LAST MINUTE WILLS/prop Flashcards
(247 cards)
1
Q
Statutory powers of PRs?
A
Money
Sell, charge, lease,
Insure
Invest
Charge for PR services
Sell/run sole business
Distribution
Appropriate
Management
Delegate powers
Appoint trustees
2
Q
For power to invest, what must PRs pay attention to?
A
Standard Investment Criteria:
- Suitability of the investment.
- Diversification to manage risk appropriately.
Duty to Obtain Advice (s.5 Trustee Act 2000)
- PRs have a duty to seek proper advice when making or reviewing investments.
- They may only dispense with this requirement if they reasonably conclude that advice is unnecessary or inappropriate.
3
Q
When will PR’s become trustees?
A
The will expressly appoints them,
There is an intestacy (the estate is held on trust with a power to sell)
A statutory trust arises under intestacy where there is a minor beneficiary
4
Q
What formalities are required for PR’s to delegate?
A
must be done in writing
agent’s must be provided with a written policy statement which the agent must agree to.
the use of an agent and the policy doc must be kept under review.
5
Q
When do PR’s have the statutory power to appropriate an asset in satisfaction of a beneficiary’s entitlement?
A
As long as:
- A specific beneficiary has not been prejudiced (e.g. was the asset promised to someone else)
- The recipient beneficiary has consented
- The value of the asset is considered at the date of transfer, not the date of death
6
Q
What statutory powers can’t a PR delegate?
A
How and when assets should be distributed,
whether fees or costs are payable from income or capital,
The appointment of trustees
7
Q
When might a PR be exonerated by the court?
A
acted honestly and reasonably,
-ought to be excused for:
– The breach of trust, and
– Omitting to obtain a direction from the court on the matter
8
Q
Do you still need a grant of probate if the will does not dispose of any of the deceased’s property?
A
Yes
9
Q
What’s the deadline for the submitting the account to HMRC?
A
12 months from the end of the month in which the death occurred
10
Q
What is the deadline for paying IHT due?
A
6 months from the end of the month in which the death occurred, after which interest becomes payable on the unpaid tax.
11
Q
What is an ‘Exempt excepted estate’?
A
Gross value is no more than £3m but no IHT is payable because after debts, spouse/charity exemption the net value of the estate is below the NRB.
(note: ONLY spouse/charity exemption count).
(gross value = taxable estate + specified transfers- those made in the last 7 years)
(NRB includes any transferred NRB but does not include RNRB).
12
Q
What factors prevent an estate from being ‘low value’ or ‘exempt’ excepted estates?
A
trusts: more than one trust, or a single trust worth more than £250k
Foreign assets worth more than £100k
specified transfers exceeds £250k
gift with reservation
RNRB claim.
13
Q
What is the statutory order of entitlement to be appointed as administrator under a grant of letters (with will)?
A
a) executor
b) trustee of the residuary estate,
c) any residuary beneficiary or, where there is a partial intestacy, a beneficiary of the estate under intestacy.
d) the PRs of anyone in (c) other than a trustee of a life tenant of the residue.
e) any other beneficiary or a creditor.
f) PRs of anyone in (e).
those within the same category have an equal right to apply
14
Q
What is the statutory order of entitlement to be appointed as administrator under a grant of letters?
A
Must have a beneficial entitlement under the estate:-
a) surviving spouse/civil partner
b) children of the deceased
c) father and mother of deceased
d) whole blood siblings.
e) half-blood siblings
f) grandparents
g) Uncles/Aunts of whole blood
h) Uncles/Aunts of half blood
The crown
If the crown does not apply, a creditor, of person who does not receive a benefit (but would have done had the estate been larger).
15
Q
What are the general duties on PR’s?
When should they complete administration?
A
act with due diligence,
act within a reasonable time
administration should be completed within 12 months (if longer PR’s are required to justify the delay).
16
Q
Can administrators reserve power?
A
No
17
Q
Can administrators renounce after intermeddling?
A
Yes
18
Q
What is an affidavit + formalities?
A
A formal statement of fact.
signed by all parties and dated,
completed and signed by the person witnessing (independent solicitor/commissioner for oaths) inc. name/address & qualification.
-must follow on immediately from the text and not on a separate page.
19
Q
How are unsecured debts / expenses paid?
A
a) property not disposed of by a will
b) residue (subject to retention of a legacy fund)
c) property the will set aside
d) £ in the pecuniary legacy fund
e) property specifically given (e.g. chattels)
(where gifts are in unequal amounts, debts are paid proportionately).
20
Q
What if PRs pay debts out of order?
A
Beneficiary can apply for marshalling and claim against a beneficiary who received assets that should have been used to pay the debts.
21
Q
What happens to income/gains after death?
A
PR’s are liable at basic rate but with no personal allowance.
22
Q
When do PRs not have to account for Estate income?
A
Under 500 from savings interest
23
Q
What happens to Estate income tax when distributed to beneficiaries?
A
If B pays no tax, they can request a refund,
If B pays higher rate, they will need to top-up the tax suffered by the PRs
24
Q
Estate Gains - do the PRs have a personal allowance?
A
Yes
25
CGT - are transfers to beneficiaries taxable on the PRs?
No, they are not disposals for CGT purposes. B acquires the asset at Probate value (d.o.d) not the value when the asset was transferred.
26
What order are legacies paid in?
specific
general
residuary
27
If there is tax to pay, will the estate be excepted?
No
28
When can you act where there may be a conflict of interest?
a) The clients have a substantially common interest in relation to the matter or the aspect of it, as appropriate; or
b) The clients are competing for the same objective
29
What conditions need to be met to act where there may be a conflict of interest?
All the clients have given informed consent, given or evidenced in writing, to you acting;
Where appropriate, you put in place effective safeguards to protect your clients’ confidential information; and
You are satisfied it is reasonable for you to act for all the clients.
30
Proprietorship register - How will you know if a property is held by Tenants in Common?
The Land Registry will add a restriction to the proprietorship register - e.g.
“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.”
31
Proprietorship register - who should be asked to sign the contract and execute the transfer deed if one tenant in common is living?
They will need to appoint a second trustee (often their solicitor) to sign the contract and execute the transfer deed with them.
Again, they should also provide a certified copy of the deceased tenant in common’s death certificate.
32
What must be included in the Root title?
deals with both the legal and beneficial title to the property
adequately describes the extent of the land being conveyed
does not cast doubt on the seller’s title
33
What are the requirements for a validly executed deed pre-1989?
Clear that it is intended to be a deed
Signed
Sealed
delivered as a deed (dating the document)
34
What are the requirements of a deed after 1989?
Clear that it is intended to be a deed
Signed delivered as a deed (dating the document)
35
When is planning permission not required?
Planning permission is needed whenever there is development on land, unless it falls within certain exceptions, such as:
building works that only affect the interior of the building; or
building works that do not materially affect the external appearance of the building; or
changes of use that are within the same use class (s3(1), The Town and Country Planning (Use Classes) Order 1987
36
What are local authority’s enforcement options for breach of planning control?
Enforcement notice
Stop Notice
Breach of condition notice - Similar to enforcement notice, but only concerned with breach of conditions or limitations to planning permission
Injunction - Local authority can apply to court for an injunction, but it is discretionary, and local authority needs to show good reason
37
How does an enforcement notice work for breach of planning control?
Local authority gives 28 days’ notice that:
land must be restored to condition it was in before unauthorised development; or
comply with any conditions or limitations imposed by planning permission
After 28 days, land owner may be fined, and the local authority can enter the land to carry out the work, recovering its expenses from the land owner
38
What are the enforcement time limits for breach of planning control?
4 years
Building works – starting with the date on which the building works were “substantially completed”
Change of use to single dwelling house – starts with the date the use was begun
10 years (ALSO BUILDING WORKS AS OF APRIL 2024)
Other changes of use
Breach of planning condition
39
What happens if a breach of planning control has been deliberately concealed?
Where a breach of planning control has been deliberately concealed, the local authority can apply to a magistrates’ court for a planning enforcement order.
40
What are the time limits for persecution for breach of building regulations?
six months after discovering breach to prosecute the person responsible for the breach in the Magistrates’ Court. Unlimited fines may be imposed.
Prosecution may take place up to two years after completion of the building work.
41
What are the time limits for an Enforcement Notice for breach of building regulations?
What are the time limits for an Enforcement Notice for breach of building regulations?
one year after completion of the building work to serve an enforcement notice.
Similar to a planning enforcement notice, this gives the land owner 28 days to alter or remove the work. Again, if the land owner fails to comply, the local authority can undertake the work at the land owner’s expense.
Injunction -If the work is unsafe, then there is no time limit.
42
What 2 things must testator have before can make will?
Capacity
Intention
43
What 2 options are there if the solicitor will receive a gift under the will?
Make client seek independent legal advice
Refuse to act and get another firm
44
What are the main points SRA says about accepting will gifts?
Value in relation to estate and of itself (legal advice)
45
What are the exceptions to ‘Caveat emptor’
(1) Misrepresentation
(2) Latent encumbrances and title defects
46
exceptions to ‘Caveat emptor’ - What is a ‘misrepresentation’
A misrepresentation is a false statement by conduct (painting over damp) or statement which induces a buyer to contract to buy.
47
exceptions to ‘Caveat emptor’ - What is a ‘Latent encumbrances and title defects’
A latent incumbrance is something which is not apparent, or cannot be discovered, when inspecting the property.
48
exceptions to ‘Caveat emptor’ - What is a defect in title?
A defect in title is a matter that brings into question the seller’s ownership of the property, or the rights and burdens that affect the property.
49
When accepting instructions to act in a property matter, what conduct issues do you need to consider?
Can you provide a competent and timely service?
Are you authorised to act on your client’s behalf?
Would you have any conflict of interest?
Duty of confidentiality
Duty of disclosure
50
When can you act where there may be a conflict of interest?
a) The clients have a substantially common interest in relation to the matter or the aspect of it, as appropriate; or
b) The clients are competing for the same objective,
51
What conditions need to be met to act where there may be a conflict of interest?
All the clients have given informed consent, given or evidenced in writing, to you acting;
Where appropriate, you put in place effective safeguards to protect your clients’ confidential information; and
You are satisfied it is reasonable for you to act for all the clients.
52
What do positive covenants bind on?
The owner (not the property) but there will often be a chain of indemnity where each subsequent purchaser indemnifies the last.
e.g. The Transfer to the Proprietors contains a covenant to observe and perform the covenants referred to in the charges register and of indemnity in respect thereof.
53
What if there is no indemnity covenant on the register?
The chain of indemnity is broken and the buyer should not provide an indemnity covenant.
54
What are the requirements for a validly executed deed pre-1989?
Clear that it is intended to be a deed
Signed
Sealed
delivered as a deed (dating the document)
55
What are the requirements of a deed after 1989?
Clear that it is intended to be a deed
Signed
delivered as a deed (dating the document)
(note: difference is deed does not need to be sealed)
56
What is the effect of having a home in a conservation area?
The GPDO will be restricted, so changes to external appearance may require planning permission
In England, planning permission is needed to demolish an unlisted building within a conservation area
In Wales, conservation area consent is needed to demolish an unlisted building within a conservation area (conservation area consent in England was abolished in 2013)
Consent is needed to cut back or cut down trees
57
What is required to demolish, alter or extend a listed building?
Listed building consent
58
What are the standard terms that limit the buyers ability to rescind the contract for misrepresentation?
An error or omission only entitles the buyer to rescind the contract:
(a) where it results from fraud or recklessness, or
(b) where the buyer would be obliged, to his prejudice, to accept a property differing substantially (in quantity, quality or tenure) from that which the error or omission had led it to expect.’
Damages are only available where there is ‘a material difference between the represented and the actual description or value of the property’
59
What conditions must a contract for land satisfy under s2 LPA 1989?
be in writing
incorporate all the terms which the parties have expressly agreed.
be signed by, or on behalf or, each party to the contract.
60
What are the standard conditions for residential property relating to incumbrances?
The seller needs to disclose any incumbrances registered at:
- Land Registry
- Land charges Registry
- Companies House
If they don’t, the seller is in breach
61
What are the standard conditions for commercial property relating to incumbrances?
The buyer is deemed to buy the property subject to any incumbrancers which would be revealed by a prudent buyer’s searches and enquiries.
62
What is the default completion date?
20 working days after the date of the contract
63
What is the default completion time of the day and what does this mean?
2pm
Money must be received by the seller’s solicitor before 2pm
64
What is the default remedy if completion time is missed?
The other party can claim damages, but cannot walk away from the transaction.
If the party serves a ‘notice to complete’ then time is of the essence and if the contract is not performed by a specific time the non-defaulting party can walk away and claim damages.
65
What is the default deposit and who pays
10% and paid by the solls
- domestic, cheque or electronically
- commercial - just electronically.
66
What is the difference between holding a deposit as a stakeholder and agent?
Stakeholder, solls must not give deposit to seller until completion (standard)
Agent, seller can demand the deposit immediately after exchange
67
Who holds the risk after contracts are exchanged?
The buyer, therefore buyer should insure from the date of exchange
68
What are the different rates of VAT on property?
Exempt supplies - Residential property, except for newly constructed property & commercial property over 3 years old with no opt to tax.
Standard-rated supplies (20%) - newly constructed commercial property
Zero-rated supplies - newly constructed residential property (buyer doesn’t pay VAT but seller can reclaim).
69
How can a company execute a deed?
Company seal attached and signed by 2 directors or 1 director and company secretary
No Company seal but signed by 2 directors or 1 director and company secretary
Singed by 1 company director and witnessed by an independent witness
Signed by a senior employee who is authorised under a power of attorney
70
What is the priority period for a search with priority carried out on REGESTERED land?
30 working days from the search result
71
What is the priority period for a search with priority carried out on UNREGESTERED land?
15 working days from the search result
72
What is the effect of the priority period?
The buyer’s transfer will take priority over any other applications, even if they were lodged before the buyer’s transfer.
73
How does the buyer get comfort that the seller will pay-off their mortgage?
The Sellor’s solicitor undertakes to REDEEM the mortgage.
Note: they’re not undertaking to discharge the charge as only the lender can do that.
74
What undertakings are made by the seller under The Code?
The Seller’s Solicitor undertakes:
(i) to receive the purchase money on completion; and
(ii) on completion, to pay the mortgage off;
The Seller’s Solicitor will complete upon receipt of the money
As soon as possible after completion and in any event by the end of the working day following completion, send written confirmation that completion has taken place …
and the [executed transfer and other deeds and documents]
75
How is interest calculated if there is a failure to complete?
At the contract rate. If there is no rate specified, at the Law Society interest rate.
Seller late = seller pays interest on full purchase price
Buyer late = buyer pays interest on the purchase price less any deposit paid
76
Is there a financial remedy for failure to complete other than interest?
Yes - common law damages. If the buyer is successful, the interest is deducted from the claim.
77
What is the process for rescission? (OF LAND CONTRACT)
The non-defaulting party serves a ‘notice to complete’ on the other party.
This makes ‘time of the essence.
The parties must then complete within 10 working days (excluding the day on which the notice was given).
78
Are there remedies other than financial remedies for a failure to complete?
Yes, Rescission. However, under a standard contract time is not of the essence.
79
Can a notice of recession be withdrawn and, if so, how?
Yes, requires the agreement of both parties.
80
What are the SELLER’s remedies of recission?
forfeit the deposit and any interest accrued on it,
resell the property and any contents included in it
claim contractual damages
81
How long do you have to register a charge at companies House?
21 Days of the creation of the charge
82
How long have you got for SDLT to be notified and paid?
14 DAYS
83
What is the deadline for submitting an application to the Land Registry following completion of REGISTERED land?
There is no deadline. However, consider OS1 search priority period.
84
What is the deadline for submitting an application to the Land Registry following completion of UNREGISTERED land and what happens if it missed?
two months from completion. If not complied with, the transaction is void. An application can be made to the Land Register to extend the period.
85
Do SDLT and LTT rates rely on slices or thresholds?
Slices - i.e. if a threshold is breached the whole sum is NOT charged at the threshold amount
86
What SDLT relief is available for first-time buyers?
No SDLT on the first £300,000 and 5% on the next £200,000
87
What additional rate of SDLT is due if the property purchased is a second residential property?
An additional 3% is charged on the WHOLE of the purchase price
88
When is PPR available
You have one home and you have lived in it as your main home all the time you have owned it
You have not let part of it out - although one lodger is allowed.
You have not used it for business only
The grounds are less than 5,000 mSq
You did not buy it just to make a gain
89
SDLT is assessed on the NPV, and different percentage rates apply to the slices of the total purchase price. What are those slices?
Up to £150,000, there is no SDLT payable.
Over £150,000 up to £5 million, SDLT of 1% is payable
Over £5 million, SDLT of 2% is payable
SDLT is rounded to the nearest pound.
90
Commercial Leases, Alterations - what is the position if Alterations are not mentioned in the lease?
The tenant is free to carry out alterations.
The only restriction imposed by law is the doctrine of “waste” which means that the tenant cannot carry out alterations which reduce the value of the premises.
91
Commercial Leases, Alterations - What if there is an absolute covenant against alterations?
If the tenant wants to make an alteration covered by an absolute covenant, they can ask the landlord, but the landlord has no obligation even to consider such a request.
92
Commercial Leases, Alterations - What if there is an qualified covenant against alterations?
A qualified covenant against alterations means that they are only permitted with landlord’s consent. The landlord does not have to give consent.
93
Commercial Leases, Alterations - What if there is a fully qualified covenant against alterations?
Alterations are only permitted with the landlord’s consent BUT the landlord must act reasonably in deciding to withhold consent.
94
Commercial Leases, Improvements - What if there is an qualified covenant against alterations but the alterations the tenant wants to make are improvements?
s19(2) LTA1927 converts it to a fully qualified covenant
95
Commercial Leases, Improvements - What if there is an absolute covenant against alterations but the alterations the tenant wants to make are improvements?
Doesn’t matter, the law can’t help with absolute covenants
96
Commercial Leases, Improvements - There is an qualified covenant against alterations but the alterations the tenant wants to make are improvements. Are those improvements from the point of view of the tenant or the landlord?
The Tenant
97
Commercial Leases, Improvements - How would the tenant carry out improvement even if there’s an absolute covenant against alterations?
Under s3, LTA1927, the tenant serves notice on the landlord of its intention to carry out improvements
If the landlord does not object within three months, the tenant may go ahead and carry out the improvements.
If the landlord objects, the tenant can apply for the court’s permission to carry out the improvements.
The landlord may offer to carry out the works itself and increase the rent, but the tenant does not have to agree to this.
However, the tenant can then not ask the court for permission.
98
Commercial Leases, Improvements - What would the court consider if there’s an absolute covenant against alterations and the tenant has applied to the court to make improvements?
The court will give permission if the improvements:
add to the letting value of the property;
are reasonable and suitable to the character of the property; and
will not diminish the value of any other property belonging to the landlord.
99
Commercial Leases, User - User refers to what the lease allows the tenant to use the premises for. What is the position if User is not mentioned in the lease?
The tenant is free to use the premises for anything they like.
100
Does statute convert a qualified user clause to a fully qualified user clause?
No
101
Can the Landlord charge more rent if there’s a change in User?
No - unless the change of use also requires structural alterations
102
If a landlord consents to improvements, what document will be created?
Licence for alterations
103
What activities would be a flag for money laundering?
Depositing money with solicitor and then requesting return of funds
Transfers between bank accounts, in multiple names, multiple banks, and multiple countries
Overpayment of tax
104
When events would trigger a requirement to carry out customer due diligence?
Establish a business relationship
Carry out an occasional transaction
Suspect money laundering/terrorist financing
Doubt the veracity or adequacy or documents or information previously obtained
105
Leasehold covenants - when were ‘old leases’ created?
before 1 January 1996
106
Which action do you look at when considering whether a lease is an old or new lease?
It is the date of creation of the lease which is critical, not the date of any subsequent assignment, as to whether the old rules or the new rules apply to the lease.
107
Who is liable for breaches in old tennancies?
In old leases, the liability of the original landlord and the original tenant continues for the full duration of the lease term. This is the case even after an assignment of either the reversion (landlord’s interest) or the lease (tenant’s interest).
108
What changed between an old lease and a new lease?
LTCA 1995, s 3 provides for
- the automatic transmission of the benefit and burden of all landlord covenants to the new owner of the reversion, and
- of the benefit and burden of all tenant covenants to the assignee.
109
What is the exception to the rule for new leases?
The only exception to this rule in LTCA 1995, s 3(6) is for those covenants which are ‘expressed to be personal to any person’.
110
When might an old tenant be liable for a breach by the new tenant?
If the outgoing tenant has provided an authorised guarantee agreement (‘AGA’) under LTCA 1995, s 16 on assignment, the landlord could sue the FORMER tenant who is guaranteeing the obligations of their IMMEDIATE successor.
111
What is the remedy for the Landlord if he sues the previous tenant under an AGA?
Damages
112
If the previous tenant is sued under an AGA, what action may he have against the current tenant?
The former tenant may be able to recoup damages paid out on behalf of a defaulting assignee using an indemnity.
113
If the previous tenant is sued under an AGA, what action may he have against the current tenant if he doesn’t have an indemnity?
The rule in Moule v Garrett (1872) LR 7 Exch 101.
If one person is compelled to pay damages because of the legal default of another, the former is entitled to recover those damages from the defaulting party.
114
Can restrictive covenants in New Leases be enforced directly against sub-tenants?
Yes
115
Can positive covenants in New Leases be enforced directly against sub-tenants?
No
116
How can a Landlord enforce positive covenants in New Leases against sub-tenants?
They can enforce against the tenant and so the tenant will have a clause where the sub-tenant covenants to observe and perform the covenants contained in the head lease.
If the landlord forfeits the head lease, the sublease is also automatically terminated, subject to a claim for relief.
Landlord will, as a condition of consent to the subletting, insist on any subtenant of the property entering into direct covenants with it to observe and perform the covenants in the lease.
117
If a tenant’s covenant against assigning a lease is qualified, they will need permission of the Landlord, does the Landlord have to act reasonably when considering the request?
Yes - s19(1)(a) of the Landlord and Tenant Act 1927 converts a qualified covenant into a fully qualified covenant.
118
If a tenant requests an assignment orally, when must the landlord give his decision?
Must act reasonably but no time limit or how they respond
119
If a tenant requests an assignment in writing, when must the landlord give his decision?
Must respond in writing within a reasonable amount of time. Case law says 28 days.
120
When considering a sublease, what covenants will the Landlord require?
Covenants that are no less strict than those in the Lease.
121
Who drafts the licence to underlet
The Landlord’s Solicitor (at the tenant’s cost)
122
Is a qualified covenant against underletting automatically converted to a fully qualified covenant?
Yes - and the decision must be made within a reasonable time.
123
Is there privity of contract between the Landlord and the undertenant?
No - there is between the landlord and the tenant and the tenant and the undertenant.
124
Can the Landlord enforce covenants against the undertenant?
No - unless that Landlord required the undertenant to covenant directly with the Landlord as part of the licence to underlet with the tenant.
125
What happens if a tenant stays after the lease runs out with the Landlord’s permission? *when hold over doesn't apply
If the landlord consents to an unprotected tenant remaining in occupation, the tenant is not holding over, but would be treated as a ‘tenant at will’.
126
What happens if a tenant stays after the lease runs out with the Landlord’s permission and the Landlord accepts rent?
If the landlord accepts rent, then the tenancy at will may be converted to a periodic tenancy and, if otherwise qualify, will acquire security of tenure.
127
Notice to quit - unless the contract says otherwise, what is the period in which a notice to quit must be given?
Weekly – four weeks (residential) or one week (other tenancies)
Monthly – one month
Quarterly – one quarter
Yearly – six months
128
Which day must a notice to quit be for?
The first day or the last day of the tenancy period
129
Who can issue a notice to quit?
Either the landlord or tenant
130
What happens if a Landlord issues a notice to quit for a protected tenancy?
The notice will only end the periodic tenancy itself. The tenant will be entitled to hold over.
131
How does a Landlord gain control when issueing a notice to quit for a protected tenancy?
Issue a hostile s.25 notice which may also be the notice to quit
132
What is a surrender by operation of law?
A surrender by operation of law arises when the landlord and tenant act in way that is inconsistent with the continuation of the tenancy. For example, the landlord accepts the keys from the tenant with an understanding that the tenant is leaving the premises permanently.
133
What are the methods by which a landlord can remedy a breach by a tenant?
Damages
Action in debt
Guarantor and rent deposit
Commercial rent arrears recovery (CRAR)
Equitable remedies
Forfeiture
134
What would an Action in Debt achieve for the landlord?
Issue court proceedings to recover a debt. An action for debt is limited to rent due in the six years before the issue of proceedings. Any earlier outstanding rent is irrecoverable.
135
What would a Guarantor and rent deposit achieve for the landlord?
The landlord can rely on the contractual terms of a guarantee to claim its losses from the guarantor.
The landlord can draw on a rent deposit (usually limited, say to six months’ rent) if there are any arrears.
The tenant will be required to top up the deposit after a withdrawal.
136
When can Commercial rent arrears recovery (CRAR) be used?
the premises are purely commercial (it cannot be used, for example, where the premises comprise a shop and residential flat)
a minimum of seven days’ principal rent is owed (it can’t be used to recover service charge or any other sum reserved as ‘rent’ but does include VAT and interest)
the lease has not been forfeited
137
What types of arears can CRAR be used for?
Only includes principle rent + Interest + VAT
It can’t be used to recover service charge, ‘insurance rent’ or any other sum reserved as ‘rent’
138
Who must conduct a Commercial rent arrears recovery (CRAR)?
the landlord must appoint an enforcement agent who either has the required certificate from the court or is exempt from the requirement (eg, a police officer)
139
How much notice must the LL give the Tenant for CRAR if he intends to enter the premises?
Seven clear days’ notice must be given of the intention to enter the tenant’s premises (clear days exclude Sundays and bank holidays)
If the notice expires without repayment of the debt, the enforcement agent can enter the premises and take control of goods belonging to the tenant up to the value of the debt owed.
140
When can the LL sell the goods seized under a CRAR notice?
The landlord must serve a further seven clear days’ notice if it intends to sell any of the seized goods.
141
What is Forfeiture?
The right of the landlord to re-enter the premises and take them back from the tenant.
142
What is the effect of Forfeiture?
It brings the lease to an end before the contractual term (or during any period of holding over).
143
Is Forfeiture an automatic right?
No, it is only permitted insofar as the lease provides for it.
144
How does a Landlord start forfeiture proceedings?
Issues a s.146 notice.
145
When does a Landlord not have to issue a section 146 notice in respect of forfeiture?
For non-payment of rent
146
What methods are there for forfeiture to be carried out
peaceable re-entry
apply to the court for a an order of forfeiture
147
In what circumstances can a Landlord waive his right to forfeiture
the landlord does some unequivocal act recognising the continuing existence of the lease;
with knowledge of the breach in question; and
communicates that act to the tenant.
The intention of the landlord is irrelevant.
148
What are the two types of breach when considering a landlord’s waiving of his right to forfeiture and why does it matter?
Once and for all breaches - if the LL waives his right he will not be able to regain it for that breach.
Continuing breaches - each day that the breach continues, the landlord regains the right of forfeiture.
149
What are continuing breaches?
failure to keep the premises in repair
breach of the user covenant
failure to comply with an insurance obligation
149
What are once and for all breaches?
non-payment of rent
insolvency
an unlawful assignment or underletting
150
From what time can the tenant apply for relief from forfeiture?
As soon as the landlord serves a section 146 notice or starts the process of forfeiture
151
What are the tenant’s options if he is issued a section 146 notice in respect of a repair covenant?
The notice must give a reasonable time to remedy the breach.
152
When can a LL issue proceedings for damages in respect of a repairing obligation?
It must have served the section 146 notice and give the tenant 28 days to serve a counter-notice (if a protected lease applicable).
153
What needs to be included in a s.146 notice (a forfeiture notice)
a notice
specifying breach complained of, and
if the breach is capable of remedy, requiring the lessee to remedy the breach
in any case, requiring the lessee to make compensation in money for the breach
154
Does a s.146 notice have to be issued in respect of the tenant that has not paid rent in line with the tenancy agreement?
No
155
What is the measure of damages for damages claimed in respect of a repairing covenant breach?
The loss of value to the landlord’s reversion
156
What is required before the LL to sue for damages?
IF (the lease is covered by Leasehold Property (Repairs) Act1938 act if the following applies)
the lease is for a term of seven years or more; and
there are at least three years of the term left to run;
the landlord needs to serve a s.146 notice, the tenant has 28 days to serve a counter-notice. This means that the landlord must get leave from the court before proceeding.
The landlord must advise the tenant of these rights in the section 146 notice.
157
What is a Jervis v Harris clause?
A Jervis v Harris clause will give the landlord the right to:
enter the property
carry out any repairs
recover the cost of doing so from the tenant.
There is no need for the landlord to serve a section 146 notice (and therefore no opportunity for the tenant to serve a counter-notice).
The cost of carrying out the repairs is treated as a debt to the landlord, not damages, and therefore it can be recovered in full.
158
Choice of remedy – non-payment of rent
Debt action
· Advantages – reasonably simple, amount of debt is clear if rent has not been paid, can separate debt from ongoing landlord/tenant relationship
· Disadvantages – court action which is potentially costly and time consuming
· Use/limitations – any sum owed under the lease, whether principal rent or, eg, service charge
Commercial Rent Arrears Recovery (CRAR)
· Advantages – quick and efficient, no need to involve court
· Disadvantages – care must be taken to observe proper procedure
· Use/limitations – limited to principal rent, not other sums treated as rent
Forfeiture (specifically for non-payment of rent)
· Advantages – quick and efficient, no need to involve court. Threat of forfeiture might be sufficient.
· Disadvantages – risk that tenant will not comply and may lose tenant (whether this is a problem will depend on the market)
· Use/limitations – depending on the lease, may extend to other sums treated as rent
159
Choice of remedy – all other breaches
Damages
· Advantages – may be helpful in separating issue whilst preserving landlord/tenant relationship
· Disadvantages – may be protracted and costly, no guarantee of recovering costs
· Use/limitations – any breach that can be compensated in financial terms
Forfeiture
· Advantages – may be effective in persuading tenant to comply with obligations
· Disadvantages – section 146 notice required, risk of losing tenant
· Use/limitations – probably not appropriate for minor breaches
Specific performance
· Advantages – not limited to financial, eg, obliged tenant to comply with obligation
· Disadvantages – discretionary remedy, difficulty to persuade court to grant it
· Use/limitations – cannot be used for continuing obligations (eg, an obligation to keep shop premises open each day)
Injunction
· Advantages – not limited to financial, ie, may stop tenant from proposed breach
· Disadvantages – discretionary remedy – difficult to persuade court to grant it
· Use/limitations – might be used for an intended breach of user clause, or an intended assignment or underletting
Example – choice of remedy – other breaches
A tenant has applied for consent to assign to a tenant of poor covenant strength who is offering no guarantor or rent deposit. The landlord has reasonably withheld consent, but has found out that the tenant intends to proceed with the assignment in any case.
The landlord cannot seek damages nor start the process of forfeiture, as nothing has yet happened. If the landlord wants to act, then it may however apply for an injunction to prevent the tenant from proceeding with the unlawful assignment.
160
Remedies involving security arrangements
Guarantor
· Advantages – guarantor may have better means to comply with obligations
· Disadvantages – may end up in certain instances with guarantor taking overriding lease and becoming tenant (may be a disadvantage or advantage depending on circumstances)
· Use/limitations – there must be a guarantor!
Former tenant
· Advantages – former tenant may be in better position to comply with obligations
· Disadvantages – as with guarantor
· Use/limitations – there must be a former tenant with an old lease or a new lease and authorised guarantee agreement
Rent deposit deed
· Advantages – quick and efficient. Can help ride over tenant cash flow problems
· Disadvantages – limited to certain number of months’ rent. Relies on tenant topping up rent deposit once used
· Use/limitations – generally only covers rent
161
Intestacy: how long must the deceased be survived by the spouse in order that the spouse inherit?
28 days
only for spouses
162
Intestacy: What is the entitlement of the Spouse if the deceased is survived by Spouse and issue?
Personal chattels absolutely,
Statutory legacy of £322,000 free of tax + with interest from the date of death.
One half of the residue (if any) absolutely
163
Intestacy: what is the contingency limb of a statutory trust?
Issue must:
Survive the intestate
AND
Reach the age of 18 or marry
164
Intestacy: What is the order where intestate dies without a spouse or issue
1) Parents
2) Siblings of whole blood
3) Siblings of half blood
4) Grandparents
5) Uncles and Aunts of whole blood
6) Uncles and aunts of half blood
7) the crown
(where more than one person is in the relevant category, the succession estate is divided equally
165
Intestacy: What assets are excluded from being ‘chattels’?
Money or securities for money
Property used solely or mainly for business purposes
Property held at death purely as an investment
166
Intestacy: Does the spouse have a right to the family home?
If joint tenants then the property will pass to the spouse by survivorship anyway.
_ If tenants in common, the spouse can elect to appropriate the home in full or partial satisfaction of their statutory entitlements.
167
Intestacy: What are the rules on the spouses right of appropriation of the family home?
must make an election within 12 months of the date of grant (PR’s cannot sell during this period without spouse’s consent.
If their entitlement is less than the value of the house, they must make up the difference.
_ court consent is required when:
168
What are the legal requirement of a testator to make a valid will
Testator must be:
-Over 18, married minor or in military service
Have:
- Testamentary Capacity
- Knowledge and approval
- Formal requirements met
169
What is required for testamentary capacity?
what they’re doing
what they’re disposing of
Understand moral claims
Have no disorder of the mind that prevents their sense of right or prevents the excise of their natural faculties (testator may be insane and still have testamentary capacity provided the delusion is unconnected with and has no effect on the terms of the will)
170
When must a testator have testamentary capacity?
At the time the will is executed.
However will still be valid if:
- Had capacity at the time they gave instruction,
- The will was prepared in accordance to those instructions,
- At the time of the execution the testator understood that they were signing a will for which they had previously given instruction.
171
Can a person who lacks capacity still make a will?
Yes - the court can authorise the execution of a will if it is persuaded that:
there are grounds to diverge from the existing testamentary position and
it is in the best interests of the person to do so.
172
What happens if part of the will was subject to undue influence?
That part is invalid, the remainder may be given effect to provided that the omissions do not upset the whole tenor of what remains. But the court cannot add or substitute words.
173
What considerations are taken into account when considering undue influence?
no presumption of undue influence.
Burden of proof lies with the person asserting and the court requires evidence.
physical and mental strength of the testator
Fairness is not relevant
174
What are the legal requirements of a Will?
in writing and
signed by the testator, or by some other person in his presence and by his direction.
testator intended to give effect to the will; and
the signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time, and
each witness attests and signs the will; or acknowledges his signature, in the presence of the testator (but not necessarily in the presence of any other witness)
175
What if the will contains gifts to an attestor?
The gifts will be void under s.15.
BUT: if there are two other witnesses who are not beneficiaries to the Will or Codicil, the effect of s.15 can be disregarded.
176
What if the will contains gifts to a Spouse of an attestor?
If a spouse or beneficiary is an attestator they cannot inherit
177
What happens if the will gifts a specific item which the testator no longer owns at death?
The gift adeems (fails to take effect) and the beneficiary receives nothing. Risk is greatest where the will states “my” rather than “a”.
178
What happens if the will gifts a specific item and its not clear what that item is?
The gift may fail for uncertainty. Best to include an alternative.
179
Demonstrative Gifts - Will a pecuniary gift fail if it is stated to be made from a specific bank account that has since closed?
No, the gift will be paid as a general legacy
180
Under the general rule, when does the will speak from?
Unless a contrary intention is shown, the date of death in respect of identifying the subject matter of a gift.
Words like “my” demonstrate a contrary intention, so the gift will fail if the car owned at the date of the will is not owned at the date of death.
181
What effect does “my” have on a collection that is capable of growing when considering when the will speaks from?
The collection will those items included at the date of death notwithstanding the use of “my”.
182
When does the will speak from in terms of people?
The date of execution NOT the date of death.
183
What expenses do beneficiaries bear in relation to a gift unless specifically stated otherwise?
Cost of delivery.
Expenses of upkeep/preservation from date of death.
184
What happens if the beneficiary dies before the testator?
The gift to them will fail
185
What happens if the beneficiary is the testators own issue and dies before the testator?
Section 33 Wills Act states that the gift will be taken as given to the beneficiaries issue in equal shares unless the a contrary intention appears in the will.
Note: Only applies to testators issue.
186
What happens if a charitable gift is given with a general charitable purpose but the charity no longer exists at the date of death?
The cy-pres docterine applies and the gift can be given to a different charity with a similar purpose.
187
What categories of deceased can the IPFDA 1975 apply to?
Only those domiciled in England and Wales.
188
What categories of beneficiaries can the IPFDA 1975 apply to?
SPOUSE
- a spouse
- a former spouse who has not remarried
- a person who cohabited with the deceased as if they were a spouse
CHILDREN
- a child of the deceased
- Any person who is treated by the deceased as a child (step-children)
MISTRESSES
- Any person who was maintained (wholly or partly) by the deceased immediately before their death. (‘maintained’ must be substantial and means cash, not just emotional support)
189
When must an application under IPFDA 1975 be made?
no more than 6 months after the date the grant of representation was made.
190
When can the time limits for an application under IPFDA 1975 be extended?
The Court has discretion to extend but there must be special reasons. The court should consider:
the circumstances surrounding the delay
whether negotiations were commenced within the time limit,
if the estate had already been distributed before notification of the claim,
whether refusal would leave the applicant without recourse against anyone else.
applicant must have an arguable case fit to go to trial.
191
What are the grounds for a IPFDA 1975 application?
the deceased’s will did not make reasonable financial provision; and/or
that the distribution of the estate under intestacy rules fails to make reasonable financial provision
192
When is an order under IPFDA 1975 deemed to take effect?
from the date of the deceased’s death - therefore, read back for tax purposes.
193
What is the standard of financial provision for the surviving spouse?
Reasonable regardless of maintainance
194
What is the standard of financial provision for ANYONE OTHER than the surviving spouse?
“Such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive FOR HIS MAINTAINANCE.”
195
When can the surviving spouse standard in IPFDA 1975 be expanded?
Former spouse who has not remarried,
Divorce etc. occurred within 12 months of the death,
No order for financial provision have been made.
196
What are the additional guidelines the court must consider when considering the level of maintenance required for the spouse.
age
duration of marriage
contribution made
what the applicant could have expected in a divorce (but only a consideration - doesn’t mean they will get this).
197
What are the additional guidelines the court must consider when considering the level of maintenance required for cohabities?
the age and length of cohabitation
the contribution made by the cohabitant
198
What are the additional guidelines the court must consider when considering the level of maintenance required for children?
the manner in which the child was (or might expect to be) educated
If not a child but treated as one:
- how the deceased previously maintained the child,
- whether the deceased knew the applicant was not their child
- the liability of any other person to maintain the applicant
199
What are the additional guidelines the court must consider when considering the level of maintenance required for applicants who aren’t children or spouses?
the length of time and extent to which the deceased maintained the applicant
whether the deceased assumed responsibility for the maintenance
Maintainance required substantial contribution towards the reasonable needs.
200
What are the additional guidelines the court must consider when considering the level of maintenance required for applicants who aren’t children or spouses?
the length of time and extent to which the deceased maintained the applicant
whether the deceased assumed responsibility for the maintenance
Maintainance required substantial contribution towards the reasonable needs.
201
What are the conditions to make a variation?
made by original beneficiary in writing (no need for a deed)
contains an express statement that s142 should apply
within 2 years of death
not be made for consideration
202
What is the effect of a variation?
The gift from the original beneficiary is read back to the date of the deceased’s death and treated for IHT purposes as having been made by the deceased to the new beneficiary.
The beneficiary doesn’t make a PET
IHT is calculated as if the deceased left the property to the new beneficiary
same effect for CGT under s.62
203
When can PRs refuse to approve the variation?
If the writing back creates an IHT charge and the funds they hold are insufficient to cover the tax.
204
When can a variation be made?
Before or After an inheritance has been accepted.
May apply to whole or part
Original beneficiaries choice as to who received the variation
205
When can a disclaimer be made?
only before acceptance
only disclaim the whole gift
treats the original gift as failed
Original beneficiary cannot chose who the gift goes to
does not disclaim their rights under intestacy (which may now apply)
206
What is the process for calculating IHT on lifetime estate?
a) Calculate the cumulative total
b) Identify value transferred
c) Apply exemptions and reliefs
d) Apply basic NRB and calculate tax
… after death:
e) Apply taper relief
f) Give credit for tax paid in lifetime.
207
What are the exemptions and reliefs that may apply to a LCT?
Spouse
Charity
Family maintenance
Annual exemption
Small gifts allowance
Normal expenditure from income
Marriage exemption
Business property relief
Agricultural property relief
Taper relief
208
What is the Annual Exemption for LCT?
£3,000 per year. Can include £3,000 from the previous year if not used.
NOTE: this is the last relief that applies.
NOTE: only applies to lifetime transfers, not on death
209
Are PETs that have yet to failed taken into account when considering the cumulative total for LCTs?
No
210
Who is liable to pay IHT on LCT during the donor’s lifetime?
The donee (i.e. the trust out of the settled assets).
However, if the donees doesn’t pay, the donor becomes liable or he may elect to be liable (this requires grossing up as the funds to pay the IHT have also left his estate).
211
Who is liable to pay IHT on LCT and failed PETs after the donor’s death and what happens if they don’t pay?
the recipient (donee) is.
If the donee doesn’t pay by the deadline (12 months) the PRs become liable
212
What IHT exemptions only apply to LCTs (I.e. don’t apply on death)
annual exemption
Family Maintenance exemption
Small gifts exemption
Marriage exemption
Normal expenditure out of income
Taper relief
213
Who does the family maintenance exemption for IHT apply to?
Spouse (or former spouse if part of a divorce settlement). Must both be UK dom
minor child of either party to a marriage.
child over 18 in full time education or training
a dependant relative to make reasonable provision for their care.
214
What are the rules for the marriage exemption for IHT?
A gift to a party to marriage is exempt up to:
- £5,000 if made by a parent of one of the parties,
- £2,500 if made by one party of the marriage to the other
- £2,500 if made by a remoter ancestor (grandparent and up)
- £1,000 in any other case.
NOTE: the exemption is per DONOR and PER MARRIAGE (so you can’t gift £5k to one party to the marriage and £1k to the other and claim marriage exemption on both payments).
215
Can the marriage exemption and the annual exemption for IHT be used for the same gift?
Yes
216
What are the rules for the “normal expenditure out of income” exemption for IHT?
Exempt if made:
- from donor’s income
- as part of a normal/regular pattern of giving, and
- does not affect the donor’s standard of living.
THERE IS NO UPPER LIMIT TO THIS EXEMPTION.
217
What are the effects of using the Charity exemption for IHT?
Gifts are fully exempt without limit
If a person leaves 10% or more to a charity, a reduced rate of 36% will apply to the rest of the estate.
218
Which assets are not subject to IHT on LCTs
Discretionary pension lump sum payments
Life insurance policies written into trust
NOTE: premiums on Life insurance policies are often covered by the normal expenditure from income exemption.
219
should a testator be discouraged from making specific gifts of qualifying assets (BPR an APR) to exempt beneficiaries (charities and spouse)
Yes. As the relief follows the asset there’s no saving on gifting them to an already exempt entity if there are other non-exempt beneficiaries.
220
How best can qualifying assets be gifted to a spouse?
Possibly gifting them to a discretionary trust of which she is a beneficiary.
221
What happens if qualifying assets are not specifically given away but fall into the residuary estate?
APR/BPR do not attach to the assets but the benefit of the relief is apportioned between the taxable and non-taxable beneficiaries.
222
what’s the risk of gifting to a non-exempt person ‘free of tax’ when there is an exempt beneficiary?
The gift to the non-exempt person will be ‘grossed up’ meaning the gift is actually more than the headline rate and so is the IHT. The tax will be paid from the residuary estate which passed to the exempt person.
223
who can benefit from the RNRB?
Only direct lineal descendants
224
if a residence is gifted to a discretionary trust for the benefit of the children, will the RNRB apply
no
225
Can the spousal exemption apply to life interest trusts?
Yes, if the spouse is the life tenant. There is no benefit if the spouse is the remainder beneficiary.
226
How old must a testator be to make a valid Will?
18 - with exceptions for those in military service
227
What is required for a valid will?
(a) it is in writing, and signed by the testator, or by some other person in his presence and by his direction; and
(b) it appears that the testator intended by his signature to give effect to the will; and
(c) the signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time; and
(d) each witness either
(i) attests and signs the will; or
(ii) acknowledges his signature,
in the presence of the testator (but not necessarily in the presence of any other witness), but no form of attestation shall be necessary.
228
Where should the testator’s signature be on a will?
At the end of the will - signatures elsewhere can be problematic
229
What are the requirements of a witness to a testator’s signature?
Must be physically and mentally present but do not need to know a will is being signed or its terms
230
Both witnesses must sign the will in front of the testator, but is it necessary for each witness to also sign in front of each other?
No
231
When can gifts to the attesting witnesses be made?
If there are at least two other witnesses not caught by s 15, or if the will is subsequently confirmed by a properly executed codicil, the effect of s 15 can be disregarded;
232
Who has the burden of proof of showing undue influence?
The person making the allegation
233
What is required to successfully bring a document into a will?
a) The document must exist when the will is executed (or at the time a later codicil is made – because the codicil re-publishes the original will)
b) The will must refer to the document as being in existence at the time of execution
c) The document must be clearly identified in the will
234
What are the methods of amending a will?
an entirely new will
a codicil to an existing will (a formal testamentary document amending a will)
make manuscript amendments to their original will.
235
If the testator has obliterated the wording (so it cannot be read), is that part of the will still valid?
The obliteration is treated as having been made by the testator with an intention to revoke and the alteration will be effective
236
What happens if wording is obliterated and replaced by new wording?
The original wording is taken unless it can be shown that the amendment was valid. Extrinsic evidence is permitted to check what the original wording was.
237
What effect does a Codicil have on the date of a Will?
Codicil this acts to ‘republish’ the will (and any codicils) to which it expressly refers. The will is given effect to as if it had been executed on the date on which the codicil was executed.
238
If a codicil revokes all/part of a will, and the codicil itself is then subsequently revoked, would this automatically re-instate the terms of the will that had been revoked by the codicil?
No
239
How can a Will be revoked?
‘burning, tearing or otherwise destroying’ it
provided there is also an intention to revoke the will.
NOTE: just writing - “revoked” will not be enough, it needs to be physically destroyed.thanks
240
What happens if If a testator is known to have made a will or codicil which they kept in their possession, but after the testator’s death the original document is missing or destoryed?
presumed to have been on purpose unless there is evidence to suggest otherwise (Patten v Poulton)
241
How would a presumption of destruction be overcome?
They would have to show:
-a valid will existed when the deceased died but was lost/damaged after death
-the deceased did not intend to revoke their will
-the deceased did not carry out or give instruction for the act of destruction.
242
What are mutual Wills?
Where one testator agrees with another testator to each make a will on terms agreed between them. Both testators also agree that neither of them will amend their will without the consent of the other. If a testator attempts to revoke their will, contrary to the previous agreement, equity may impose a constructive trust over that testator’s property on the terms previously agreed and limit the effect of any new will.
243
What are Mirror Wills?
Couples’ Will’s are the same
244
Is there a way to prevent a Will from being revoked in the face of a proposed Marriage?
Yes, it is possible to avoid the effect of s 18/18B by drafting the will in contemplation of marriage/civil partnership. But it must:
- name the future Spouse and
- ceremony and
- expressly state that the will is not to be revoked.
245
What happened if a beneficiary cannot be found?
S.27 only helps for unknown beneficiaries/creditors.
Benjamin orders are expensive,
Can pay money into court,
Therefore, insurance should be sought if a beneficiary is known about.
246
q
Presumption of Death is how long?
