not mislead or attempt to mislead, either by their own acts or omissions, or by being complicit in the acts or omissions of others. This means that the seller’s solicitor should (with their client’s consent) inform all buyers immediately of the seller’s intention to deal with more than one buyer.
A solicitor is acting for the seller of a property registered with freehold title absolute. The seller and their deceased partner are the registered proprietors and the title reveals that they owned the beneficial interest as tenants in common. It has therefore been agreed that a second trustee will be appointed to join in the sale, solely to overreach the deceased partner’s trust interest.
Which of the following best explains the basis for deciding the appropriate title guarantee to be given by the second trustee in the draft contract?
A. The contract should state that limited title guarantee is given because the second trustee does not own an equitable interest in the property.
B. The contract should state that no title guarantee is given because the second trustee is only being appointed to overreach the deceased’s beneficial interest and therefore has no right to dispose of the land
C. The contract should state that full title guarantee is given because the property is registered with title absolute.
D. The contract could state that limited title guarantee is given because this implies that the property is disposed of free from incumbrances, other than those the second trustee does not know about and could not reasonably know about.
E. The contract could state that possessory title guarantee is given because this implies that the second trustee has not incumbered the property and is not aware that anyone else has done so since the last disposition for value.
A. The contract should state that limited title guarantee is given because the second trustee does not own an equitable interest in the property.
Option A is the best answer. It is advisable for a trustee to give limited title guarantee in these circumstances.
A solicitor acts for the assignee of a lease of commercial property granted three years ago for a term of 10 years. Contracts have been exchanged incorporating the Standard Commercial Property Conditions. The assignor obtained the landlord’s consent to the
assignment prior to exchange of contracts. The solicitor has drafted the transfer deed using Land Registry form TR1.
Which of the following statements best describes the way in which the transfer deed should be drafted?
A The TR1 should contain an indemnity from the assignee to the assignor to observe and perform the covenants in the lease because this is a leasehold transaction.
B The TR1 does not need to contain an indemnity from the assignee to the assignor to observe and perform the covenants in the lease as such an indemnity is implied by the general law.
C The TR1 does not need to contain an indemnity from the assignee to the assignor to observe and perform the covenants in the lease as the assignor will automatically be released from future liability on the assignment.
D The TR1 can only incorporate an indemnity from the assignee to the assignor to observe and perform the covenants in the lease if this was covered by a special condition in the contract.
E The TR1 should contain an indemnity from the assignee to the assignor to observe and perform the covenants in the lease if the assignor is giving an authorised guarantee agreement to the landlord.
Option E is correct. An indemnity from the assignee to the assignor will only serve a purpose
if the assignor will continue to be liable to the landlord if there is a breach of the tenant’s
covenants in the lease after the assignment has taken place.
The lease was granted three years ago, so it is a new lease for the purposes of the Landlord
and Tenant (Covenants) Act 1995 (the ‘Act’). The Act will automatically release the assignor
from all the tenant covenants of the tenancy on completion of the assignment, but the assignor
may become liable under the terms of an authorised guarantee agreement instead. Option C
ignores this possibility so is not the best answer.
A solicitor acts for an assignee of a lease granted in 1998. The assignor has applied to the landlord for consent to assign the lease and the landlord’s solicitor has provided a draft licence to assign. The draft licence contains a requirement for the assignor to enter into an authorised guarantee agreement with the landlord and for the assignee to give the landlord a direct covenant to observe and perform the covenants in the lease for the remainder of the term.
Is the draft licence in acceptable form?
A No, because the direct covenant should come from the assignor rather than the assignee.
B No, because the direct covenant should either be deleted or limited to the period during which the assignee is the tenant under the lease.
C No, because the assignor should not be required to enter into an authorised guarantee agreement for a lease granted in 1998.
D Yes, because the landlord needs to create privity of contract with both the assignor and the assignee.
E Yes, because the landlord is entitled to require that the assignor enters into an authorised guarantee agreement for a lease granted in 1998.
Option B is correct. The lease was granted in 1998, so it is a new lease for the purposes of
the Landlord and Tenant (Covenants) Act 1995 (the ‘Act’). The Act will automatically release
the assignee from all the tenant covenants of the tenancy on assignment of the lease, so
if the landlord requires a direct covenant from the assignee, the covenant should be limited
to the period the assignee is actually the tenant, not the remainder of the entire term. It is
arguable that a direct covenant is not necessary at all as it gives the landlord nothing more
than they enjoy under s 3 of the Act, but landlords quite commonly require one, albeit in the
restricted form.
A husband and wife are the registered proprietors of a freehold property. The husband died six months ago and the wife is selling the property. The Proprietorship register contains a restriction stating that no disposition by a sole proprietor of the land (not being a trust corporation) under which capital money arises is to be registered except under an order of the registrar or of the Court.
**What is the best advice to the buyer as to whether the wife can sell the property on her own? **
A The wife is the sole legal owner of the property and can sell it on her own as she and her late husband held the legal title as joint tenants.
B The wife is the sole legal and equitable owner of the property and can sell it on her own as she and her late husband held the legal and equitable title as joint tenants.
C The wife needs to appoint another person to act as a legal owner alongside her in the sale of the property.
D The wife cannot sell the property until probate has been granted and she can show that her late husband’s equitable interest in the property has been transferred to her by an assent from her late husband’s personal representatives.
E It is safe to buy the property from the wife on her own as long as the buyer is provided with a certified copy of her late husband’s death certificate
Option C is the best answer in these circumstances. The husband and wife held the legal title
to the property as joint tenants because that is the only way the legal title can be held by
co-owners. However, the restriction in the Proprietorship Register indicates that they held the
equitable title as tenants in common. Consequently, the wife cannot sell the property alone.
In the light of this, options A, B and E are not good advice, although it is the case that the
husband’s death certificate will need to be produced.
A contract for the sale of an old commercial freehold property incorporates Part 1 of the Standard Commercial Property Conditions (Third Edition – 2018 Revision) without amendment. The seller has indicated in replies to enquiries that it has exercised the option to tax.
Which of the following statements best describes the position regarding VAT under the contract?
a
The seller will charge VAT on the sale.
selected
Option b: The seller will not charge VAT on the sale.
b
The seller will not charge VAT on the sale.
Option c: The seller will only charge VAT on the sale if there is a change in the law between exchange and completion requiring the seller to charge VAT on the sale.
c
The seller will only charge VAT on the sale if there is a change in the law between exchange and completion requiring the seller to charge VAT on the sale.
Option d: The seller will be able to decide whether to charge VAT on the sale at any time up to completion.
d
The seller will be able to decide whether to charge VAT on the sale at any time up to completion.
Option e: VAT is included in the purchase price.
e
VAT is included in the purchase price.
Option A is the best answer. The sale of the property is taxable as the facts indicate the seller has opted to tax. Option B therefore is wrong.
Part 1 conditions of SCPC at 2.1 state that VAT is chargeable and SCPC 2.2 states that VAT is payable as an additional amount. So, Option E is wrong, as VAT is not included in the purchase price.
A solicitor is acting for a buyer in a conveyancing transaction and intends to exchange contracts with the seller’s solicitor using Law Society formula B later today. The contract incorporates the Standard Commercial Property Conditions (Third Edition) (SCPC). The buyer’s solicitor is holding cleared funds for the deposit of 10% and intends to send the deposit to the seller’s solicitor immediately after exchange by the method stipulated in the SCPC. However, the buyer’s solicitor cannot send their client’s part of the contract to the seller’s solicitor until tomorrow.
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Which of the following best describes whether variations will be required to formula B on exchange?
a
No variations are required to formula B.
Option b: Two variations are required to allow the buyer’s solicitor to send the deposit via banker’s draft or cheque and not via electronic means and to put their client’s part of the contract in the first-class post or document exchange (DX) tomorrow not today.
b
Two variations are required to allow the buyer’s solicitor to send the deposit via banker’s draft or cheque and not via electronic means and to put their client’s part of the contract in the first-class post or document exchange (DX) tomorrow not today.
Option c: The only variation required is to allow the buyer’s solicitor to send the deposit via electronic means and not via banker’s draft or cheque.
c
The only variation required is to allow the buyer’s solicitor to send the deposit via electronic means and not via banker’s draft or cheque.
Option d: The only variation required is to allow the buyer’s solicitor to put their client’s part of the contract in the first class post or DX tomorrow not today.
d
The only variation required is to allow the buyer’s solicitor to put their client’s part of the contract in the first class post or DX tomorrow not today.
Option e: Two variations are required to allow the buyer’s solicitor to send the deposit via electronic means and not via banker’s draft or cheque and to put their client’s part of the contract in the first class post or DX tomorrow not today.
e
Two variations are required to allow the buyer’s solicitor to send the deposit via electronic means and not via banker’s draft or cheque and to put their client’s part of the contract in the first class post or DX tomorrow not today.
Option E is the correct answer. Two variations to formula B are required in this transaction so options A, C and D are wrong. Firstly, the deposit will be sent by electronic means as per Standard Commercial Property Condition 3.2.2 rather than by banker’s draft or cheque as provided for in the undertakings contained in formula B. This means option B is also wrong. Secondly, the Buyer’s solicitor will not be able to comply with the undertaking in formula B to put their client’s part contract in the first class post/DX today so will need to vary the formula to provide that this will be done tomorrow instead
A lease of a commercial property was granted in 1992 for a period of 35 years, reserving a monthly rent. Three years ago, the original tenant assigned the lease to the second tenant, with the consent of the landlord. Two years ago, the second tenant assigned the lease to the current tenant, with the consent of the landlord. The current tenant has failed to pay the rent for the last 3 months.
Basing your answer on the terms of the lease only, which of the following statements is correct?
a
The landlord’s only option is to bring an action against the current tenant.
Option b: The landlord could bring an action against the original tenant and/or the second tenant.
b
The landlord could bring an action against the original tenant and/or the second tenant.
Option c: The landlord could bring an action against the current tenant and/or the original tenant.
c
The landlord could bring an action against the current tenant and/or the original tenant.
Option d: The landlord could bring an action against the current tenant, the second tenant, and/or the original tenant.
d
The landlord could bring an action against the current tenant, the second tenant, and/or the original tenant.
Option e: The landlord’s only option is to bring an action against the original tenant.
e
The landlord’s only option is to bring an action against the original tenant.
Option C is correct. This is an ‘old’ lease for the purposes of the Landlord and Tenant (Covenants Act) 1995. The burden of the covenant to pay rent passes to the current tenant (Spencer’s case). The original tenant remains liable on the tenant’s covenants throughout the entire term of the lease due to privity of contract. So the landlord has the option to take action against either the current tenant or the original tenant. Note that s17 of the Landlord and Tenant (Covenants) Act 1995 would apply here.
Option A is wrong as the original tenant remains liable on the tenant covenants, as this is an ‘old’ lease, so the landlord could potentially take action against the original tenant.
Option B is wrong as the second tenant will only be liable for breaches of covenant whilst the lease is vested in them. (Note that there is a high likelihood that when the landlord gave consent to the assignment, a direct covenant to observe the terms of the lease would have been required from the second tenant. If so, the second tenant would remain liable after the assignment. However, the question asked you to base your answer on the terms of the lease only).
A freeholder (‘the landlord’) has granted a commercial lease of a property to a tenant (‘the Property’). The tenant has failed to pay rent by the due date specified in the lease and a further 14 days have now elapsed.
The lease contains the following wording:
“Whenever any rent reserved by this lease is outstanding for 14 days after becoming payable (whether formally demanded or not) the Landlord may at any time (notwithstanding the waiver of any previous right of re-entry) re-enter the Property or any part in the name of the whole whereupon the term will end.”
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Can the landlord bring the lease to an end now and regain the Property as a result of the tenant’s failure to pay rent?
a
No, because common law requires a formal demand for the rent to be made before the landlord can forfeit the lease.
selected
Option b: No, because a court order is always required in order to forfeit a lease.
b
No, because a court order is always required in order to forfeit a lease.
Option c: No, because the tenant must be allowed a reasonable time in order to remedy the breach.
c
No, because the tenant must be allowed a reasonable time in order to remedy the breach.
Option d: Yes, because forfeiture in these circumstances is expressly reserved by the lease.
d
Yes, because forfeiture in these circumstances is expressly reserved by the lease.
Option e: Yes, because forfeiture is always a remedy available for non-payment of rent.
e
Yes, because forfeiture is always a remedy available for non-payment of rent.
Option D is correct. A landlord may consider forfeiture for non-payment of rent only if the right is expressly reserved by the lease. In this instance, the lease clearly provides that forfeiture is available as a remedy for non-payment of rent, provided that the rent remains outstanding 14 days after becoming payable. On the facts, this situation has arisen and therefore Option D is correct and Option E is wrong.
Option A is wrong because the forfeiture clause in the lease dispenses with the need for a formal demand.
A solicitor is acting for the buyer on the purchase of a freehold commercial property in Wales. The replies to the pre-contract enquiries of the seller reveal that use of the property was changed by the seller from use as a book shop (class A1) to a restaurant (class A3) last year. No article 4 direction is in force in relation to the General Permitted Development Order.
Was planning permission required for the change of use from bookshop to restaurant?
Option a: No, because use as a bookshop and use as a restaurant are both in class A.
a
No, because use as a bookshop and use as a restaurant are both in class A.
selected
Option b: Yes, because use as a bookshop and use as a restaurant are not in the same use class.
b
Yes, because use as a bookshop and use as a restaurant are not in the same use class.
Option c: No, because change from use as a bookshop to use as a restaurant is covered by the relevant General Permitted Development Order.
c
No, because change from use as a bookshop to use as a restaurant is covered by the relevant General Permitted Development Order.
Option d: Yes, because all changes of use require planning permission.
d
Yes, because all changes of use require planning permission.
Option e: Yes, because an article 4 direction might be in force.
e
Yes, because an article 4 direction might be in force.
Option B is the correct answer. In Wales use as a shop is class A1 and use as a restaurant is class A3. Therefore, a change between these classes amounts to development and requires planning permission.
A client is buying an unregistered freehold property. The epitome reveals that the property was conveyed to the current seller and his wife as beneficial joint tenants 10 years ago. A certified copy of a death certificate shows that the seller’s wife died last year. The seller intends to sell the property on his own without appointing a second trustee.
In what circumstances will the client be able to buy the property from the seller alone?
Option a: If there is no memorandum of severance on the conveyance to the seller and his wife and there is no statement in the transfer from the seller that he is solely and beneficially entitled to the land and there are no registered bankruptcy proceedings relating to the seller and his wife.
a
If there is no memorandum of severance on the conveyance to the seller and his wife and there is no statement in the transfer from the seller that he is solely and beneficially entitled to the land and there are no registered bankruptcy proceedings relating to the seller and his wife.
Option b: If there is no memorandum of severance on the conveyance to the seller and his wife and there is a statement in the transfer from the seller that he is solely and beneficially entitled to the land even if there are registered bankruptcy proceedings relating to the seller and his wife.
b
If there is no memorandum of severance on the conveyance to the seller and his wife and there is a statement in the transfer from the seller that he is solely and beneficially entitled to the land even if there are registered bankruptcy proceedings relating to the seller and his wife.
Option c: If there is no memorandum of severance on the conveyance to the seller and his wife and there is a statement in the transfer from the seller that he is solely and beneficially entitled to the land and there are no registered bankruptcy proceedings relating to the seller and his wife.
c
If there is no memorandum of severance on the conveyance to the seller and his wife and there is a statement in the transfer from the seller that he is solely and beneficially entitled to the land and there are no registered bankruptcy proceedings relating to the seller and his wife.
selected
Option d: If there is a memorandum of severance on the conveyance to the seller and his wife and there is a statement in the transfer from the seller that he is solely and beneficially entitled to the land and there are no registered bankruptcy proceedings relating to the seller and his wife.
d
If there is a memorandum of severance on the conveyance to the seller and his wife and there is a statement in the transfer from the seller that he is solely and beneficially entitled to the land and there are no registered bankruptcy proceedings relating to the seller and his wife.
Option e: If there is a memorandum of severance on the conveyance to the seller and his wife and there is a statement in the transfer from the seller that he is solely and beneficially entitled to the land and there are registered bankruptcy proceedings relating to the seller and his wife.
e
If there is a memorandum of severance on the conveyance to the seller and his wife and there is a statement in the transfer from the seller that he is solely and beneficially entitled to the land and there are registered bankruptcy proceedings relating to the seller and his wife.
Option C is the correct answer. A buyer is entitled to assume that a joint tenancy has not been severed if the three conditions set out in the Law of Property (Joint Tenants) Act 1964 are met: that there is no memorandum of severance endorsed on the conveyance of the property to the joint tenants; that there are no bankruptcy proceedings registered against the joint tenants and; that the transfer to the buyer contains a statement by the seller that he is legally and beneficially entitled to the property.
A solicitor acts for a tenant of a retail unit (the ‘Property’) under a lease (the ‘Lease’) which was granted out of the freehold reversion for the first time in 2016. The tenant wants to underlet the Property as it is now too small for their business but is concerned about their ongoing liabilities under the Lease. Underletting of the whole of the Property is permitted under the Lease with the consent of the landlord, such consent not to be unreasonably withheld.
Which of the following is the best advice to the tenant about payment of the rent under the Lease, once the Property has been successfully underlet under a commercial underlease which incorporates the most common conditions?
Option a: The landlord will collect the rent from the undertenant and the tenant will be automatically released from the tenant covenants under the Lease.
a
The landlord will collect the rent from the undertenant and the tenant will be automatically released from the tenant covenants under the Lease.
Option b: The landlord will collect the rent from the undertenant but will be able to claim the rent from the tenant under an authorised guarantee agreement if the undertenant fails to pay.
b
The landlord will collect the rent from the undertenant but will be able to claim the rent from the tenant under an authorised guarantee agreement if the undertenant fails to pay.
Option c: The landlord can choose to collect the rent either from the tenant under the Lease or from the undertenant under a direct covenant.
c
The landlord can choose to collect the rent either from the tenant under the Lease or from the undertenant under a direct covenant.
Option d: The landlord will collect the rent from the tenant but will be able to claim the rent from the undertenant under an authorised guarantee agreement if the tenant fails to pay.
d
The landlord will collect the rent from the tenant but will be able to claim the rent from the undertenant under an authorised guarantee agreement if the tenant fails to pay.
selected
Option e: The landlord will collect the rent from the tenant who will remain liable under the tenant covenants under the Lease.
e
The landlord will collect the rent from the tenant who will remain liable under the tenant covenants under the Lease.
Answer E is correct as the (head)tenant, will remain liable under the (head)lease and therefore, Answer A is wrong.
Answer B is wrong because the landlord will not collect the rent from the undertenant directly, and there is no AGA because this is not an assignment.
Answer C is wrong because the landlord would not collect the rent under a direct covenant from the undertenant.
Answer D is wrong because there would not be an AGA for an underlet.
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The Key Elements and Structure of a Freehold Property Transaction48
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Investigation of Title33
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Pre-contract Searches and Enquiries18
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Preparation for and Exchange of Contracts79
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Completion90
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Structure and Content of a Lease63
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Procedural Steps for the Grant of a Lease or Underlease17
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Procedural Steps for the Assignment of a Lease20
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Lease Termination and Security of Tenure under a Business Lease36
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SBAQs14
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Remedies for Breach of Leasehold Covenants (Land Law Chapter 6)6
