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1
Q

What will lender’s solicitor do in commercial transaction?

A
  • Specify what enquiries / searches needed
  • Ask buyer’s solicitor to send copies of all searches
  • Draft legal charge and other security documents
  • Draft certificate of title / ask buyer’s solicitor to provide
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2
Q

What are the different lending documents?

A

1) Mortgage offer
2) Certificate of title
3) Facility letter
4) Legal charge (or mortgage deed)

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3
Q

What requirements must a contract for land satisfy?

A

1) In writing
2) Incorporate all express terms
3) Be signed

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4
Q

Is a property contract a deed?

A

No

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5
Q

Does the property contract transfer the land?

A

No

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6
Q

So why use a property contract?

A
  • Fix completion date
  • Tie related transactions
  • Set out obligations
  • Include conditions
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7
Q

What are the different types of contracts?

A

1) Standard Form Contract
2) Tailor made contract

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8
Q

What is the standard form contract for residential land?

A

Standard Conditions of Sale

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9
Q

What is the standard form contract for commercial land?

A

Standard Commercial Property Conditions

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10
Q

When is a contract typically tailor made?

A
  • Commercial transactions
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11
Q

When are Standard Conditions of Sale obligatory?

A

If the parties are adopting the Law Society Conveyancing Protocol

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12
Q

When are special conditions not already in the Standard Conditions of Sale be applicable if the solicitor is following the Law Society Conveyancing Protocol?

A

If they are absolutely necessary for the purposes of the transaction

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13
Q

What must the seller disclose in terms of incumbrances and defects in title?

A

Whether there are any latent incumbrances or defects in title

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14
Q

What are latent incumbrances?

A

Rights burdening the property not apparent on inspection

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15
Q

What are examples of latent incumbrances?

A

Covenants and easements

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16
Q

What is an example of a defect on title?

A

If a deed containing covenants has been lost

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17
Q

In the Standard Conditions of Sale, what are the incumbrances subject to which the property is sold?

A

1) Those specified in contract
2) Those discoverable on inspection before date of contract
3) Those seller does not and could not reasonably know about
4) Those, other than mortgages, which buyer knows about
5) Entries made before the date of contract in any public register except those maintained by Land Registry / Land Charges Department
6) Public requirements

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18
Q

In the Standard Commercial Property Conditions, what are the incumbrances subject to which the property is sold?

A

1) Those specified in contract
2) Those discoverable on inspection before date of contract
3) Those seller does not and could not reasonably know about
4) Those, other than mortgages, which buyer knows about
5) Public requirements

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19
Q

What is the difference between SCS and SCPC on incumbrances?

A

SCS – seller needs to disclose any incumbrances registered at Land Registry, Land Charges and Companies House – or be in breach.
SCPC – buyer deemed to buy subject to incumbrances which would be revealed by buyer’s searches and enquiries

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20
Q
A

A guarantee by the seller to the quality of title

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21
Q

What are the different title guarantees in Contract?

A

1) Full title guarantee (the default)
2) Limited title guarantee
3) No title guarantee

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22
Q

What is full title guarantee?

A

Property is free of all incumbrances other than those in contract – which seller guarantees

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23
Q

What is limited title guarantee?

A

Given by sellers with little knowledge (i.e. executors) – meaning no incumbrances have been created since seller’s period of ownership

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24
Q

What is no title guarantee?

A

Does not guarantee seller’s right to sell, or that property is free of incumbrances.

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25
What is the default completion date of SCS and SCPC?
20 working days after the date of the contract
26
What is the time for completion under SCS and SCPC?
2pm
27
What is meant by time is not of the essence until a notice to complete is served?
Default position of standard contract, meaning if a party fails to complete, the other can claim damages for the breach but cannot walk away from transaction unless a notice to complete is served first which details a specified time
28
What is a deposit stakeholder?
Solicitor will hold and keep funds safe until completion
29
What is a deposit agent?
Seller can demand deposit immediately after exchange
30
What does standard contracts say about indemnity?
If chain is unbroken, buyer must give an indemnity covenant
31
How many pre-set special conditions are there in a residential draft contract?
7
32
How many pre-set special conditions are there in a commercial draft contract?
9
33
What are the special conditions in a residential draft contract?
1) Incorporates SCS into contract 2) Title guarantee 3) Contents 4) Vacant possession 5) Time of completion 6) Representations 7) Occupier’s consent
34
What does SCS say about representations?
No liability made for representations unless written, unless fraudulent
35
What does SCS say about occupier’s consent?
Other adult occupiers can sign special condition 7 to confirm vacant possession
36
What are examples of tailor made special conditions?
1) Seller must pay £80 for indemnity policy 2) Seller and Buyer agree they will not disclose to any third person details of this agreement
37
What title guarantee can a buyer receive from 2 tenants in common if 1 has died?
1) Full title guarantee from seller 2) Limited title guarantee from the deceased’s trustee
38
What is VAT exempt in Property?
1) Residential property (except newly constructed) 2) Commercial property over 3 years old (option not to tax)
39
What are standard-rated supplies in property?
Newly constructed commercial property (less than 3 years old)
40
What are zero-rated supplies?
Newly constructed residential property is zero-rated supply
41
What is VAT position on newly constructed residential property?
Buyer doesn’t pay VAT, but seller can recover input tax
42
What happens if seller opts to tax property that is over 3 years old?
Subsequent sale is standard rated – any tenants after will pay VAT on their rent
43
That the property is standard-rated
44
What is a Transfer of a Going Concern?
Seller using property as rental, and so will buyer, means exempt from VAT
45
What is Law Society Formula B?
Exchange by telephone call
46
How is Formula B handled?
Solicitors will go through contract on phone ensuring it is identical – agree date and time of exchange
47
What does Law Society Formula B impose on solicitors following exchange?
Undertakings on the following: - Hold signed contract to other solicitor’s order - To post signed contract by first class post or DX - To send deposit in form of payment specified by contract
48
What is Formula A?
Same solicitors hold both contracts – undertake to send to both
49
What is Formula C?
More so for chain transactions – money from one property used to buy another
50
What must solicitor prepare after exchange?
A memorandum of exchange
51
What is included in memorandum of exchange?
Key contract terms for the file
52
What must the form of transfer of land be?
In the form of a deed
53
TR1 form
54
What form is used for transfer of portfolio of registered titles?
TR5 form
55
What form is used for unregistered land?
Typically, still the TR1 form
56
What must go in the date panel on the TR1 form? When is this filled?
The date is handwritten on completion – so should be left blank until then
57
How many transferees can there be?
Maximum of 4
58
What address for service should be put for transferee?
If a residential buyer, would usually be the address for the property
59
What do you put in TR1 title guarantee box if no title guarantee?
The title guarantee box should be left blank
60
What goes into declaration of trust?
If legal and beneficial title being transferred to sole transferee, this should be skipped
61
What would go into additional provisions?
This would be indemnity covenants for positive covenants, new covenants and easements If transferor is sole surviving tenant in common, appointment of second trustee would appear here
62
Who must sign the TR1 form?
- Transferor – always - Transferee – if tenants in common or holding property on trust or providing an indemnity covenant / other obligation in panel 11
63
How is a deed executed as an individual?
An individual signs the transfer in the presence of an independent witness who signs and prints full name and address
64
What are the options for executing as a company?
- Company seal in accordance with Article’s – e.g. sole signature - No company seal, but signed by two directors / one director and one secretary - Signed by one company director and witnessed by independent witness - Signed by senior employee who is authorised under power of attorney
65
What is an engrossment?
Final transfer deed sent for execution
66
What is a pre-completion search for registered land?
Form OS1 or OS2 for part of land at the Land Registry
67
Search with priority
68
How long is OS1 priority? What is the effect?
Priority period of 30 working days – will take priority over any application even if lodged
69
What is the pre-completion search for unregistered land?
Form K15 at Land Charges Registry
70
What does K15 search for?
Any incumbrances or adverse matters registered against owner/seller of unregistered land
71
What is the priority period of K15 form?
15 working days
72
Does the seller need to disclose any adverse issues that may have resulted in changes to official copies originally provided?
Yes – or may face claim for damages / rescission of contract
73
What is form K16?
Bankruptcy search against buyer to protect lender
74
What are requisitions on title?
Questions about title after reviewing title deeds
75
What form does requisitions on title for residential transactions come in?
In the form of Law Society TA13
76
What form does requisitions on title for commercial transactions come in?
Commercial Property Standard Enquiries (CPSE) form SCR (Solicitor’s completion requirements)
77
What are the 5 parts of the content of TA13?
1) Vacant possession 2) Deeds and documents 3) Completion 4) Money 5) Mortgages and charges
78
How is completion usually facilitated?
By post, via Law Society Code for Completion by Post
79
What does the buyer and seller pay interest on if late to complete?
- Buyer: purchase price less deposit paid (SCS and SCPC) - Seller: full purchase price (not SCPC)
80
What if it is a leap year?
Divide by 366 not 365
81
What must a party do if they wish to rescind?
First, they must serve notice to complete on the other making time of the essence
82
How long does a default party have to complete if a notice to complete has been served?
Ten working days, excluding the day on which notice is given
83
What time does the notice to complete elapse?
2pm, unless amended
84
What if the buyer has defaulted but not paid up 10% deposit yet?
He must make it up to 10% without delay
85
What are seller’s remedies for buyer’s defaulting?
1) Forfeit deposit and any of the interest 2) Resell property and any contents 3) Claim contractual damages
86
What are buyer’s remedies for seller default?
1) Demand return of deposit with any interest 2) Claim contractual damages or even specific performance
87
When must SDLT be submitted and paid?
Within 14 days of completion
88
When must LTT be submitted and paid?
Within 30 days of completion
89
What happens if deadline for registering a charge on Companies House is missed?
Will need to apply for court order
90
Can first registration for title be made online?
No, will be made by post or Document Exchange
91
What is Land Registry application deadline for registered land?
Should be submitted within 30 working days of buyer’s solicitor’s OS1 search with priority – but otherwise no actual deadline
92
Can you extend OS1 search with priority?
No, a new one would have to be made
93
What is the Land Registry deadline for unregistered land?
2 months – otherwise transaction is void
94
What are the different SDLT bands for residential transactions?
1) Up to £250,000 2) Over £250,000 up to £925,000 3) Over £925,000 up to £1,500,000 4) Over £1,500,000
95
What are the rates for the different SDLT bands for residential transactions?
1) Up to £250,000 – 0% 2) Over £250,000 up to £925,000 – 5% 3) Over £925,000 up to £1,500,000 – 10% 4) Over £1,500,000 – 12%
96
If a property is £350,000, what is the SDLT payable?
£5,000 (5% of £100,000)
97
Are contents part of the purchase price?
Typically they are separated, but if not, will form part of the purchase unless valued separately and particularly valuable
98
What is the SDLT relief for first time buyers?
No SDLT for £425,000 – and then 5% on anything over (as long as it is not exceeding £625,000)
99
Is a first time buyer available for relief if the property is worth £670,000?
No
100
If there is more than one person buying, can the first time buyer claim the relief?
No, unless all buyers are first time buyers
101
What is the rule on SDLT for second properties?
3% is charged on the whole of the purchase price
102
How would you calculate SDLT for second properties?
1. Calculate SDLT like normal 2. Add 3% onto the contract purchase price (i.e., 3% of £300,000 house)
103
What is the SDLT bands and rates for non-residential transactions?
1) Up to £150,000 – 0% 2) Over £150,000 up to £250,000 – 2% 3) Over £250,000 – 5%
104
Is there first time relief for buyers for LTT?
No
105
SDLT is less for second property buyers, and provides first time buyer relief. LTT doesn’t.
106
What is LTT on residential transactions?
1) Up to £225,000 – 0% 2) Above £225,000 up to £400,000 – 6% 3) Above £400,000 up to £750,000 – 7.5% 4) Above £750,000 up to £1,500,000 – 10% 5) Above £1,500,000 – 12%
107
What is LTT on non-residential transactions?
1) Up to £225,000 – 0% 2) Above £225,000 up to £250,000 – 1% 3) Above £250,000 up to £1,000,000 – 5% 4) Over £1,000,000 – 6%
108
What is offset of losses?
If taxpayer made losses on assets during tax year, may offset against gains made
109
What is the annual CGT exemption?
£3,000.00
110
What is private residence relief?
Person does not pay CGT if they sell or dispose their home
111
What are the conditions required for private residence relief?
- It has been person’s main home for all the time they lived in it - They have not let it out (other than lodger) - It has not been used for business purposes (using as temp office is ok) - Grounds including all buildings are less than 5,000 sqM - Was not bought just to make a gain
112
What is the rule on married couples on private residence relief?
Married couples and civil partners can only treat one property as their main home between them (can’t have one each)
113
Does the rate of income tax make a difference to the CGT payable?
Yes
114
Does a gift to a spouse mean CGT is payable?
No

Property Review (11 decks)

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