College aantekeningen
Property Law and Practice - Freehold
- Vak
- Instelling
- Boek
This is an in-depth study of freehold transactions.
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Voorbeeld 4 van de 115 pagina's
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Voorbeeld van de inhoud
PROPERTYPRACTICE
(Freehold)
, Investigation of a registered and unregistered freehold title
Key elements and structure of freehold property transactions
A conveyancing transaction has three stages –
1. The pre-contract stage
2. The post-contract (or pre-completion) stage, and
3. The post-completion stage
Most legal work is done at the pre-contract stage and therefore this is longest. The pre-
contract stage may take 4-6 weeks from the date when instructions were first received. The
post-contract stage may then be much shorter (no more than 2 weeks usually). The post-
completion stage represents the ‘tidying up loose ends’ process after the buyer has bought
the property.
Outline of a simple transaction
1. Marketing Seller puts property on the market. Seller usually engages estate
the property agent. Before marketing can start, seller or estate agent needs to
have commissioned an EPC.
Once buyer found and a price agreed, conveyancing can begin. At
this stage, the parties have not entered into a legally-binding
relationship with each other and either of them can walk away at
any time until exchange of contracts.
2. Taking All firms regulated by the SRA have to comply with the SRA’S
instructions Transparency Rules 2018 which require them to public price and
service information for certain areas of law on their website, or on
request if firm doesn’t have website. One of the areas this applies
to is residential conveyancing. E.g. total cost of service, basis for
the charges, a description of and cost of any likely disbursements
and whether these disbursements attract VAT. This is so
individuals have the information needed to make an informed
choice of legal services provider.
Once the solicitor is retained by the client, instructions must be
taken. These instructions should normally be confirmed to the
client in writing, together with written information relating to costs
which the client will have to pay for work done by solicitor.
At this stage it’s necessary to obtain proof of client’s identity in
order to comply with anti-money laundering regulations.
3. Pre-contract Seller’s solicitor must prepare the pre-contract package for the
stage buyer. This includes –
The draft contract showing what land the seller is selling
and on what terms he is prepared to sell it
Evidence of the seller’s legal title to the property to prove
, that he does own and is entitled to sell the land and,
Sometimes the results of pre-contract searches which the
seller has made and other information about the property
Package may also include such items as copy local authority
planning permissions, which the buyer’s solicitor will want to see
to ensure property which client is buying was permitted to be
built.
When buyer’s solicitor receives pre-contract package from seller’s
solicitor, they check documents supplied to ensure that the terms
of the contract accord with their instructions and do not reveal any
problems which might make the property an unsuitable purchase
for their client.
Caveat emptor principle applies to conveyancing (let the buyer
beware) so it’s the buyer’s responsibility to find out all the
information which he needs to know before committing to the
purchase.
Title
Buyer’s solicitor must check to ensure that seller is entitled
to sell the land what he is purporting to sell
Any queries arising out of title documents are raised as
‘requisitions’ (questions/requests addressed to the seller
requiring him to resolve any apparent problems with the
seller’s ownership)
Contracts normally contain a clause excluding buyer from
questioning seller’s title once contracts have been entered
into therefore it’s crucial any questions regarding the title
are raised prior to a binding contract being entered into
Searches
Caveat emptor makes pre-contract searches necessary
These searches reveal a large amount of information about
the property which help buyer make up mind whether or
not to proceed with purchase
Some cases the seller’s solicitor will submit search
applications and pass results to buyer’s solicitor. In most
cases, buyer’s solicitor will make search application.
Buyer’s finances
Buyer’s solicitor must check client is able, financially, to
proceed with transaction
Unless client has sufficient available cash to purchase
property, he must’ve received a satisfactory offer of finance
and have available sufficient money overall to afford the
, transaction
Draft contract
When buyer’s solicitor is satisfied with their search results, with
proof of seller’s ownership (title) and with terms of the draft
contract, they’ll be ready to return the draft contract to seller’s
solicitor, telling them the buyer has approved the terms and is
ready to enter the contract.
Contract is prepared for the clients’ signatures. 2 copies of the
contract, incorporating any agreed amendments, are printed off –
the seller signs one and the buyer signs another.
4. Exchange of Binding contract comes into existence at this point. On exchange,
contracts the buyer normally pays a deposit. This was customarily 10% of
purchase price and will be held by the seller’s solicitor until
completion. The money serves as a ‘statement of intent’ by buyer
that he is serious about transaction and intends to fulfil his
contractual obligations.
5. Post- First step is usually for the buyer to ‘raise requisitions’ with the
contract/ seller. Requisitions are likely to be directed at the resolution of
pre- procedural queries relating to the mechanics of completion itself
completion e.g. buyer needs to know how much money is required from him
stage to complete the transaction, where completion is to take place and
who holds the keys to the property. These queries are usually
raised on a standard form which is sent to seller’s solicitor for their
replies.
Draft transfer deed
At same time as sending requisitions, buyer’s solicitor sends draft
transfer deed to seller’s solicitor for approval. In registered land,
this will take the form of a transfer. In unregistered land, it may
take the form of a traditional conveyance.
Customarily, it is the buyer’s solicitor who prepares the transfer
deed. However, it’s increasingly common for the contract to
provide that the seller will draft the transfer. This will then be
provided to the buyer at the same time as the draft contract. This
can help prevent delays between exchange and completion.
Contract states what parties have agreed to do, the transfer deed
carries it out (transfer deed activates the terms of the contract and
brings them alive). This deed must therefore be drafted to reflect
the terms of the contract (no new terms can be introduced at this
stage). Seller’s solicitor will check draft deed to ensure it’s been
done properly. Seller’s solicitor’s approval of draft transfer deed is
normally notified to buyer’s solicitor at the stage when seller’s
solicitor replies to buyer’s solicitors requisitions.
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