FLK2 MCQS SUMMARY SOLICITORS ACCOUNTS EXAM (ELABORATED QUESTIONS AND ANSWERS) LATEST

FLK2 MCQS SUMMARY SOLICITORS ACCOUNTS EXAM (ELABORATED QUESTIONS AND ANSWERS) LATEST The solicitor should pay the whole of the sum into client account and promptly transfer £800 to business account When there is a mixed payment of client money and non-client money, it must be paid into client account, and the non-client money transferred to business account. - CORRECT ANSWER-A solicitor acts for a residential buyer, and the transaction is nearing simultaneous exchange and completion. The buyer sends to the solicitor a bank transfer comprising £800 solicitors' costs and £3,000 estate agent's commission (both sums inclusive of VAT). The solicitor's invoice has been raised and delivered to the buyer, but the estate agent's invoice has not yet been received. How should the solicitor deal with the bank transfer sum when it arrives? Select one alternative: The solicitor should pay the whole of the sum into business account and leave it there pending completion. The solicitor should pay the whole of the sum into client account and leave it there pending completion The solicitor should pay the whole of the sum into client account and promptly transfer £800 to business account The solicitor should pay the whole of the sum into business account and promptly transfer £3,000 to client account The solicitor should pay the whole of the sum into an account separate from both client account and business account, and then transfer £800 to business account and £3,000 to client account Credit client ledger client account and debit cash sheet client account Correct. The deposit is being held by the seller's solicitor as agent. The deposit is client money (Rule 2.1(b)) and will be paid into the seller's solicitor's client account and it will be credited to the seller's client ledger (client side as it is client money). The stakeholder ledger is only used by the seller's solicitor to record receipt of a deposit when they are holding the deposit as stakeholder (not the case on these facts). - CORRECT ANSWER-A firm of solicitors is acting on behalf of a client who is selling their flat and buying a new house. A deposit of £20,000 has been received by the solicitors in respect of the sale, the whole of which, under the Standard Conditions of Sale, will be used towards the deposit for the client's purchase. Which one of the following pairs of double entries shows how the receipt of the deposit should be recorded? Select one alternative: Credit stakeholder ledger and debit cash sheet client account Credit client ledger client account and debit stakeholder ledger Credit client ledger client account and debit cash sheet client account Credit cash sheet client account and debit client ledger client account Credit cash sheet business account and debit client ledger client account To check for any problems with a shortfall or timing of the funds earlier rather than later, and to find out if they intend for you to act for their mortgage lender This is correct - a solicitor should identify any issues with funding. For example, a client may not have taken into account Stamp Duty Land Tax or Land Transaction Tax. If the solicitor is to act for the mortgage lender then they will need to know this; for example, to check that they are on that lender's panel of approved conveyancers. - CORRECT ANSWER-You are about to have an initial meeting with a new client who is a first-time buyer of a house. Why is it important that you discuss their means of funding the purchase? Select one alternative: You may be able to help them find an alternative lender with a better rate of interest on their mortgage If they are short of the full purchase price, you may be able to find issues with the property that would enable you to negotiate a reduction in price As they will likely be paying in cash, to check that the funds have not derived from criminal proceeds To check for any problems with a shortfall or timing of the funds earlier rather than later, and to find out if they intend for you to act for their mortgage lender If they are borrowing the money, you will need plenty of notice to negotiate the legal charge and certificate of title with the mortgage lender You cannot act for the friend, because their solicitor will need to advise on the financial transaction and negotiate the documentation Correct - unlike with a high street lender, there is scope for conflict in negotiating the financial side of the transaction and the documentation. - CORRECT ANSWER-You have a new client who is buying a house. For various reasons, they cannot obtain a mortgage through a high street lender. However, luckily, a wealthy family friend has agreed to lend the client the money. The friend has asked your client to meet their legal costs. Your client asks if you can act for the friend as well. How do you advise them? Select one alternative: You can act for the friend, because the relationship between them and the client means that the likelihood of conflict arising is very low You cannot act for the friend because you cannot represent their interests without breaching your duty of confidentiality to your client You can act for the friend because the friend and your client have the same interest - that of ensuring that the property has marketable title You can act for the friend, provided they agree that documents will comply with a form contained in Encyclopaedia of Forms & Precedents and that no amendments will be allowed The charges register of the official copies for the third party's land Although the benefit of the right of way will show on the property register of the property, it is also important to check that the burden of the right of way is shown on the charges register for the third party's land. - CORRECT ANSWER-The solicitor acting for the buyer of a registered property (the 'property') discovers from their title investigation that the property benefits from a right of way over a third party's land. The third party's land is registered at the Land Registry. Which one of the following should the solicitor check, in these circumstances, to ensure that the right of way has been properly registered over the third party's land? Select one alternative: The charges register of the official copies for the third party's land The proprietorship register of the official copies for the property The result of the Search of the Index Map (SIMR) The property register of the official copies for the third party's land The result of the Central Land Charges Search (CLC) against the seller They will only be able to obtain a qualified title at the Land Registry, which may make the property less attractive as security to a lender if needed in the future Correct - missing covenants will lead to the Land Registry registering only a qualified title. This may cause issues with secured lenders. Although the indemnity policy may cover the buyer's financial loss if these covenants are later enforced, they may conflict with the buyer's use of the property. - CORRECT ANSWER-ou act for a cash buyer of a piece of wasteland which is unregistered, and have queried with the seller's solicitor a missing deed of covenant that is referred to on the root of title. The seller confirms that the deed of covenant cannot be traced, but offers an indemnity policy for the benefit of the buyer. Which of the following options represents the correct advice to the buyer about the impact of this missing deed? Select one alternative: They will only be able to obtain a qualified title at the Land Registry, which may make the property less attractive as security to a lender if needed in the future They will only be able to obtain possessory title, but 12 years after first registration, they will be able to upgrade to title absolute The indemnity policy should be sent to the Land Registry together with the application of the first registration to secure title absolute The title defect can be dealt with by means of a full title guarantee in the transfer deed The covenantee named in the deed should be contacted to confirm that the covenants will not be enforced Listed building consent will likely be needed in addition to planning consent for the proposed alterations to the building Correct - for alterations to a listed building, specific listed building consent will be required in addition to standard planning permission - CORRECT ANSWER-You act for a developer in acquiring an old school building who proposes to alter and convert it into residential flats. The local search reveals that the property is a Grade II listed building. How should you advise your client on their proposals? Select one alternative: The client should withdraw from the transaction, as no changes can be made to a Grade II listed building Listed building consent will be needed, but this means that a planning permission application is unnecessary Provided the proposed alterations and change of use fall within the General Permitted Development Order, no planning application will be required Listed building consent will likely be needed in addition to planning consent for the proposed alterations to the building Listed building consent will only be needed if changes are being made to the exterior appearance of the building To register the land at the seller's expense before proceeding further because of the rules on compulsory first registration Although it is correct to ask the seller's solicitor to register the land at the seller's expense, once done, the buyer's solicitor will have no need to see the missing plan and grant of probate. - CORRECT ANSWER-A solicitor acting for a client buying unregistered land is examining the epitome of title. The solicitor notes the following: the root of title is a conveyance dated 3 July 1970 and made between (1) Alice Rawlings (2) Michael Jameson in which the property is described by reference to a plan, but the plan is missing the next document is an assent dated 4 September 1989 and made between (1) Charles Jameson (2) Sandra Jameson the final conveyance is dated 20 December 2001 and made between (1) Charles Jameson (2) the seller What should the solicitor ask the seller's solicitor to do? Select one alternative