12.3 Preparing The Contract Of Sale

Question 1

Sellers solicitor must obtain a copy of (in residential + commercial transactions)

Answer 1

The sellers client title to the property

Question 2

To obtain the sellers client title in a registered property the solicitor will download

Answer 2

A copy of the register of title from the HMLR

Question 3

To obtain a copy of the sellers client title in an unregistered property the sellers solicitor must locate

Answer 3

The original title deeds

Question 4

Contract package

Answer 4

Standard forms that give practical information about the property to the buyer that is sent to the buyers solicitor

Question 5

In a residential contract the solicitors will use a form of contract produced by

Answer 5

The Law Society

Question 6

In a commercial contract the solicitors will use a form of contract produced by

Answer 6

The Law Society which incorporates the SCPC (Standard Commercial Property Conditions)

Question 7

Three parts to a form of contract

Answer 7

Particulars of sale
Standard conditions
Special conditions

Question 8

Particulars of sale

Answer 8

Front part of the contract
Drafted by the sellers solicitor
Contains the key information related to the contract

Question 9

Standard conditions are the

Answer 9

Small print
Setting out the basic terms and the conditions related to the transaction

Question 10

Special conditions

Answer 10

Conditions that are particular to that transaction

Question 11

In a commercial contract the SCPC contains

Answer 11

Special conditions covering matters such as VAT, health and safety

Question 12

VAT does not need to be added to a

Answer 12

Residential property

Question 13

Sellers duty of disclosure is limited due to the

Answer 13

Doctrine of caveat emptor

Question 14

Doctrine of caveat emptor means

Answer 14

Buyer must discover any defects in the property and cannot sue the seller if they are discovered after completion

Has been diluted in recent years due to the Consumer Protection Act

Question 15

Patent defects

Answer 15

Physical defects
Seller is not obliged to disclose defects that are visible from a physical inspection of the property

Question 16

Latent defects

Answer 16

Defects that are not visible from a physical inspection of the property
Seller is not obliged to disclose

Question 17

Greatest danger for the seller lies in

Answer 17

Pre contract enquiries&raquo_space; being sued for misrepresentation by the buyer

Question 18

Title guarantee

Answer 18

Promise imposed by statute that the buyer is entitled to sell the property
Solicitors are expected to make sure of this for their client (buyer)

Question 19

Full title guarantee

Answer 19

The seller is selling the property free from all charges
They have the right to sell the property - full and equitable interest in the property

Question 20

Limited title guarantee

Answer 20

Given by a seller with less knowledge of the property ie. A personal representative

Question 21

Contract rate is a

Answer 21

Penalty rate of interest that applies in the event of late competition

Question 22

Contract rate is set at

Answer 22

By reference to their own bank
Anything above 4% or 5% should be amended by the buyers solicitor for being too high

Question 23

Potential fraud with chattels and fittings

Answer 23

Sum attributed should be the true market value of these items
Should not be overinflated to result the amount of SDLT/LTT payable

Question 24

SDLT means

Answer 24

Stamp land duty payable

Question 25

Deposit is typically set at

Answer 25

10% of the purchase price on the exchange of contracts

Question 26

Seller is entitled to keep the X if the buyer defaults

Answer 26

The deposit

Question 27

When the deposit is held by the sellers solicitor as a stakeholder

Answer 27

Better position for buyer Sellers solicitor holds the deposit on behalf of the buyer and seller pending completion

Question 28

When the deposit is held by the sellers solicitor as a stakeholder

Answer 28

Better position for buyer Sellers solicitor holds the deposit on behalf of the buyer and seller pending completion

Question 29

When the sellers solicitor holds the deposit as an agent

Answer 29

Risky for buyer - can be difficult to recover if the seller defaults on the sale Can send the deposit to over to seller immediately after the exchange of contracts

Question 30

Risk and the exchange of contracts

Answer 30

Standard conditions state that between the exchange of contracts and completion, if the property is damaged the buyer is contractually obliged to proceed with the purchase

Question 31

A prudent buyer should be advised by their solicitor to have

Answer 31

Building insurance in place on the exchange of contracts Note that the Standard conditions do not require the buyer to insure the property

Question 32

VAT IS NOT A CONCERN IN

Answer 32

Residential transactions

Question 33

Risk in the property passes under the exchange of contracts in the

Answer 33

Standard conditions

Question 34

Conditional contract is

Answer 34

More likely to be involved in a commercial transaction Means that an important matter needs to be resolved and the contract will not be completed if it is not

Question 35

Additional documents to the contract package

Answer 35

Property information form Fittings and contents form p

Question 36

Indicative redemption figure means

Answer 36

Paying off the mortgage

Question 37

An indicative redemption figure is relevant in

Answer 37

Where the seller has a mortgage over the property being sold

Question 38

Solicitor should ensure that the seller has

Answer 38

Title - full equitable and beneficial ownership of the property to sell it

Question 39

Sellers duty of disclosure is

Answer 39

Limited due to the principle of caveat Patent - discoverable on inspection do not have to be disclosed Latent - not discoverable - have to be disclosed

Question 40

Stamp land duty is only payable on

Answer 40

Money being paid for the land

Question 41

VAT is payable on

Answer 41

New commerical properties sold within 3 years of construction

Question 42

With other commercial property sold after three years of construction the seller has an option to

Answer 42

Impose VAT

Question 43

VAT is a problem when

Answer 43

A buyer who is not registered for VAT VAT registered means they will be able to claim back

Question 44

If the title to a property is unregistered and in mortgage - how would a sellers solicitor obtain the sellers client title?

Answer 44

Deeds will be held by the lender and an undertaking must be given by the lender for release of the deeds

Question 45

If the title to a property is unregistered and in mortgage - how would a sellers solicitor obtain the sellers client title?

Answer 45

Deeds will be held by the lender and an undertaking must be given by the lender for release of the deeds