SQE 1: Property Practice CRYPT SHEET
Contents
1. Freehold transactions
2. Title investigation – registered land
3. Title investigation – unregistered land
4. Pre-contract searches and enquiries
5. The contract and exchange
6. Completion
7. Grant of a lease
8. Lease structure and content
9. Alienation
10. Business tenancies
11. Lease termination
, 1. Freehold transactions
Introduction to property practice
Property transactions can involve large sums of money, and solicitors take steps to avoid
losses to their client.
Parties to a property transaction often appoint a solicitor because there will be rights,
obligations and restrictions on the property that will need advising on.
Your role will differ if your client is the buyer, lender or seller:
Buyer SPEED, LOW COST + QUALITY SERVICE
Seller has the right to sell
Physical condition of the land and buildings = adequate
All rights enjoyed by the property
Any third-party rights affecting the property
Property is free from any security interest or will be on completion
Contract reflects the terms agreed between the parties
Sufficient funds to finance the purchase
Lender Property = marketable + its value is sufficient to cover any losses
Seller has the right to sell
Physical condition of the land and buildings = adequate
All rights enjoyed by the property
Any third-party rights affecting the property
Property is free from any security interest or will be on completion
Contract reflects the terms agreed between the parties
Sufficient funds to finance the purchase
No discrepancies in lender’s understanding & borrower’s circumstances
Security document (mortgage) = valid and enforceable
Seller Contract reflects the terms agreed between the parties
Provide the buyer’s solicitor with what they need to proceed with the purchase
Tie the timing of the sale to any related purchase
transfer legal ownership (and responsibility) of the property to the buyer
Collect money from the sale, repay the mortgage and account to the seller
Outline of conveyancing process
There are THREE distinct stages to a property transaction:
1. Pre-exchange (beginning to exchange) The most work takes place in
2. Pre-completion (exchange to completion) the pre-exchange stage, when
3. Post completion (after completion) the buyer’s solicitor has to
investigate and report on title.
Exchange: the parties become contractually bound to proceed with the sale/purchase.
, Completion: the buyer’s solicitor pays the balance of the purchase money to the seller
and the seller’s solicitor agrees to send the necessary paperwork to the buyer’s solicitor.
Post completion: the buyer’s solicitor arranges to pay any SDLT/LTT and register the
new ownership at the Land Registry.
Caveat emptor
Caveat emptor translates to ‘buyer beware’ - the principle means the buyer takes the
property as it finds it.
N.B There is no onus on the seller to provide all the relevant information on the property
(e.g. patent incumbrances or physical defects) it is up to the buyer to fully investigate.
BEFORE becoming contractually committed, the buyer should thus find out as much as
possible about the property. It will do this by investigating title, ordering searches and
raising pre-contract enquiries. The buyer should also arrange for a surveyor to undertake
a physical survey.
However, the seller is obliged to disclose latent incumbrances and defects in title +
sellers should also be wary of making any potential misrepresentations.
TWO exceptions to the principle of ‘caveat emptor’:
(1) Misrepresentation = a false statement which induces a buyer to
Misrepresentatio contract to buy.
n
Seller cannot mislead the buyer by concealing physical defects
(e.g. painting over damp patches) OR answering questions
dishonestly.
Buyer remedies: in common law for misdescription, or under the
Misrepresentation Act 1976.
Buyer will probably rely on the sale contract – no need to prove
they were induced to rely on the conduct or statement; it is
sufficient if there was an error or omission (Hardy v Griffiths)
(2) Latent Latent incumbrance: something which is not apparent/cannot
encumbrances & be discovered, when inspecting the property.
title defects
A seller is under a duty to disclose latent incumbrances of
which it is aware OR of which it has the means to know,
acting reasonably and diligently.
Defect in title = a matter that brings into q. seller's ownership of
the property, or the rights & burdens that affect the property.
Initial advice
, At the outset of the matter, you should consider 1) timescale and costs, 2) co-ownership, 3)
surveys and 4) tax as appropriate.
1. Likely © Average residential sale = six to eight weeks from sale to completion.
timescale © Some large value commercial matter = on a tight timescale (4 weeks).
and costs © Costs may be fixed (esp. with residential matters) or on a time basis.
2. Co- Co-ownership = having two or more owners.
ownership
Legal ownership Beneficial ownership
Registered at Land Registry May/may not be same as legal
Maximum number = 4 Not registered at the Land
Must be over 18 Registry (unless as legal owners)
Sole or a joint tenancy No maximum number
Hold the property on trust Any age
for the benefit of the Sole, a joint tenancy OR a
beneficial owners tenancy in common
Beneficial ownership: Joint tenancy
® Not suitable for a co-owner who wants to pass a share OR for
business relationships.
® Co-owners are seen as a single entity.
® Right of survivorship applies - if any co-owner dies their share
passes to surviving co-owners. Interest cannot pass by will/intestacy.
Equitable ownership: Tenants in common
® Purchasers own their own undivided share in the property + can share
the property in whatever proportions they choose (see trust deed).
® Right of survivorship does not apply– share will pass under a will or
intestacy rules.
N.B. Declaration of trust of land must be in writing and signed by the
declarant(s) (LPA 1925, s 53(1)(b)). TR1 form provides option to record
co-ownership arrangements.
3. Surveys Survey necessary to check any physical defects with the property – defects
= expensive to put right, affecting the value of the property.
- Identifying defects gives buyer the opportunity to renegotiate the price,
require a contribution from the seller OR withdraw before exchange.
THREE different types of survey
1) Basic valuation (commissioned by lender)
® Cheapest option – not detailed buyer should be advised to obtain a
fuller survey
2) Homebuyer report
Contents
1. Freehold transactions
2. Title investigation – registered land
3. Title investigation – unregistered land
4. Pre-contract searches and enquiries
5. The contract and exchange
6. Completion
7. Grant of a lease
8. Lease structure and content
9. Alienation
10. Business tenancies
11. Lease termination
, 1. Freehold transactions
Introduction to property practice
Property transactions can involve large sums of money, and solicitors take steps to avoid
losses to their client.
Parties to a property transaction often appoint a solicitor because there will be rights,
obligations and restrictions on the property that will need advising on.
Your role will differ if your client is the buyer, lender or seller:
Buyer SPEED, LOW COST + QUALITY SERVICE
Seller has the right to sell
Physical condition of the land and buildings = adequate
All rights enjoyed by the property
Any third-party rights affecting the property
Property is free from any security interest or will be on completion
Contract reflects the terms agreed between the parties
Sufficient funds to finance the purchase
Lender Property = marketable + its value is sufficient to cover any losses
Seller has the right to sell
Physical condition of the land and buildings = adequate
All rights enjoyed by the property
Any third-party rights affecting the property
Property is free from any security interest or will be on completion
Contract reflects the terms agreed between the parties
Sufficient funds to finance the purchase
No discrepancies in lender’s understanding & borrower’s circumstances
Security document (mortgage) = valid and enforceable
Seller Contract reflects the terms agreed between the parties
Provide the buyer’s solicitor with what they need to proceed with the purchase
Tie the timing of the sale to any related purchase
transfer legal ownership (and responsibility) of the property to the buyer
Collect money from the sale, repay the mortgage and account to the seller
Outline of conveyancing process
There are THREE distinct stages to a property transaction:
1. Pre-exchange (beginning to exchange) The most work takes place in
2. Pre-completion (exchange to completion) the pre-exchange stage, when
3. Post completion (after completion) the buyer’s solicitor has to
investigate and report on title.
Exchange: the parties become contractually bound to proceed with the sale/purchase.
, Completion: the buyer’s solicitor pays the balance of the purchase money to the seller
and the seller’s solicitor agrees to send the necessary paperwork to the buyer’s solicitor.
Post completion: the buyer’s solicitor arranges to pay any SDLT/LTT and register the
new ownership at the Land Registry.
Caveat emptor
Caveat emptor translates to ‘buyer beware’ - the principle means the buyer takes the
property as it finds it.
N.B There is no onus on the seller to provide all the relevant information on the property
(e.g. patent incumbrances or physical defects) it is up to the buyer to fully investigate.
BEFORE becoming contractually committed, the buyer should thus find out as much as
possible about the property. It will do this by investigating title, ordering searches and
raising pre-contract enquiries. The buyer should also arrange for a surveyor to undertake
a physical survey.
However, the seller is obliged to disclose latent incumbrances and defects in title +
sellers should also be wary of making any potential misrepresentations.
TWO exceptions to the principle of ‘caveat emptor’:
(1) Misrepresentation = a false statement which induces a buyer to
Misrepresentatio contract to buy.
n
Seller cannot mislead the buyer by concealing physical defects
(e.g. painting over damp patches) OR answering questions
dishonestly.
Buyer remedies: in common law for misdescription, or under the
Misrepresentation Act 1976.
Buyer will probably rely on the sale contract – no need to prove
they were induced to rely on the conduct or statement; it is
sufficient if there was an error or omission (Hardy v Griffiths)
(2) Latent Latent incumbrance: something which is not apparent/cannot
encumbrances & be discovered, when inspecting the property.
title defects
A seller is under a duty to disclose latent incumbrances of
which it is aware OR of which it has the means to know,
acting reasonably and diligently.
Defect in title = a matter that brings into q. seller's ownership of
the property, or the rights & burdens that affect the property.
Initial advice
, At the outset of the matter, you should consider 1) timescale and costs, 2) co-ownership, 3)
surveys and 4) tax as appropriate.
1. Likely © Average residential sale = six to eight weeks from sale to completion.
timescale © Some large value commercial matter = on a tight timescale (4 weeks).
and costs © Costs may be fixed (esp. with residential matters) or on a time basis.
2. Co- Co-ownership = having two or more owners.
ownership
Legal ownership Beneficial ownership
Registered at Land Registry May/may not be same as legal
Maximum number = 4 Not registered at the Land
Must be over 18 Registry (unless as legal owners)
Sole or a joint tenancy No maximum number
Hold the property on trust Any age
for the benefit of the Sole, a joint tenancy OR a
beneficial owners tenancy in common
Beneficial ownership: Joint tenancy
® Not suitable for a co-owner who wants to pass a share OR for
business relationships.
® Co-owners are seen as a single entity.
® Right of survivorship applies - if any co-owner dies their share
passes to surviving co-owners. Interest cannot pass by will/intestacy.
Equitable ownership: Tenants in common
® Purchasers own their own undivided share in the property + can share
the property in whatever proportions they choose (see trust deed).
® Right of survivorship does not apply– share will pass under a will or
intestacy rules.
N.B. Declaration of trust of land must be in writing and signed by the
declarant(s) (LPA 1925, s 53(1)(b)). TR1 form provides option to record
co-ownership arrangements.
3. Surveys Survey necessary to check any physical defects with the property – defects
= expensive to put right, affecting the value of the property.
- Identifying defects gives buyer the opportunity to renegotiate the price,
require a contribution from the seller OR withdraw before exchange.
THREE different types of survey
1) Basic valuation (commissioned by lender)
® Cheapest option – not detailed buyer should be advised to obtain a
fuller survey
2) Homebuyer report
