Real Estate

Question 1

what does the solicitor check for in the commercial lease?

9 things

Answer 1

duration
rent review
service charge 
alienation
payment of rent
use of premises 
insurance
alterations
irritancy

Question 2

What are the lease management documents?

Answer 2

deposit agreement
guarantee
licence for works

Question 3

explain duration under the commercial lease

Answer 3

sets our how long the lease is for
landlord prefers longer lease as looking for assured return on investment
tenants would possibly want it to be shorter (plans could change)

Question 4

explain rent review under the commercial lease

Answer 4

sets out when each rent review will take place, the method of review
landlord prefers this to be as frequent as possible in order to increase rent often
tenant would want this to be as infrequent (cheaper)

landlord would put in an upwards only clause

Question 5

explain service charge under the commercial lease

Answer 5

a fair proportion of the service costs subject to any adjustments made by the landlord
landlord will want to give tenant as much notice as possible so that they can pay
tenant will want as much notice as possible so they have time to pay
also want the cost to be as low as possible
low rent = higher service charges

Question 6

explain alienation under the commercial lease

Answer 6

contract will include standard provision prohibiting tenant from assigning or subletting the lease without the landlords consent
landlord wants to know who is renting the premises at all times
tenants lease could be terminated if sublet without consent

Question 7

explain payment of rent under the commercial lease

Answer 7

dates when rent is payable
landlord wants the rent to be paid in easy instalments so there are no issues with payment from the tenant
tenant will want smaller, frequent instalments so they don’t have to pay large sums at a time

Question 8

explain use of premises under the commercial lease

Answer 8

sets out the purpose for which the tenant may use the premises
landlord doesn’t want the premises being used for inappropriate purposes
tenant needs to know exact purposes allowed so as not to breach the lease

Question 9

explain Insurance under the commercial lease

Answer 9

usually covers a full repairing and insuring basis - means tenant is solely reliable for repairs
landlord doesn’t want to take responsibility for repairs to damage not caused by them
tenant wouldn’t prefer this

Question 10

explain alterations and additions under the commercial lease

Answer 10

tenant is prohibited from making major alterations to the property and may be required to reinstate it
landlord wants to keep property in the same condition it started in
tenant will not want to make any changes in case the have to change them back/pay a fine

Question 11

explain irritancy under the commercial lease

Answer 11

allows landlord to terminate the lease is any one of a number of specified breaches by the tenant occurs
stops landlord from having to continue the lease where the tenant is not acting the way they should
encourages tenants to be careful to follow the lease terms properly

Question 12

explain the deposit agreement for lease management documentation

Answer 12

as an alternative to seeking guarantees to secure an otherwise inadequate tenant, landlords will sometimes seek deposit agreements

money is placed into a financial pot at the commencement of the lease which the landlord can dip into in the event of a default by the tenant

can apply to rent but also other costs like damage

interest accumulated on the deposit belongs to the tenant and the tenant can acquire this yearly

Question 13

explain the guarantee for lease management documentation

Answer 13

used in circumstances where a guarantee regarding the tenants obligations under the lease is required

prepared on the assumption that a full guarantee is given, making the guarantor a debtor in their own right regarding any failure by the tenant to meet the obligations

Question 14

what are the conditions for bankruptcy?

Answer 14

must owe a debt of at least £1500 but no more than £17000 if you want to apply through MAP

if the debt is over £17000 or you own assets valued over £2000 then only option is to apply through the full administration route

must have received money advice from a money advisor
must live or have lived in scotland, or established a business in scotland in the year leading up to your bankruptcy

must not have been made bankrupt in the last 5 years

cant apply though MAP if youve been made bankrupt this way in the last 10 years

need to either meet MAP conditions, be apparently insolvent or have a certificate or sequestration

Question 15

how can a creditor make an individual bankrupt?

Answer 15

creditors will ask the sheriff to make you bankrupt

you must owe them at least £3000 including fees, interest etc

the creditor must have provided you with the debt advice and information package
(must have been sent this at least 2 weeks before petition)
you must be apparently insolvent

Question 16

what is apparent insolvency?

Answer 16

legal term that shows you cannot pay your debts

a creditor must have gone to court and obtained a ruling that you owe the debt

Question 17

what evidence can be used to prove apparent insolvency?

Answer 17

charge for payment
- requires payment in 14 days or can be used to prove AI

statutory demand

• gives notice that a creditor may make you bankrupt if you dont pay
• becomes evidence after 21 days

Question 18

what is gratuitous alienation?

Answer 18

when the trustee discovers that the debtor has disposed of parts of the assets prior to sequestration

s.98(2)

must be shown that there has been transfer of the debtors property or a renunciation of a claim or right

an alienation will be challenged if made to an associate of the debtor within 5 years of the date of sequestration

if made to someone who is not an associate then the period goes back as far as 2 years

Question 19

who is an associate for gratuitous alienation?

Answer 19

s.229

spouse/CP (includes former)
business partners and other associates
debtors employer or employee

a friend of a debtor no matter how close cannot be an associate
neither can fiance, mistress etc

Question 20

when does alienation become completely effectual?

Answer 20

moveables - date of delivery

heritage - recording of disposition

Question 21

what is unfair preference?

Answer 21

choosing to pay one creditor to the prejudice of others

preference must have occurred no more than 6 months before the date of sequestration

a prejudice is unfair if a creditor is preferred to the prejudice of the general body of creditors

s.99(1)

Question 22

what happens to the family home if owned fully by the debtor?

Answer 22

fully own the house yourself then your interest in the property transfers to the trustee

becomes their duty and intention to sell

have to check for a mortgage and make sure repossession hasnt begun by the lender

if there is a mortgage and the equity in the house isnt far greater than what is owed its unlikely the trustee will sell

if there is a spouse need to check that there are no interests in the house under the matrimonial homes (family protection) act 1981

usually wont sell where children involved

Question 23

what happens to the family home which is jointly owned?

Answer 23

trustee cannot sell without the co-operation of the joint owner

can buy out the partners share - can be possible via remortgage

if you jointly own the property and there is enough equity to make it worthwhile to release it to your creditors, you may be able to ask the other owner/s to buy you out of your share via lump sum/installments/remortgage

Question 24

what is bankruptcy?

Answer 24

bankruptcy is the legal process by which you are formally declared insolvent (means you cant pay your debts as they become due)

to become bankrupt the court has to issue a bankruptcy petition against you (you can apply or your creditors can)

Question 25

what happens when you are made bankrupt?

Answer 25

your assets are used to pay your debts must follow the bankruptcy restrictions name and details are placed in the register of insolvencies

Question 26

how long does bankruptcy last?

Answer 26

6 months for MAP | usually 12 months for full administrative

Question 27

what are the conditions for applying for bankruptcy through MAP?

Answer 27

must owe total debt of at least £1500 but no more than £17000 total assets cannot exceed £2000 must have taken money advice from a money advisor living or have lived in scotland 1 year not been sequestrated in 5 years not made bankrupt through MAP for 10 years pay application fee £90 have a signed certificate of sequestration

Question 28

what are the conditions under MAP bankruptcy?

Answer 28

discharged after 6 months trustee discharged shortly after cannot borrow more than £2000 where you already have debts of £1000 or more without disclosing your bankruptcy status cannot engage in business transactions without disclosing the name of the business

Question 29

what happens if you do not comply with restrictions under MAP or to comply with your trustee?

Answer 29

committed an offence and liable to a fine, imprisonment or both failure to co-operate with your trustee can result in consequences such as a bankruptcy restriction order

Question 30

what are the conditions for applying for full administration bankruptcy?

Answer 30

owe total debts or £3000 or more but do not qualify for MAP be living or have lived in scotland for the past year not made bankrupt in 5 pay application fee of £200 must have received money advice from a money advisor must be either apparently insolvent, have a certificate of sequestration but dont qualify for MAP

Question 31

what are the conditions under a full administration bankruptcy?

Answer 31

not discharged until at least 12 months after discharge you must continue to pay your debtor contribution order if you have a regular income (usually 48 months) provide your trustee with the current financial information every 6 months until debtor contribution order has ended, keep trustee informed of changed in circumstances co-operate fully

Question 32

what happens if you fail to co-operate under the full administrative bankruptcy?

Answer 32

fail to co-operate with terms - committed an offence and liable to a fine, imprisonment or both failure to co-operate with your trustee can result in consequences such as a bankruptcy restriction order

Question 33

what is a certificate for sequestration?

Answer 33

granted by an authorised person and certifies you have demonstrated that you are unable to pay your debts as they become due most money advisors, insolvency practitioners are authorised to grant a certificate use it to apply for your own bankruptcy must apply within 30 days or issue no charge for the certificate itself but may be charged for the advice

Question 34

what is the trustees role in bankruptcy?

Answer 34

person who administers the bankruptcy - works for the accountant in bankruptcy gathers the debtors assets, including property and sells them pay the costs of managing their bankruptcy and pay debts trustee will contact the debtor about their finances and request information about such assets, who their creditors are, income and weekly outgoings, entitled to ask for wage slips, bills, bank statements etc

Question 35

what are the consequences of bankruptcy?

Answer 35

credit rating is affected for many years banks may freeze or close your accounts and savings are transferred to the trustee name and details remain in public record in register of insolvencies for 2 years trustee may seek to enforce bankruptcy restrictions on the debtor due to their conduct

Question 36

what are the examples of behavior which would warrant a bankruptcy restriction order?

Answer 36

incurring debts they knew that had no chance or repaying giving away assets or selling them at less than their value (gratuitous alienation) gambling not co-operating with the trustee

Question 37

explain the discharge of bankruptcy

Answer 37

debtor is discharged (12 or 6 months) but the administration of the bankruptcy continues until the trustee has done everything required and is then discharged themselves debtor must continue to co-operate until the trustee is discharged trustee remains in office until the administration of the debtors estate is concluded and only then can they seek their own discharge once a debtor is discharged they have no personal liability to repay the debts they had before being made bankrupt if the trustee recovers all the costs of the bankruptcy and pay the creditors in full, plus interest, and theres money left over/assets remaining they are returned to the debtor

Question 38

what are the exceptions to the rule that debtors no longer have liability for debts after bankruptcy?

Answer 38

``` student loans court fines any fraud incurred aliment all secured payments such as mortgages ```

Question 39

what is a standard security?

Answer 39

when you take out a loan from a bank to buy property, the bank will want to ensure they can get their money back if you have problems repaying the loan the property you buy is offered as security for the loan registered in the land register fail to honour the terms of the loan = bank takes control of your property

Question 40

explain discharging a standard security

Answer 40

once you have repaid the loan you can request a discharge from the lender this is then registered against your title in the land register if selling your property - the proceeds of sale go towards the balance of the standard security which the solicitor discharges

Question 41

what remedies are available for defaults of payment

Answer 41

renegotiate the missives bridging finance damages or penalty

Question 42

explain non-performance by the seller

Answer 42

before taking action, ascertain if there is any non performance by the seller which would entitle non payment by the purchaser standard missives state that there are documents which need to be produced so if they are not the purchaser can resile (withdraw from the contract lawfully)

Question 43

what does renegotiate the missives mean?

Answer 43

if it looks likely that there is to be a default then could delay and change the date of entry amend the missives

Question 44

what does bridging finance mean?

Answer 44

if rescheduling isnt available then the purchaser could ask the bank for a short term loan on the basis of them receiving the money on a specific date this is expensive and should only be used on a short term basis

Question 45

explain the use of damages for default of payment

Answer 45

if none of these practical remedies can be agreed, and payment is not forthcoming, the purchaser will be in default on the day of entry sometimes already agreed in the contract how damages are to be calculated or a clause states an amount already

Question 46

what is an advance notice?

Answer 46

provides interim protection for deeds between two named parties that are intended to be registered in the land register provides the purchaser with a 35 day period of protection that safeguard their purchase from an inhibition against the seller and any competing deeds granted to a third party entering the register first cant be extended or renewed can be discharged at any time £10 come into effect the day after registration

Question 47

when is a real right created regarding advance notices?

Answer 47

a real right is only created on registration of the deed in the land register so there is a period of risk between the delivery of the deed and registration using an advance notice bridges this gap

Question 48

how long before completion should advance notices be registered?

Answer 48

commercial - submission no earlier than 5 working days before completion residential - 10 working days

Question 49

what is the home report?

Answer 49

a pack of documents which gives potential buyers information about the property that is for sale should be no more than 12 weeks old when property put on the market

Question 50

what does the home report contain?

Answer 50

three components - a single survey - an energy report - a property questionnaire

Question 51

what is the single survey?

Answer 51

an assessment of the overall condition of the home (roof walls plumbing etc) a valuation notes accessibility for people who have particular needs such as wheelchair access

Question 52

what is the energy report?

Answer 52

gives the home an energy efficiency rating and its environmental impact in terms of carbon dioxide emissions higher the rating the more efficient and therefore the lower cost of fuel bills also considers the environment and how well insulated the home is and type of heating system

Question 53

what is the property questionnaire?

Answer 53

answered by the seller and features the things purchasers want to know like council tax bank, property alterations, costs for upkeep or communal areas etc

Question 54

what are missives?

Answer 54

exchange of a series of letters between solicitors comprising a formal offer, letter that make up the contract of sale

Question 55

can a solicitor act for both a borrower and a lender for standard securities?

Answer 55

generally lenders will permit solicitors acting for the borrower in the purchase of a house to act on the lenders behalf as well law society guidelines allows this despite the apparent conflict of interest terms of the loan must have been agreed between the parties before the solicitor has been instructed by the lender

Question 56

what if a conflict of interest does arise between the solicitors/borrowers/lenders in the standard security agreement?

Answer 56

if a genuine conflict of interest does emerge, the solicitor must immediately stop acting for both parties

Question 57

what counts as a genuine conflict of interest when acting for borrower and lender?

Answer 57

if solicitors find themselves in possession of information that is clearly detrimental to one of the parties, they are under a duty to reveal it to the other party if they are unable to do so then they should withdraw

Question 58

can a solicitor act for a married couple in conveyancing?

Answer 58

yes, acting for related parties is exempt from the general rule of conflict of interest husband and wife still have separate interests so solicitor must ensure that both partners signing the standard security understand its terms ensure spouses receive independent legal advice

Question 59

what are the standard conditions?

Answer 59

typical conditions that all or most lenders would want to apply to the basis on which they are lending money for a property standard securities things the borrower will be obliged to do

Question 60

what are the main standard conditions?

Answer 60

maintenance and repair - borrower is to keep the property in good and sufficient repair observance of conditions in title - observe any condition to perform any obligation that applies to the property planning notices etc - deal with planning and other notices and provide the lender with copies of any received insurance - borrower is to insure the property for market value and the proceeds of any claim are to be dealt with as directed by the creditor

Question 61

what standard security remedies are available via the 1970 act for enforcement?

Answer 61

service of calling up notices service of notices of default immediate court action - s.24 action

Question 62

explain the calling up notice

Answer 62

requires the owner of the property to pay the creditor the whole sum secured by the standard security within 2 months of the date on which the notice is served generally served in circumstances where the creditor wants the debt secured by the standard security discharged in full

Question 63

explain the notice of default

Answer 63

can be served in circumstances where there has been a breach of the terms of the standard security and the breach is remediable notice of default requires the debtor or the owner to remedy the default specified in the notice within one month typically used when the debtor has fallen into arrears

Question 64

what is a s.24 court action?

Answer 64

must only be used after a calling up procedure for residential properties gets remedy for the default through the courts

Question 65

what is a bankruptcy restriction order?

Answer 65

may be made against you if you have acted dishonestly, recklessly or unlawfully before or during your bankruptcy trustee will inform AiB of suspicious behavior and a BRO can be held for 2-15 years

Question 66

what warrants a bankruptcy restriction order?

Answer 66

for failing to cooperate with the trustee at any stage - not supplying info, misleading the trustee about your level of debt gratuitous alienation unfair preference incurring debts you know you cant repay fraudulent activity

Question 67

what is the effect of a bankruptcy restriction order?

Answer 67

have to inform potential lenders of your BRO if you seek credit in excess of £2000 or if you are in debt over £1000 and seek further credit cant take a role as a local authority member cant act as company director

Question 68

what is a licence for works agreement?

Answer 68

designed to be used to record the consent of a landlord to works carried out by a tenant under the lease

Question 69

what are the advantages of the home report?

Answer 69

costs nothing for buyer lots of info given on house you are buying purchaser will have a clear idea of what issues that affect the property new build homes dont need it

Question 70

what are the disadvantages of the home report

Answer 70

expensive for seller compulsory - to be able to place home on the market you need one time consuming process property cannot be put on market with home report 12 weeks or older

Question 71

what is an energy performance certificate?

Answer 71

contained in the energy report - details the house's grade of energy efficiency needed whenever a property is built, sold or rented must have this before marketing property must be displayed somewhere in the home valid for 10 years

Question 72

when do you need a home report?

Answer 72

whenever you sell a home which is not a new built and it is displayed on the market a cardboard sign counts as being displayed (any form of advertisement)

Question 73

what is a closing date?

Answer 73

seller normally waits until a number of people have expressed n interest in making in offer and then will announce a closing date sealed offers are submitted on that date and the seller chooses one do not have to take the highest offer

Question 74

what is noting interest?

Answer 74

if you are interested in buying a particular property but are not yet ready or willing to offer a note of interest can ensure you get an opportunity to make an offer

Question 75

whats the timeline for missives? 8

Answer 75

prospective purchaser arranges finance ensures satisfaction with home report get mortgage approved in principal instructs solicitor to submit written offer on their behalf offer usually met by a qualified acceptance solicitor acts as your agent and signs for you missives are the contract so if your offer is accepted you are locked into the contract contract is formed and have to come up with the money on date of entry

Question 76

what are the obligations of the seller under missives?

Answer 76

to deliver a good and marketable title to delivery a valid disposition out of house by date of entry to exhibit and deliver clear searches

Question 77

what are the obligations of the purchaser under missives?

Answer 77

to pay the price on the due date to complete any further obligations which they have agreed to in the missives

Question 78

can you submit an offer for a son when instructed by the mother?

Answer 78

no there no authority unless there is power of attorney

Question 79

what is a form A standard security

Answer 79

where both the personal obligation of the debtor as well as the details of the mortgage and the grant of security are all contained in one document

Question 80

what is a form B standard security

Answer 80

only contains the grant of security over the property personal obligation are in a separate document mostly for commercial loans

Question 81

what are the disadvantages of buying a repossessed property?

Answer 81

wont know much about hte property and its faults may not have a guarantee that things work (central heating etc) house could have been sold cheaper because of this

Question 82

explain equity

Answer 82

value of ownership built up in home or property that represented in current market value home worth 300,000 mortgage is 50,000 equity is 250,000

Question 83

what is the timetable for sequestration? 6

Answer 83

apply for sequestration application successful=trustee appointed debtors assets invested and legally become part of the trustees estate investigation into value of assets (value of house, gratuitous alienation, unfair preference checks) what creditors are there and how much is owed releasing of assets

Question 84

what is an alternative to sequestration?

Answer 84

trust deed - can enter into a voluntary agreement with the creditors as an alternative to sequestration - arrangment entered into between a debtor and creditors whereby an agreed portion of the estate is given to a trustee to be administered for the debtors - if the debtor fails to comply then the creditor can petition for sequestration - difficult to get consent for this so statutory protection could be debt arrangement scheme to spread payments over a reasonable period

Question 85

what are the three categories under the single survey?

Answer 85

The survey documents the condition of each aspect of your property within the report, broken down into 3 categories. Category 1 = no immediate report is required Category 2 = repair or replacement requiring future attention, but estimates are still advised Category 3 = Urgent repairs or replacement are required now. Failure to deal with the issues may cause further problems to other parts of the property or cause a safety hazards. Estimates for repair or replacements are required now.

Question 86

What is LBTT?

Answer 86

Land and Buildings Transaction Tax

Question 87

what is LBTT applied to?

Answer 87

applied to residential and commercial land and buildings transactions including commercial purchases and leases tax is payable at different rates on each portion of the purchase price within specified tax bands between 0 - 12% depending on the value of the property but usually ill be in the range of 0-5% first time buyers don't have to pay this

Question 88

when should i get home insurance?

Answer 88

the day contracts are concluded - a fire could engulf the home and you would not be covered. insure for market price you are paying henceforth

Question 89

what documentation is needed to prove no occupancy rights in the property for married people?

Answer 89

incorporate consent of spouse/cp into documentation (disposition, standard security, stand alone form) get renunciation of occupancy rights from spouse/cp

Question 90

what documentation is needed to prove no occupancy rights for unmarried people?

Answer 90

get a declaration that the property is not a matrimonial home so is not subject to occupancy rights

Question 91

what are the 6 main things the property enquiry certificate searches for?

Answer 91

``` planning building control roads statutory notices water and sewage contaminated land ```

Question 92

explain the plannings search under the property enquiry certificate

Answer 92

searches fo any planning applications that have been made in respect of the property being purchased

Question 93

explain the building control search under the property enquiry certificate

Answer 93

searches for any building warrants applied for in respect of alteration to the property and whether the council has approved the works

Question 94

explain the roads search under the property enquiry certificate

Answer 94

whether the road is adopted to the boundary of the property or whether the council owns the pavements etc

Question 95

explain statutory notices under the property enquiry certificate searches

Answer 95

whether the council has served any under various statutes

Question 96

explain the water and sewage search under the PEC

Answer 96

report states whether the property is connected to the water and sewage mains

Question 97

explain the contaminated land search under the PEC

Answer 97

whether the property is contaminated