Due Dilligence

Question 1

When might a solicitor act for both a buyer and a seller ?

Answer 1

Only if the risk of conflict is not high:

• where you use a standard mortgage AND approved certificate of title

Question 2

What must solicitors do to ensure there is no undue influence when spouse agrees to mortgage matrimonial home for business loan?

Answer 2

• Explain to wife be purpose for which the solicitor has become involved
• explain that the lender will rely on the solicitors involvement to counter any suggestions that the wife has been unduly influenced
• obtain confirmation from the wife that she wishes solicitors to act for her in transaction

Question 3

What are the different types of mortgage ?

Answer 3

• Repayment mortgage - monthly payment made of original amount borrowed and partly on interest chargeable on the loan
• interest-only mortgage - monthly payments only on interest chargeable on loan (still owe original amount borrowed at the end)

Question 4

What will the buyer and seller of a residential building have to pay in property tax ?

Answer 4

Buyer - SDLT/LTT

Seller - capital gains if not main residence

Question 5

What will a buyer and seller of commercial building have to pay in property tax?

Answer 5

• buyer - SDLT/LTT and maybe VAT
• seller - likely Corporation tax

Question 6

How long after purchase is is SDLT/LTT due ?

Answer 6

14 days

Question 7

What are the SDLT rates for first time buyers ?

Answer 7

Up to £300k is 0%

£300k-£500k is 5%

Question 8

What’s re the SDLT rates for non first time buyers ?

Answer 8

First £125k is 0%

£125k-£250k is 2%

£250k - £925k is 5%

Question 9

What does the property register show ?

Answer 9

Whether it is leasehold or freehold, easements benefit it

Question 10

What is included proprietorship register ?

Answer 10

Current owners, the class of title,

Question 11

What is included in Charges register ?

Answer 11

Encumbrances - Covenants, easements, charges, third party interests

Question 12

What should client do if purchasing property and find covenants that are missing ?

Answer 12

Obtain indemnity insurance policy in respect of these covenants

Question 13

With regards mortgages on property what steps should be taken ?

Answer 13

Contract should be checked to include that mortgage is excluded from the list of encumbrances affecting the property - seller solicitor should provide an undertaking to discharge the mortgage immediately on completion