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Intro Flashcards

(61 cards)

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1
Q

What is the principle of caveat emptor?

A

The Latin principle translates to ‘buyer beware’, meaning the buyer takes the property as they find it.

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2
Q

What are the buyer’s main aims in a property transaction?

A
  • Ensure the seller has the right to sell the property
  • Confirm the physical condition of the property meets needs
  • Identify all rights the property enjoys
  • Identify third party rights affecting the property
  • Ensure the property is free from security interests
  • Ensure the contract reflects agreed terms
  • Confirm sufficient funds to finance the purchase
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3
Q

What is the lender’s aim in a freehold transaction?

A
  • Ensure the property is marketable
  • Confirm the property’s value covers potential losses if the buyer defaults
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4
Q

What are the seller’s main aims in a freehold transaction?

A
  • Ensure the contract reflects agreed terms
  • Provide necessary documents to the buyer’s solicitor
  • Tie sale timing to any related purchases
  • Transfer legal ownership to the buyer
  • Collect money from the sale and repay the mortgage
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5
Q

What are the three distinct stages of a property transaction?

A
  • Pre-exchange
  • Pre-completion
  • Post completion
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6
Q

What happens during the pre-exchange stage?

A
  • Buyer decides to buy and agrees on price
  • Surveyor surveys property and reports
  • Buyer’s solicitor investigates title
  • Proceed to exchange only when satisfied
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7
Q

What occurs during the exchange stage?

A
  • Seller and buyer enter into a contract
  • Buyer pays a deposit (usually 10%)
  • Parties cannot withdraw without financial consequences
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8
Q

What happens during the completion stage?

A
  • Buyer’s solicitors send purchase price to seller’s solicitors
  • Seller’s solicitors send paperwork to transfer property
  • Buyer receives keys and moves in
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9
Q

What are the post-completion responsibilities?

A
  • Seller’s solicitor pays off the mortgage
  • Buyer’s solicitor pays SDLT/LTT and registers ownership
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10
Q

What is the role of the Energy Performance Certificate (EPC)?

A
  • Reports on the energy efficiency of a property
  • Seller must provide it before marketing the property
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11
Q

What are the implications of co-ownership?

A
  • Legal ownership can be sole or joint tenancy
  • Beneficial ownership can differ from legal ownership
  • Tenants in common can pass shares under a will
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12
Q

What types of surveys should a buyer consider?

A
  • Homebuyer report
  • Full structural survey
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13
Q

What is Capital Gains Tax (CGT)?

A

A tax on the profit made from selling certain assets that have increased in value.

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14
Q

What should a buyer do before becoming contractually bound to a purchase?

A

Investigate the property thoroughly through title investigation, searches, and surveys.

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15
Q

What is the significance of the Hardy v Griffiths case?

A

Illustrates the importance of buyers investigating properties before exchange of contracts.

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16
Q

What is a lender’s security interest in a property?

A

The lender takes a security interest over the buyer’s property to cover potential losses if the mortgage is not repaid.

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17
Q

What does the buyer’s solicitor need to ensure regarding the property?

A
  • The seller has the right to sell
  • The property condition meets buyer’s needs
  • All rights and interests are identified
  • The contract reflects agreed terms
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18
Q

What are the potential risks for a buyer in a property transaction?

A
  • Losing money through the conveyancing process
  • Legal issues affecting property use or value
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19
Q

Fill in the blank: The average residential sale may take around ______ weeks from agreement to completion.

A

six to eight

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20
Q

True or False: The buyer can withdraw from the transaction without any legal liability after contracts are exchanged.

A

False

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21
Q

What is the primary responsibility of a seller in a property transaction?

A

To sell the property and receive payment as quickly as possible.

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22
Q

What should solicitors consider regarding taxes in property transactions?

A
  • SDLT/LTT
  • VAT
  • CGT
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23
Q

What should a buyer be recommended to undertake in a property transaction?

A

At least a homebuyer report, and ideally a full structural survey.

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24
Q

What tax implications should be considered in a property transaction?

A
  • SDLT/LTT
  • VAT
  • CGT
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25
What are the typical sources of funding for a residential property purchase?
* The client’s own resources * A mortgage loan * Proceeds of any related sale
26
What types of mortgages are available for residential properties?
* Capital repayment mortgage * Interest only mortgage * Endowment mortgage
27
What is a capital repayment mortgage?
The borrower repays the capital sum by monthly payments, with interest added.
28
What is an interest only mortgage?
The borrower only pays the interest on the loan, leaving the capital outstanding.
29
What is an endowment mortgage?
An interest only mortgage topped up with payments invested in an endowment policy.
30
What are the SRA principles?
* Uphold the rule of law * Uphold public trust * Act with independence * Act with honesty * Act with integrity * Encourage equality, diversity, and inclusion * Act in the best interests of each client
31
What must a solicitor ensure regarding competence and timely service?
They must provide a competent service and deliver it in a timely manner.
32
What should a solicitor verify when acting on behalf of a client?
That they are authorized to act on the client's behalf.
33
What constitutes an own interest conflict?
A situation where the solicitor's duty to act in the client's best interests conflicts with their own interests.
34
What are examples of circumstances that may give rise to an own interest conflict?
* A financial interest of the solicitor or someone close * A personal or business relationship of the solicitor
35
What is the definition of a conflict of interest?
A situation where separate duties to act in the best interests of two or more clients conflict.
36
What are the exceptions to the rule against acting in a conflict of interest?
* Substantially common interest * Competing for the same objective
37
What is a substantially common interest (SCI)?
A situation where there is a clear common purpose between clients and a strong consensus on how to achieve it.
38
What is the competing for the same objective exception (CFSO)?
A situation where two or more clients are competing for an objective that, if attained by one, will make it unattainable for others.
39
Can a solicitor act for both a buyer and lender in the same transaction?
Generally permitted in residential transactions due to common interest.
40
What is the duty of confidentiality?
The obligation to keep the affairs of current and former clients confidential.
41
What must a solicitor do when acting for a client on a matter?
Make the client aware of all information material to the matter of which they have knowledge.
42
Fill in the blank: The buyer must have sufficient funds to complete the purchase, including cash to pay the _______.
[deposit on exchange]
43
Fill in the blank: The solicitor’s fees will be subject to _______.
[VAT]
44
Fill in the blank: In commercial property, funding options can be more _______.
[varied and complex]
45
True or False: A solicitor can act for a buyer and lender in commercial transactions without issues.
False
46
What is the duty to disclose as per CCS 6.4?
You must make the client aware of all information material to the matter of which you have knowledge.
47
What must you report to your client when acting for a buyer?
The extent and results of your investigations, and any limitations or matters which were not covered.
48
What are the limited exceptions to the duty to disclose?
1. Disclosing information could cause serious physical or mental harm to your client or another person. 2. Disclosure is prohibited by legal restrictions. 3. Duty of disclosure to another client.
49
What does CCS 8.6 require when providing information to clients?
You must give clients information in a way they can understand.
50
Why is it important to avoid using complex language with clients?
If a client cannot understand the report, you have not complied with CCS 8.6.
51
In the example of acting for a buyer and their lender, what is the critical issue?
The mortgage offer states a price different from the agreed price, which is critical to the loan amount.
52
What should you do if there is a discrepancy in the price between the buyer and lender?
Ask the buyer for consent to inform the lender of the discrepancy.
53
What happens if the buyer does not agree to disclose the price discrepancy?
You cannot continue to act for the lender and should stop acting for the buyer as well.
54
What must you ensure when taking on a new client according to CCS 3.2?
You must ensure that you are competent to act.
55
What does CCS 3.1 require regarding who gives instructions?
You must ensure that anyone giving you instructions is authorised to act on behalf of the client.
56
What is prohibited under CCS 6.1?
You must not act if there is an 'own interest conflict' or a significant risk of such a conflict.
57
What is the definition of a 'conflict of interest' under CCS 6.2?
Where your separate duties to act in the best interests of two or more clients in the same matter conflict.
58
What are the two exceptions to the conflict of interest rule in CCS 6.2?
1. Clients have a substantially common interest. 2. Clients are competing for the same objective.
59
What conditions must be met for the exceptions to apply in CCS 6.2?
* All clients must give informed consent in writing. * Effective safeguards must be in place to protect confidential information. * It must be reasonable for you to act for all clients.
60
What is the duty under CCS 6.3?
You have a duty to keep the affairs of clients and former clients confidential.
61
What takes precedence if there is a conflict between the duty of confidentiality and duty to disclose?
The duty of confidentiality will always override the duty of disclosure.

Property Practice (8 decks)

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