Class notes
Real Estate Law Level 5
- Course
- Institution
All units (1-10) for Real Estate Level 5 which is 2nd year study level.
[Show more]
Seller
Follow
mc40
Content preview
REAL ESTATEUNIT 1
Two Milestones:
1. Exchange of contracts
2. Completion
Two Milestones & three stages:
(i) Pre-cexchange stage/ pre-contract stage
1. Exchange of contracts
(ii) Pre-completion/ pre-contract stage
2. Completion
(iii) Post-completion stage
IMPORTANT NOTE - The parties are not bound to the transaction until the contracts are
exchanged.
Caveat Emptor - Let the buyer beware
The seller isn’t obliged to disclose information about the property other than limited details of
title and wouldn’t be liable for any defects that later come to light so the onus is on the buyer
to discover as much about the property prior to purchasing the property.
(i) Pre-cexchange stage/ pre-contract stage
The steps in the pre-contract stage reflect the caveat emptor principle:
● The seller’s solicitor submits a pre-contract package to the buyer’s solicitor which
includes a draft contract and evidence of the seller’s title.
● The buyer’s solicitor must check the title very carefully to ensure that, firstly, the seller
is indeed entitled to sell the property and secondly that there are no incumbrances
such as restrictive covenants which would prevent the buyer from using the property
as they intend.
● It is important that the buyer’s solicitor is happy with the title before exchanging
contracts as the contract will usually contain a provision prohibiting the buyer from
raising further queries on the title known as requisitions after exchange.
● The buyer’s solicitor will not be limited to matters of title. They will also want to carry
out additional searches and enquiries such as:
○ Boundaries
○ Access
○ Disputes
○ Outgoings
○ Previous works/ alterations
■ The seller is not obliged to answer such enquiries but is probably best
advised to do so to facilitate the sale.
Professional Conduct Issues:
, 1. Can we act on behalf of this client?
2. Can we carry out the client’s instructions?
If a solicitor does not receive clear instructions to act and clarify these preliminary matters at
the outset, the solicitor and more importantly their client may run into severe difficulties later
in the transaction which could lead to delay, expense.
Paragraph 6 SRA Codes - Conflicts of Interest
● Acting for buyer and seller
○ Paragraph 6.2 - conflict of interest or significant risk of such a conflict.
○ An exception set out in Paragraph 6.2(a) - allow a solicitor to act for more
than one party even if there is a conflict of interest where the clients have a
substantial common interest in relation to the matter and provided that
certain safeguards can be put into place. However the law society issued
guidance that this exception cannot be used when acting for buyer and seller.
○ Another exception in Paragraph 6.2(b) - competing for the same objective.
● Acting for borrower and lender
○ This is more common and is possible unless Para 6.2 becomes relevant
○ 6.2(a) allows a solicitor to act for both parties in most cases as they have a
substantial common interest. However, there must be safeguards in place.
These include:
■ Making sure that all clients have given their consent in writing for you
to act for them, and;
■ You are satisfied that it is reasonable for you to do so.
Paragraph 1 SRA Codes - Contract Races
This is a legitimate selling technique as long as all prospective buyers know that they are
engaged in a race. But what if the seller instructs his solicitor that he doesn’t want anyone to
know.
● Para 1.4 - Where you act for a seller of land you must not mislead or attempt to
mislead the buyer either by your own acts or omissions or by being complicit in the
acts or omissions of others. You should inform all buyers immediately of the seller’s
intention to deal with more than one buyer.
○ If your client refuses to agree to such disclosure, you cannot disclose the
contract race to the prospective buyers as you have a duty of confidentiality to
your client under Para 6.3.
○ Instead you should immediately stop acting in the matter.
● Para 1.3 - This is also relevant where a solicitor is asked to give an undertaking. An
undertaking is a statement made by or on behalf of a solicitor or firm to someone who
reasonably places reliance on it that the solicitor/ firm will do something or cause
something to be done or not do something.
○ Failure to honor an undertaking is professional misconduct so anything you
undertake to do is under your control.
,Legal costs of a purchase
● Solicitor’s fees
● Search fees
● Stamp duty land tax (SDLT)
● Land Registry fees
Solicitors must look out for
● Money laundering
● Mortgage fraud
● Title fraud
Anti-Money Laundering
Warning signs of possible money laundering or fraud offences in the context of real estate
transactions.
Precautions could a law firm take to mitigate the risks of becoming involved in fraudulent real
estate transactions.
Warning signs Mitigation of risk
● Multiple owners ● Identity checks on your client and/ or
● Sudden or unexplained the other party.
changes in ownership ● Check the other side’s solicitors
● Unknown third party funding have completed their ID checks
● Property owned in someone ● Companies House search if buyer or
else's name seller a company
● Payments from numerous ● Note if a client avoids meeting
sources ● Check other side’s solicitor via Find
● Unusual purchase price a Solicitor
● Cash passing directly ● Checkproperty and mortgage
between buyer and seller consistent with financial position of
● Cash only buyers the client
Initial Instructions Checklist
● Contact details of your client ● Anticipates completion date
● Estate agent’s details ● Present/ intended use of property
● Current occupants
● Seller’s solicitor’s details
● Related sale?
● Address of the property ● Any other terms agreed?
● Purchase of fixtures/ fittings ● Survey details
● Tenure - Freehold or lEasehold ● Situation of property - proximity to
● Price railways, rivers, industry
● Deposit/ preliminary deposit ● Insurance
● Mortgage required
,
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller mc40. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.01. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
82871 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now