Topic 1 - Freehold Transactions

Question 1

What are the main aims of a buyer in a property transaction?

Answer 1

To understand the timeframe and costs involved in the transaction.

Question 2

What should a solicitor ensure when acting for the buyer?

Answer 2

• The seller has the right to sell the property
• The physical condition of the land and buildings is adequate
• All rights that the property enjoys are identified
• Any third party rights affecting the property are identified
• The property is free from any security interest
• The contract reflects the agreed terms
• Sufficient funds are available to finance the purchase.

Question 3

What are the lender’s aims in a freehold transaction?

Answer 3

• The property is marketable
• The property’s value is sufficient to cover losses if the mortgage is not repaid.

Question 4

What should a solicitor ensure when acting for the lender?

Answer 4

• The seller has the right to sell the property
• The physical condition of the property is adequate
• All rights that the property enjoys are identified
• Any third party rights affecting the property are identified
• The property is free from any security interest
• The contract reflects the agreed terms
• Sufficient funds are available to finance the purchase
• No discrepancies exist in the lender’s understanding of the transaction
• The security document (mortgage) is valid and enforceable.

Question 5

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

Answer 5

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

Question 6

What should a solicitor ensure when acting for the seller?

Answer 6

• The contract reflects the agreed terms
• Provide necessary documents to the buyer’s solicitor
• Coordinate the timing of the sale with any related purchase
• Transfer legal ownership to the buyer
• Collect payment and settle any mortgages.

Question 7

Define ‘caveat emptor’.

Answer 7

The principle meaning ‘buyer beware’, indicating that the buyer takes the property as found and must investigate it thoroughly before purchase.

Question 8

What are the sources of information about a property?

Answer 8

• The title to the property
• Seller’s replies to enquiries
• Searches from local authorities and other bodies
• A survey of the property.

Question 9

What happens if a problem with the property is discovered before exchange?

Answer 9

The buyer can withdraw from the deal without legal liability or require the seller to remedy the issue.

Question 10

What is an Energy Performance Certificate (EPC)?

Answer 10

A document that reports on a property’s energy efficiency and provides recommendations for improvement.

Question 11

What is the typical timescale for a residential property sale?

Answer 11

Average of six to eight weeks from sale agreement to completion.

Question 12

What does co-ownership mean?

Answer 12

Having two or more owners of a property, considering both legal and beneficial ownership.

Question 13

What is beneficial ownership?

Answer 13

Ownership that may differ from legal ownership and is not registered at the Land Registry.

Question 14

What is Capital Gains Tax?

Answer 14

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

Question 15

What do the SRA principles emphasize?

Answer 15

• Upholding the rule of law
• Maintaining public trust and confidence
• Acting with independence, honesty, and integrity
• Encouraging equality, diversity, and inclusion
• Acting in the best interests of each client.

Question 16

What is required to provide a competent and timely service?

Answer 16

Having the necessary skills and experience to manage the client’s matter effectively.

Question 17

What should be verified before acting on a client’s behalf?

Answer 17

Identity checks and proper authorization to ensure instructions represent the client’s wishes.

Question 18

What types of conflict of interest exist?

Answer 18

• Own interest conflict
• Conflicts not involving own interests.

Question 19

What is an own interest conflict?

Answer 19

A situation where a solicitor’s duty to act in the best interests of a client conflicts with their own interests.

Question 20

When should a solicitor not act due to a conflict of interest?

Answer 20

If there is an own interest conflict or significant risk of such a conflict.

Question 21

What is a conflict of interest?

Answer 21

A situation where your separate duties to act in the best interests of two or more clients in the same or related matter conflict.

(SRA Glossary)

Question 22

According to CCS 6.2, when can you act in relation to a matter with a conflict of interest?

Answer 22

You may act if:
* The clients have a substantially common interest
* The clients are competing for the same objective
* All clients have given informed consent in writing
* Effective safeguards are in place
* It is reasonable for you to act for all clients.

Question 23

Define ‘substantially common interest’ (SCI).

Answer 23

A situation where there is a clear common purpose between clients and a strong consensus on how to achieve it.

(SRA Glossary)

Question 24

Provide an example of an SCI.

Answer 24

Two clients buying properties together for development asking for a report on title to investigate the land.

Question 25

What happens if clients with an SCI fall out during a transaction?

Answer 25

If they no longer have a clear common purpose, you may not act for both clients.

Question 26

What is the 'competing for the same objective' exception?

Answer 26

A situation where two or more clients are competing for an objective that, if attained by one, makes it unattainable for the others.

Question 27

What conditions must be met for the SCI or CFSO exceptions to apply?

Answer 27

The lawyer must ensure: * All clients provide informed consent in writing * Effective safeguards are in place for confidentiality * It is reasonable to act for all clients.

Question 28

Can you act for both a buyer and lender in the same transaction?

Answer 28

Generally yes, because both have a common interest in ensuring the property is marketable.

Question 29

Is it common for solicitors to act for both lenders and borrowers in commercial transactions?

Answer 29

No, it usually does not happen due to differing approaches to resolving issues.

Question 30

What is the duty of confidentiality?

Answer 30

You must keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or consented by the client.

Question 31

When does the duty of confidentiality apply?

Answer 31

It applies to both current and former clients, including clients of a previous firm.

Question 32

What is the duty to disclose according to CCS 6.4?

Answer 32

You must inform your client of all material information you possess regarding the matter.

Question 33

What are some exceptions to the duty to disclose?

Answer 33

Exceptions include: * Potential harm to the client or another person * Legal restrictions on disclosure * Conflicts with duties to another client.

Question 34

How should information be presented to clients according to CCS 8.6?

Answer 34

Information must be provided in a way that clients can understand.

Question 35

What should you do if there is a conflict between duties to a buyer and lender?

Answer 35

You must seek consent from the buyer to disclose the discrepancy to the lender.

Question 36

What happens if the buyer does not consent to disclose information to the lender?

Answer 36

You cannot continue to act for the lender and should ideally stop acting for the buyer as well.