A detailed breakdown of the stages of a registered commercial property transaction on the Property Law & Practice Module. It summaries what the buyer's, seller's and lender's solicitors need to do at every stage of the transaction, the searches that need to be conducted and the documents that need ...
STAGES OF A REGISTERED COMMERCIAL PROPERTY TRANSACTION
STAGES BUYER’S SOLICITORS SELLER’S SOLICITORS LENDER’S SOLICITORS
BEFORE • Take instructions from client • Take instructions from client • Take instructions from client
EXHANGE • Approve contract (don’t include date until exchange) • Draft contract • Approve contract (don’t
(Nothing is • Investigate seller’s title to ensure that it is ‘good and • Deduce title (i.e. check official include date until exchange)
binding at this marketable’ and check the following: copies of title to ensure seller has • Investigate seller’s title to
stage) - Official copies and title plan match address of property being authority to sell property ensure that it is ‘good and
purchased • Make any legally required marketable’ and check the
- Property type (i.e. freehold or leasehold) disclosures following:
- Name(s) on proprietorship register match name of sellers • Arrange for BUYER to sign the
- Verify the client’s identity – customer due diligence • Check for encumbrances that may mortgage deed – can’t release
- Check for conflicts of interest between the buyer and the affect property money to BUYER unless they
seller • Company search – check if person do.
- If the purchase price includes fixtures or fitting/chattels has power to buy property via
- Is property held as benefit joint tenancy or tenancy in company’s constitution
common? • Mortgages – give undertaking to PROFESSIONAL CODUCT POINT:
- Is there a restriction on the proprietorship register which discharge mortgage ASAP and give • SRA rules say solicitors can act
indicates a co-owner has died? evidence of discharge on for LENDER & BORROWER on
E.g. Restriction: No disposition by a sole proprietor of the completion the grant of a mortgage of land
registered estate (except a trust corporation) under which • Give copies of planning permission, only where:
capital money arise is to be restricted unless authorised by an building regulations, etc to BUYER
order of the court. a. the mortgage is a standard
• Check buyer has enough funds to mortgage of property to be
*For JT: Does surviving spouse have proof of title (i.e. death complete transaction prior to used as the borrower’s
certificate)? exchange private residence;
*For TinC: Has surviving spouse effective overreached D’s • Report back to client to explain b. They are satisfied that it is
equitable interests? s.2(2) LPA 1925 contract, mortgage offer (if any) REASONABLE and, in the
- Are there any existing mortgages? and implications & results of clients’ BEST INTERESTS for
If YES, ask for undertaking from seller’s solicitors to searches and enquiries you to act; and
discharge mortgage before exchange and provide c. Certificate of title required by
evidence (i.e. DS1 or ED) lender is in the form
PROFESSIONAL CODUCT POINT: approved by the Law Society
- Are there any right/covenants that BENEFIT the property? • SRA rules say solicitors cannot act and the Council of Mortgage
- Are there any rights that BURDEN the property? for BOTH BUYER & SELLER in a Lenders.
, -> Are the burdens enforceable? (i.e. positive or restrictive) commercial property transaction
*Positive covenant - only enforceable if there is chain of (exception: residential property) - Auth: IB (3.7)
indemnity Auth: O(3.5), IB(3.3 & 3.4)
*Restrictive covenant – only enforcement if notice is given
-> Have covenants ever been breached before?
-> Have the covenantees given consent to breach covenant?
-> Do covenants affect proposed use of property?
• Inform buyers of any covenants that affect/impede use of
property
• Advise client to inspect the physical property and conduct
structural survey
Conduct the following searches:
• Pre-Contract Searches & Enquiries of seller (CPSE or
questionnaires) - to find out everything seller isn’t obliges to
disclose
• Company search – verify company exists, is solvent and has
no fixed or floating charges which affect the company
• Local Land Charges Search (LLC1) – get copies of all local
authority charges, planning permissions, listed buildings, tree
preservation orders, conservation areas, etc.
• Enquiries of Local Authority (CON29 & CON29O) – get copies
of planning permission, building regulations from seller
• Chancel Check – is property is close to ‘risk parish’? Get
insurance.
• Environmental Search/Survey – risk of flooding or
contamination?
• Water company search – who maintain water pipes/sewers?
• Highways search – who owns land between property &
highway
• Coal mining search – is property in coal mining area?
• Site Inspection
• Winding up petition search – more reliable than standard
company search
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