1. Due dilligence Flashcards
(32 cards)
Overview of the conveyancing process (freehold property transactions)
- Pre-contract stage (investigation of title and pre-contract searches)
Seller’s solicitor submits pre-contract package of documents to buyer’s solicitor (incl draft contract and evidence of title)
Buyer’s solicitor carries out searches / enquiries
- Agree contract - on exchange the buyer pays deposit
- Pre-completion - checking documentation and ensuring money will be available on completion
- Post-completion - finalisation of administrative matters, e.g. ensuring any mortgage is paid off and removed from title, paying SDLT
What are the seller’s solicitor’s responsibilities pre-exchange?
Drafting the contract
What are the buyer’s solicitor’s responsibilities pre-exchange and pre-completion?
Carry out due diligence
Draft the transfer deed
When is a contract race legitimate?
Only when the prospective buyers know they are in one
What are the key professional conduct issues to be aware of in house purchases?
- Cannot act for buyer and seller - the s 6.2(a) and (b) exceptions DO NOT apply
- Permitted to act for joint buyers but may be necessary to advise on how the equitable interest in held
- Permitted to act for borrower and lender but with restrictions, i.e. only if standard loan terms
What is the requirement for first-time buyers SDLT relief?
Price no more than £625,000
Intend to occupy property as main residence
Pay nothing up to £425,000 and 5% on the portion from £425,001 to £625,000
What are the SDLT rates?
- Under £250,000 – 0%
- Between £25,000-£925,000 – 5%
- Between £925,000-£1,500,000 – 10%
- The remainder – 12%
Note that the value of the property doesn’t include chattels
When must SDLT be paid?
Within 14 days of completion
What first-time buyer LTT relief is available in Wales?
None
What are the LTT rates?
- Up to and including £225,000 – 0%
- £225,001-£400,000 – 6%
- £400,001-£750,000 – 7.5%
- £750,001-£1,500,000 – 10%
- Over £1,500,000 – 12%
Note that the value of the property doesn’t include chattels
When is private residence relief available?
On the sale of an individual’s dwelling house used as their only / main residence
What is contained on the property register?
Description of the land / title plan
Freehold / leaseholder
Could also contain easements
What is contained on the proprietorship register?
Current owners and their address
Class of title
What are the different classes of title?
Absolute title = Vested legal estate subject only to entries on register; can still be bound by overriding interests not on the register
Possessory title = in possession of property but lost deeds / claiming through adverse possession
Qualified title = Specific identified defect which the Registrar feels cannot be overlooked or ‘cured’ by the grant of absolute title
What is contained on the charges register?
Incumbrances / burdens on the property
What are common examples of easements?
Rights of way
Rights of drainage
Rights of support
What is a prescriptive easement?
An easement gained after receiving it for a long period of time
What is the rule from Halsall v Brizell regarding positive covenants linked to rights of access?
If the right of access is over someone else’s property and has a covenant to maintain it attached, the buyer is obliged to comply with the positive covenant in order to use the right of access
What is the impact of a declaration as to rights of light and air in the charges register?
An agreement of no right to light means that it could never be gained as a prescriptive easement
How can you identify how the equitable interest of the property is held?
If tenants in common, specific wording appears on the Proprietorship Register
“RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.”
If this wording isn’t there then can assume joint tenants - and no overreaching required
What types of covenant are binding on successors in title?
Restrictive covenants
How does a previous owner protect themselves against a successor in title breaching a restrictive covenant?
Through an indemnity covenant in the proprietorship register
What is the purpose of an indemnity covenant?
Makes the buyer liable in contract to the seller for breach of a covenant
What type of interest is a restrictive covenant?
Equitable interest
