PROPERTY Flashcards
(103 cards)
1
Q
FREEHOLD COMMERCIAL PROPERTY
Entry on the Proprietorship Register:
‘The Transfer to the proprietor contains a covenant to observe and perform the covenants referred to in the Charges Register and of indemnity in respect thereof.’
Best advice the buyer’s solicitor should now give to the buyer?
A
SCPC => sale of commercial property - means that if the seller gave such an indemnity covenant, the buyer will have to give an indemnity covenant when they purchase the property, to continue the chain of indemnity.
However, buyer’s indemnity covenant will be given in the transfer at completion and not in the contract.
1) ‘observe and perform’ = positive covenant
2) charge register = burdened land
3) SCPC
4) current stage = title investigation
5) entry indicates = indemnity covenant
2
Q
covenant to observe and perform
A
POSITIVE COVENANT
3
Q
Sale of commercial property under SCPC, indemnity covenant
Best advice:
A
The buyer wil need to give the seller an indemnity covenant at completion if the Standard Commercial Property Conditions are incorporated into the contract.
4
Q
Latest stage to withdraw from transaction
A
pre-exchange
5
Q
Client intent letter covers
A
Procedure to refuse legal services or its bill, legal ombudsman, costs, timeline, contact details of the team who will work with them
6
Q
who deduces and who investigates the title
A
- Seller’s solicitor will deduce the title.
- Buyer’s solicitor will investigate the title.
7
Q
Good root of title
(UNREGISTERED PROPERTIES)
A
- dated more than 15 years ago
- deals with both legal and beneficial title
- adequately describes the extent of the property/title
- does not cast doubt on seller’s title
Conveyance of property will be best root of title
8
Q
Restrictive covenant entries
A
- if burden: charges register
- if benefit: properietorship register
9
Q
When there is a right of way granted on the property; what must be considered?
A
MARA
1- maintenance
(contribution and costs of maintenance)
2- adoption
(is it public road/highway, adopted directly by the local authority - if so don’t worry abt the registration)
3- registration
(is it properly registered, check SL’s charges register)
4- adequacy
(adequate for use)
10
Q
Lender’s entries: mortgaged land
A
1- restriction in the Proprietorship register (against dealings)
2- charge in the Charges register
11
Q
Trust of Land: beneficiaries’ entiries
A
Restriction in the Proprietorship register against dealings
- TiC
- overreaching must occur
12
Q
Epitome of title contains a conveyance by deed dated Jan 1976 and contains: restrictive covenant (restrictive covenant of ‘use’).
Is the buyer bound?
A
Buyer will be bound IF the restrictive covenant is registered as D(ii) land charge against the name of the original covenantor.
- restrive convenant enforcement
- Epitome = unregistred title
- Good title
(bcs conveyance deed dated more than 15 years ago, deals with B&E title, does not cast doubt in the seller’s title)
13
Q
Enforcement of restrictive covenant and easement for uncertain term over UNREGISTERED land
A
Created post 1926:
MUST be protected:
- by a ‘Land Charge’ at the charges registry against the name of the grantor OR
- (for positive covenant) there must be a ‘chain’ of indemnity covenant.
Entries
Restrictive covenant - D(ii)
Easement for uncertain term - D(iii)
14
Q
Enforcement of ‘estate contract’ over UNREGISTERED land
A
MUST be protected by a ‘Land Charge’ at the charges registry ‘against’ the name of the grantor.
Land charge - C(iv)
15
Q
Puisne Mortgage
A
Second legal mortgage over unregistered land.
Must be entered as charge: C(i) land charge.
16
Q
Change of use:
A
Must obtain PLANNING PERMISSION
17
Q
Best advice for a buyer who will use the property in breach of use covenant
(restrictive covenant):
A
Obtain restrictive covenant insurance policy (at the buyer’s cost)
18
Q
Restrictive Covenant breaches - remedies to be sought by the buyer
A
1- future breach by the buyer
= insurance to cover future breaches of the buyer (at buyer’s costs)
[this will not be available if PWB is contacted/alerted of the breach]
[upper tribunal is not available for positive covenants - & last resort for restrictive]
2- past breaches by the seller
= ask for indemnity and insurance at seller’s costs (solicitor must request this to protect client’s interest)
3- future breaches by the seller
= restrictive covenant indemnity policy
19
Q
Change of use within the same class
A
does NOT require planning permission.
(but building regulations could still be needed)
(eg. class E for commercial, business and services. Shop and resto are both in class E.)
(still needs building regulations approval for carry out significant internal/external building works)
19
Q
When is a planning permission required?
A
- change of use class
- external building works (which requires also building regulation approval)
19
Q
When is a planning permission NOT required?
A
1- building works affecting only the interior of the building,
2- building works that do not materially affect the external appearance of the building; or
3- changes of use that are in the same class.
20
Q
Unregistered freehold property purchase - property benefits from a right of way granted by deed over neighbouring land.
What search should be carried out by buyer’s solicitor?
A
SIM search
Right of way is benefitted by the unregistered property.
SIM search informs you whether or not neighbouring land is registered.
- If that land is unregistered, easement by deed is validly created and legal interest binds the world.
- If that land is registered, it must be entered as a charge in the land registry to be enforceable.
21
Q
Search to see whether a public footpath crosses a registered freehold:
A
Standard enquiries of the local authority for public right of way
CON29 = local authority standard enquiries will tell whether any public right of way abuts or crosses the property
22
Q
Commercial property by a river in Cheshire including surrounding open agricultural land.
Property is in an area where historic pumping of brine took place.
Solicitor already received:
- CPSE,
- local authority search
- highways search,
- draining search,
- chancel repair,
- index map search,
What other searches should the solicitor carry out?
A
- Desktop environmental search (in every conveyance);
- waterways search (bcs riverside);
- Cheshire salt search (Cheshire and brine)
- commons registration search (necessary for open land, agricultural open, and town/village green)
23
A farmer built a new cattle shed over ten years ago.
The farmer did not seek planning permission (as would be required), but instead 'deliberately concealed' it with bales of hay until last week.
What action might the local authority take against the farmer?
The local authority CAN apply for a planning enforcement order.
(does not have to)
Time limit does not start to run until the deliberate concealment is removed.
24
If the buyer intends to undertake a significant extension to the property following completion.
and
The seller told the buyer during a viewing of the property that an application for planning permission to build a similar extension was refused by the local authority two years ago.
Which search / enquiry would you undertake to confirm the position
If buyer wants to make significant building works and similar application for building works was refused. Formal confirmation is needed from the local authority.
=> You must conduct CON29 (local authority search).
CON29 shows: all PP applications (granted, issued, refused and pending)
(bcs LLC1 search only shows planning permissions that have been granted with conditions)
25
The buyer of a commercial property instructs the solicitor that the seller and the buyer have agreed between them that the 'seller will carry out some repairs to the roof before the completion' date.
The buyer's solicitor should draft a 'special condition in the contract' specifying that the seller must carry out these repairs before the completion date to the 'reasonable satisfaction' of the buyer.
- special conditions
- in the contract
- drafted by buyer's solicitor
- before completion
- to reasonable satisfaction of the buyer
26
Special conditions in contract
Special conditions are required to deal with specific matters agreed between the parties.
Caveat emptor would mean that in the absence of a special condition, the responsibility for the repairs would fall to the buyer.
When contracts are exchanged, the burden of risk passes to the buyer. So, it is important to draft it in the contract.
ALSO
Estate contract: requires contract signed by both parties and incorporates all agreed terms.
(eg. If the promise to repair not incorporated in the contract, promise would not be binding)
27
A VAT-registered business is selling a freehold commercial building to a bank.
The seller has exercised the option to tax the building.
The bank makes only exempt supplies for VAT purposes in the course of its business.
Position as to VAT chargeable in respect of the sale?
The sale wil be subject to VAT at 20% which wil be irrecoverable by the bank.
---
The option to tax a commercial building made by a VAT registered business seller means VAT is chargeable on the sale at 20%.
The bank only makes exempt supplies so the bank cannot recover the VAT it paid (input VAT) by offsetting it against output VAT it charges on goods and services it supplies since the bank cannot charge output VAT.
Banks and financial institutions are exempt supplies for VAT purposes (VAT is not chargeable on the goods and services it supplies).
28
If there is a restriction as to equitable interest in the Proprietorship register (trust of land), what should the buyer (B's solicitor) do?
THEY MUST OVERREACH
(restriction triggers overreaching bcs it indicates tenancy in common)
They need to ensure another trustee is appointed to pay the purchase money to, so the restriction will not apply.
29
Between exchange and completion, the contract incorporates SCPC. The storage area to the rear of the property was destroyed by fire last night.
What is the correct advice to the buyer?
Under SCPC, the risk of the property passes to the buyer from the date of the contract, which is exchange.
Buyer should have put in place insurance from the exchange.
If there is no insurance, the seller is no longer responsible for the property.
The cost of repair is at buyer's cost.
30
Post-completion steps to protect lender's charge, borrower is a company:
(bank-mortgage)
Register the charge at Companies House within 21 days of the creation of the charge, and
at the Land Registry within 30 working days of the OS1 search
31
Registered land purchase - priority research forms
OS1 - whole of land/property
OS2 - part of land
Gives 30 working days priority period, the buyer must submit the application to register the transfer.
Pre-completion search to register within 30 working days
32
Unregistered land purchase - priority research
Land Charges Search of the Land Charges Registry.
Gives priority period of 15 working days,
it is only necessary to complete the purchase.
(deed only - not registration application).
33
Assignment - priority search
(pre-completion)
OS1 - assignment
(whole/part of property)
34
Assignment Post-completion steps
Assignee's solicitor:
- arrange to submit and pay appropriate SDLT (England) and LTT (Wales).
- register assignment.
- send formal notice of assignment to L’s S.
35
Subletting - priority search
(pre-completion)
OS1 - underletting of whole
OS2 - underletting of part
36
Following an assignment or underletting, tenant will be required to give the Landlord (____)
FORMAL NOTICE within a month of completion of transaction.
37
PURCHASE - When should SDLT and LTT be paid? How much to pay?
SDLT (England) - within 14 days of completion
- residential
> up to £250k no SDLT needs to be paid
> First time buyers discount (relief) if the purchase price imax £625k; no SDLT for the first £425k of the purchase price
> second properties, additional 3%
- non-residential
> up to first £150k, no STDL (second rent after consuming 150k)
LTT (Wales) - within 21 days period starting the day after the creation of the charge
> residential properties: no relief for first time buyers
> Up to £225k no LTT is payable
38
When to register charge for a mortgage given to a company and which is on fixed charge over the property
Register the charge at Companies House within 21 days of the creation of the charge, and
at the Land Registry within 30 working days of the OS1 search.
39
For purchase of an 'unregistered' freehold property by a company from a woman, funded by a loan by the bank.
Between exchange and completion.
What searches the buyer's solicitor must carry out?
A Central Land Charges Search on Form K15 against the woman's name for the period of her ownership.
40
A solicitor must not take an undertaking to redeem the existing mortgage in the Law Society's recommended form if (____) until (_____).
must not take undertaking
IF in NEGATIVE EQUITY (ie. sale proceeds insufficient to repay the balance outstanding on the loan)
UNTIL they are HOLDING the shortfall in their firm's CLIENT account in CLEARED FUNDS.
rule = A solicitor can act on the sale of a property in negative equity, but care must be taken not to provide an undertaking (nor to agree to provide an undertaking) unless the shortfall is held in cleared funds in client account.
41
For purchase of an 'registered' commercial freehold property by a company from a woman, funded by a loan by the bank.
Between exchange and completion.
What searches the buyer's solicitor must carry out?
Undertake a Land Registry priority search using Form OS1
42
Registration at the Land Registry for registered property in England must take place within 30 working days of which date?
The date of the result of the OS1, to avoid subsequent entries being made on the title which bind the purchaser.
43
Land Registry application forms
Posst-completion stage
Form AP1 - registered title
Form FR1 - unregisted
44
SURVEY TYPES
* basic valuation = essential minimum if mortgage is taken for lenders
* homebuyer report = much more detailed, suitable for property younger than 150 y
* full-restructural survey = if property listed, extensional development/works/building is required
45
PROPERTY register sets out:
o freehold or leasehold
o property address & description
o title plan
o exclusions (eg. minerals underneath, historic etc)°
o rights benefitting the property extracted or refers to a bundle of rights. If there is a right of way: consider MARA
o rights: right of way, rights to run services (service media), right of way, excluded rights (it. not included right such as minerals)
The Property Register describes the property using the postal address and also by referring to the Title Plan.
46
solutions for an inadequate right of way
Request registration
or
If the servient land is unregistered you would put a CAUTION against first registration over the land so that you can ensure the burden of the right of way is registered in the charges register once the servient land is registered.
To be enforceable, the burden must also be registered against the land over which the right of way passes (the servient land).
47
PROPRIETORSHIP register sets out:
- class of title = because LR guarantees its titles with compensation
- registered proprietor (ie. person(s) named on the proprietorship register) MAX 4 legal title owners can exist.
[If they gave an indemnity covenant to the transferor on acquiring the property it also appears.]
- Rights benefitting the property: covenants, easements
- restrictions: any restrictions on the right to sell or deal with the property unless the terms of the restriction are complied with
o limits L’s authority to deal with the property.
o equitable interest trust of land’s protection (must overreach)
o co-ownership: beneficial tenants in common or joint tenants (although we have to see the death certificate if one of them died).
- restrictions can also mortgages: prevents property from being sold without lender’s consent
48
CLASS OF TITLE
1. title absolute: best one, full ownership and proved. No issues with the title.
2. qualified title: specific defect in title
3. possessory title: no title no deeds but physical possession only
4. good leasehold title: leaseholder cannot provide evidence of the landlord’s title to land but can be upgraded easily once Landlord’s title is registered.
+ advice the client to obtain title indemnity insurance to cover risks.
49
If there is a restriction on the proprietorship register
= limits L's authority to deal with.
- co-ownership: beneficial tenants in common or joint tenants (although we have to see the death certificate if one of them died).
* if all co-owners living/existence = ALL must sign the contract and execute transfer deed
* if surviving beneficial joint tenant sells the property = signs the contract and execute the deed AND they must provide certified copy of the death certificate
* if surviving beneficial tenant in common = need to appoint a second trustee to sign the contract and execute the deed (overreaching); they must also provide death certificate.
50
CHARGES register sets out:
Interests BURDENING the property:
- MORTGAGES--- 2 entries (1) date of mortgage (2) name and address of the lender
- COVENANTS (positive or negative) burdening the property -meaning that this is a servient land.
Restrictive covenants are binding on the property.
But positive covenants are not necessarily binding so consider chain of indemnity. Positives are only binding on the original covenantor unless there is a chain of indemnity.
- EASEMENTS:
- LEASES: Leases over 7 years
- all estate contracts, restrictive covenants, easement for uncertain term [equitable] are protected by entry of a notice.
51
when does the buuyer give indemnity covenant?
buyer will give indemnity covenant in Transfer deed at COMPLETION!
52
Basic investigation - unregistered title
- Index Map Search (SIM): reveals whether the area searched eg. neighbouring land is registered or unregistered land, it does not detail any specific rights of way and private rights.
- Root of title – if falls after relevant date for compulsory first reg°, must ensure that seller registers prior to purchase.
- chain of title – check each deed validly executed and stamped
validly executed: comply with LPMPA 1989 (deeds no longer have to be sealed)
[If deed before 1989, then it must be sealed and complies with other requirements for LPMPA 1989.]
- Stamping of conveyances
shows that the correct amount of ad valorem (ie. proportionate to value) stamp duty has been paid (or if it was a gift, a certificate of value confirming it). Stamping replaced by SDLT in 2003.
- extent of land conveyed: usually a plan but can be proved otherwise in residential properties. [residential - only postal address]
- check conveyances for stamp duty
all conveyances must have:
> certificate of value or be properly stamped with the ad valorem stamp duty; AND
> have a particulars delivered stamp
If not properly stamped or executed, the buyer’s S must insist that the seller rectifies.
53
LAND CHARGES
Puisne mortgage c(i)
Estate contract c(iv)
Restrictive covenant d(ii)
Equitable easement d(iii)
Home right F
MUST carry land charge searches: search is carried by years of ownership and full name. Against each owner of the land in the chain of title.
Period search begins with 1926.
Names must not spelt differently or middle names omitted: TO PROVE TITLE.
54
Binding legal and equitable easements on an unregistered land
Legal easements are not registrable as land charge, instead they should be apparent from epitome of title and if acquired by prescription then by inspection.
Equitable easements are registrable as d(ii) charges and not necessarily apparent from epitome or inspection.
55
report on title - stage?
Pre-contract searches & enquiries:
client must be made aware of all info material to the matter which they have knowledge. also requires to give the info to the client in a language they would understand. Client shouldn’t exchange contracts until they have read the report on title and fully understand what they are buying.
56
Report on title - STANDARD SEARCHES
[undertaken in every purchase]
1. local search – enquiries of the local authority (CON29) and search of local land charges (LLC1)
2. drainage and water enquiries
3. desktop environmental search
4. chancel repair liability
and depending on title & seller
5. land charges search (unregistered land)
6. Index map search (unregistered and registered land subject to mineral rights)
7. companies search
57
Report on title - OPTIONAL SEARCHES
1. CON290
(including commons registration search)
2. Highways search
3. coal mining search
4. Cheshire salt
(if area could be subject to brine subsidence - parts of Cheshire)
5. tin, clay and limestone (specific to these mines)
6. Phase I/Phase II survey
(- phase I survey = more detailed than the standard desktop and includes site inspection
- phase II – taken where Iand indicates risk of contamination, soil/water samples tested)
7. flood search
(if property known to have flooded in the past more detailed than desktop)
8. utility providers
(new development or site for n'd' connection to gas water)
9. railways (overground, underground, crossrail or HS2; near or in proximity)
10. Waterways
(property has a waterway [river or canal] passing through or next to it, shows liability of maintenance )
58
CON29 shows
[Standard Enquiries of the Local authority]
- planning permissions, refusals, completion notices
- building regulations
- roads and public rights of way (eg PUBLIC footpaths)
- environmental notices (inc. contaminated land notices)
- will show whether roads are adopted (check if land immediately abuts the highway)
59
CON290
[Optional local authority enquiries in specific circumstances]
- common land and town or village green (designated for communal use)
- road proposals from private bodies
- areas of outstanding natural beauty and national parks
- pipelines
- noise abatement zones
- Commons registration search
60
LLC1
[Local Land Charges Search]
Register of local land charges keep records which may require payment of money or may affect the use of property.
If info is already registered searches will be done on Land Registry.
- planning permissions ALREADY granted
- planning enforcement or stop notices
- art 4 directions (restricting GPDO)
- financial charges (eg. road-making charges)
- conservation areas
- listed building status
61
CON29DW
-and-
Commercial DW
CON29DW - residential
Commercial DW
drainage and water search submitted to relevant water company
62
CON29M
COAL MINING – check when property falls within an area that could be subject to coal mining, listed in a gazetteer. Identifies whether there is a risk of subsidence and if any compensation has been paid.
63
SIM
Index map search
SIM search informs whether the neighbouring/adjoining land is registered.
If it is unregistered, all legal easements will be binding, if neighbour is registered interest must be registered.
64
Form K15
Central Land Charge
Unregistered property – CLC search is carried out against the seller if the transaction is not at full market value.
65
Form K16 Bankruptcy search
Only carried out against the seller if the transaction is not at full market value – also carried out at the Central Land Charges Registry. Carried out against a buyer taking a mortgage.
66
The buyer will need to be certain it acquires the land free of any mortgage a seller has. What should buyer's solicitor do to ensure this?
- Obtaining an appropriate undertaking from the seller’s solicitor to redeem the mortgage from the proceeds of sale on completion
- Ensuring that it is a term of the contract that the mortgage will be redeemed on completion
- Checking in enquiries that the seller will have sufficient funds to clear the mortgage
67
Planning permission
needed whenever there is development on land unless it falls with certain exceptions:
- building work only affect the interior of building; or
- building works do not materially affect the external appearance of the building; or
- changes of use that are within the same use class.
68
Article 4 direction
GPDO 2015 operates like a general planning permission.
In Wales, equivalent is TCPGDO.
- GPDO 2015 can be excluded or amended in a locality by an Article 4 direction
=> enquiry should be made of the local authority to check whether it is excluded, part of local search (LLC1 search).
If unsure whether development falls within the GPDO 2015 – apply for a CERTIFICATE OF LAWFULNESS which confirms whether the work constitutes ‘development’ and if it falls within GPDO.
69
Listed Buildings
are of special architectural or historic interest. To demolish, alter or extend a listed building, a 'listed building CONSENT' is required.
- Grade I – exceptional interest (eg Tower bridge)
- Grade II – particularly important, more than special interest (eg Battersea Powers Station)
70
Conservation areas
Specific historic or architectural interest, the character or appearance of which is desirable to preserve or enhance. Local authority is under a duty to designate CA within its locality.
- restricts GPDO, external appearance changes requires planning permission
- to demolish unlisted building in a CA, PP is needed
- In Wales, conservation area consent is required to demolish unlisted building.
- consent also needed to cut trees
71
BUILDING REGULATIONS
When to apply?
- erection or extension of buildings
- installation or extension of service or fitting controlled under BR
- Work required where there is a material change of use of the whole building
- significant internal building works
BR regulate issues affecting health & safety (such as fire escapes, stairways, water supply, structural integrity of building)
If the building works covered by the BR, you must first obtain building regulations CONSENT.
– when significant internal building works, BR is always required!
72
Enforcement of Planning Permissions
BREACH
- Development took place without planning permission
- a condition or limitation of planning permission is breached
AGAINST
the current land owner [not the person causing the breach].
BY
Local Authority
1- enforcement notice: gives 28 days notice to remedy, if not LA carries out works & recovers expenses.
2- stop notice: Can only be served after enforcement notice been served.
[Cannot prohibit use as a dwelling house or any activity that has been carried out more than 4 years.]
3- breach of condition notice
4- injunction: application to court
73
Enforcement of Planning Permissions TIME LIMITS
Works completed on or after 25 April 2024:
Time limit is 10 years and applies to all building works and changes of use.
Works completed before 25 April 2024:
LA must act within:
4 years where:
* building works (starts when substantially completed)
* change of use to single dwelling house (starts with date of the use begun)
10 years where:
* other changes of use
* breach of planning permission conditions/limitations
NO TIME LIMIT FOR DELIBERATE CONCEALMENT - apply to MC
74
Enforcement of Building Regulations - options
* Prosecution: no time limit in England.
In Wales old time limits apply:
- within 6 months after discovering the breach for the person responsible in the MC (unlimited fines)
- up to 2 years after completion of the building works
remedy: injunction
75
If building regulations breach is discovered, the buyer’s solicitor needs to advise the options:
- withdraw from transaction (drastic – not necessary unless the issue is central to purchase)
- invite seller to regularise matters before completion [may need to be a term in the contract]
- obtain indemnity insurance (best option, if fined you are refunded; it’s from seller’s pocket) – only covers financial loss for enforcement
- the seller may obtain retrospective planning permission or a regularisation certificate for works.
76
Pre-contract enquiries - seller's duty
(obliged) to give correct information.
The seller cannot deliberately mislead the buyer by concealing physical defects or answering questions dishonestly.
If unsure/unknown must answer ‘not so far as the seller is aware’.
If seller did not conduct reasonable investigations, it must state so.
77
Pre-contract enquiries:
ADDITIONAL ENQUIRIES LIMITATIONS
In commercial transaction, any question can be raised,
In residential conveyancing additional questions are used only to clarify issues related to docs provided/title investigation/Planned use/nature location of the property/ existing and planned developments. [NEED TO KNOW]
78
Pre-contract enquiries: CPSE
Commercial Property Standard Enquiries (CPSE)
CPSE1 = Applies to all commercial property transaction
CPSE2 = where property is subject to commercial tenancies
CPSE3 = grant of a new lease
CPSE 4 = Specific to assignment of leasehold.
79
Pre-contract enquiries: RESIDENTIAL - Law Society Conveyancing Protocol
TA6 = Property Information Form – Always
TA10 = Fittings and Contents Form – Always
TA7 = Leasehold Information Form - long leases
TA8 = property has been newly built
80
Types of contract: STANDARD CONDITIONS
Residential transactions always adopt the standard form, it refers to Standard Conditions of Sale. [SCS]
> obligatory if Law Society Conveyancing Protocol is adopted.
> special conditions can only be added if they are 'absolutely necessary'.
Standard for commercial transactions incorporates Standard Commercial Property Conditions. [SCPC]
81
STANDARD CONDITIONS
1- specified incumbrances
- SCS: seller needs to disclose any incumbrances registered at the LR, the LC and at Companies House.
- SCPC: buyer is deemed to buy the property subject to any incumbrances which would be revealed/discovered by a prudent buyer’s searches and enquiries.
2- title guarantee
[Full title guarantee OR Limited title guarantee]
3- completion date (and time)
4- contract rate (sets out the interest that is payable by the defaulting party for the delayed completion)
5- deposit (Default for both standards: 10% but can be varied by special condition)
6- VAT
7- Risk and Insurance
[Once contracts are exchanged, risk passes to the buyer]
8- Indemnity covenant
82
completion date (and time)
[STANDARD CONDITIONS]
Default position in both SCS & SCPC is ‘the date that is 20 WORKING DAYS after the date of the contract’.
Default time of completion is 2pm. Monies must be received by the seller’s solicitor before 2pm.
GR = time is not of the essence until a notice to complete is served.
==> if a party fails to complete by the specified completion day and time, the non-defaulting party can claim damages for the breach but cannot yet walk away from the transaction.
83
If the parties agree to a lower deposit, but the buyer does not complete on time and seller serves a notice to complete, then (____)
the buyer must immediately pay the balance of the 10% deposit – unless amended by special condition.
84
Conveyancing - VAT
residential
* mostly no VAT payment to be made
* under SCS, the purchase price is inclusive of VAT.
commercial
* default position under SCPC: property is a standard rated supply ie. VAT payable at the normal rate of 20% plus purchase price.
* if the property is over 3 years old and the seller did not make an option to tax, no VAT to pay!
* parties should amend via special conditions
85
VAT and the property contract
standard rated (20%): older commercial properties (+3 y.o.) are standard rated if the seller opted to tax.
- exempt supplies: [cannot recover input tax]
o residential property is exempt [unless newly developed property] AND
o commercial property over three years old, and where the owner has NOT opted to tax.
- zero-rated supplies:
o newly constructed residential property is zero-rated.
o Commercial - Output is taxable. The buyer doesn’t pay VAT but the seller can recover inputtax from HMRC.
86
FORMULA A, B, C
Exchange
- Formula B: most common, exchange by phone conversation. Can be with 'release of contracts' method to tie related transaction.
- Formula A is used where one solicitor is holding both signed contracts
- Formula C for a chain of transactions
After exchange, each party must prepare a memorandum.
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Form of the transfer - conveyancing
Registered land:
TR1 - of the whole
TP1 - of part of registered title
TR5 - portfolio of registered title (may also include unregistered titles within)
Date of TR 1 is handwritten at completion!
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Form of the transfer - conveyancing
Unregistered land:
TR1 form
Date of TR 1 is handwritten at completion!
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TR 1
Form of the transfer, DEED.
Date of TR 1 is handwritten at completion.
Transferor must always execute the deed.
If the deed is executed by an individual, it must be signed in presence of a witness who also signs. (for execution, signature is attested)
Deed is considered delivered when it’s dated – ie. comes into effect-.
If executed by a company: either
- seal of company attached accordingly with AoA
- by two directors or one director and company secretary
- by 1 director and witnessed by independent witness
- by a senior employee authorised under PoA
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Pre-completion searches REGISTERED title - priority search
OS1 - Whole
OS2 - Part
It confers a priority period of 30 working days in favour of the buyer and transfer takes priority over other applications even if lodged before.
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Pre-completion searches UNREGISTERED title - priority search
out Land Charges search of the Land Charges Registry and identify any incumbrances or adverse matters.
This confers a priority period of 15 working days BUT unlike OS1, it is only necessary to complete the purchase (not registration application) within the priority period.
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Solvency searches pre-completion: needed against the buyer if relies on mortgage
Form K15 - full central land charges search against the current seller for unregistered property against the SELLER.
Form K16 - Bankruptcy search of unregistered land – only relevant when the transaction is not at full market value in the Central Land Charges Registry. Against the SELLER.
If 15 working days expired after conducting K15 until completion, search needs to be renewed before completion!
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Requisitions on Title
[To refer the Qs that buyer’s solicitor needs answering before completion]
Residential => form of Law Society TA13, Completion info and undertakings
Commercial => either firm’s precedent form, or CPSE form SCR (solicitor completion requirements)
THEN seller's solicitor gives undertaking to redeem mortgages against the seller’s title, this is necessary for the buyer’s to be able to register the transfer.
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Completion stage
- balance of the purchase price paid to the seller
- legal title in the property passes to the buyer [unregistered][registered pass with registration]
- completion by Post accordingly to Law Society Code for Completion by Post
[as soon as possible, and no later than the end of the working day after completion, the seller’s solicitor undertakes to send the transfer deed the buyer’s solicitor]
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What are the remedies for delay or failure to complete under the Standard Conditions of Sale (SCS) in residential property conveyancing?
1. Interest: The defaulting party must pay interest for each day's delay at the contract rate.
2. Notice to Complete:
- Served by the non-defaulting party, making time of the essence.
- Requires completion within 10 business days (excluding the day the notice is served).
- Both parties are bound by the notice and cannot withdraw it unless agreed.
3. If failure within 10 days: REMEDIES
Seller: Forfeit the deposit, claim interest, resell, and seek contractual damages.
Buyer: Demand deposit return with interest, claim damages, or seek specific performance.
4. If completion never occurs: Only damages are available as a remedy.
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What happens if a commercial freehold sale is delayed or fails the completion under the SCPC?
Notice to Complete:
- The seller's solicitor may issue the notice any time after 2pm on the completion date.
- The notice allows the defaulting party 10 working days to complete the transaction. [becomes of essence]
Timing:
- The 10 working days begin the day after the notice is deemed served.
- Compensation is payable for every day of delay, starting from the day after the original completion date but excluding the actual day of completion if payment is made on time.
Remedies:
- If the defaulting party fails to complete within the 10 working days, they are considered in breach and compensation continues to accrue.
- The seller must choose between:
> Claiming compensation under SCPC, or
> Rescinding the contract, but not both.
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When a company takes mortgage for the purchase of a registered property, the registries are:
1- must register charge at Companies House within 21 days of the creation of the charge (starts to run the day after)
2- must register the charge at Land Registry within 30 working days of the OS1 research
GR = The timescale for Companies House should be calendar days, and for the Land Registry working days.
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POST-COMPLETION STEPS
1. Payment of SDLT (England) or LTT (Wales):
- SDLT must be submitted and tax paid within 14 days of completion to avoid penalties. Submit the return to HMRC.
- LTT must be submitted and paid within 30 days of completion. to avoid penalties and submit LTT to WRA.
On submitting the SDLT, buyer’s solicitor receives SDLT5 certificate, if LTT the receives WRA certificate.
2. Register a charge given by a company
- register at Companies House within a 21 days period, starting the day after the creation of the charge. If not, charge is void.
- if dateline missed, apply for a court order to allow filing out of time
3. Land registry application
- if registered title Land Registry Form AP1 within 30 working days of the OS1 research
- if unregistered title: Form FR 1
- overriding interest: If there is none, tick the box in AP1 or FR1 HOWEVER, if there is complete a Form D1
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What are the conditions for Private Residence Relief to apply for CGT exemption on a home sale?
1. The property has been the person’s main home for the entire period they lived there.
2. It has not been let out (except to a lodger).
3. It has not been used for business purposes (temporary use as a home office is allowed).
4. The property was not bought to make a gain.
5. The grounds, including all buildings, are less than 5000 m².
Note: Civil partners or spouses can treat only one property as their main home for relief purposes.
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Calculating the expiry of a lease term:
If the term of the lease is ‘FROM AND INCLUDING’ a certain day
the term expires on the day before that day of the year in the relevant year
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Calculating the expiry of a lease term:
If the term of the lease is 'FROM' a certain day
the term starts the day after that day. And expires on that day of the year.
