Property
Key Considerations:
1. Title - REG (title #) or UNREG (epitome)
2. Estate - FREEHOLD or LEASEHOLD
3. Buying, selling, or both (chain of txns)
4. Residential or Commercial
5. What stage is txn at?
Protocol: Law Society Conveyancing Protocol is best practices for residential freehold/leasehold; not for new builds or
comm
FREEHOLD LEASEHOLD
S2 - Draft K - Leasehold PIF
- PIF - Copy of draft lease or existing lease
PRE- - Official copies of: - Copy of any headlease/LL’s title
CONTRACT - REG: title register, or - Landlord sol drafts License to Assign
PACKAGE - UNREG: epitome of title
S2 - Local search - Company search if LL is company
- Drainage
SEARCHES - Environmental
- Commons registration
- Chancel repair (church)
- Bankruptcy
S2 - Standard pre-K enquiries re: boundaries, 3P - Enquiries re: 3y service charge accounts, rent,
rights, disputes, notices… insurance
ENQUIRIES - Review seller’s title - Review leasehold title, LL title
- Review date of lease wrt continuing liability for
covenants
- Consider liability on assignment
S2 Standard Conditions of Sale (std form) - Draft lease attached to K
- 1. Particulars - Standard Condns re: apportionments, existing
DRAFT - 2. Standard Condns leases, new leases
CONTRACT - 3. Special Condns (if agreed, put here - if not here, - Consent to assignment + BSOL review draft lease
then not binding) to ensure covenants are acceptable
- Draft License to Assign if need
- Stock Transfer of share in Management Company
if SELLER owns shares
S2 - Advise on contents of M Offer - Review Lender Handbook terms re leases and
- Review Lender Handbook - ensure title and unacceptable clauses
MORTGAGE search results comply - Check lease term is adequate for lender
1
, - Get M Deed signed
- Submit Certificate of Title (CoT) to lender
S3 - Law Society Formulae for ⇌Ks - If new lease - once ⇌Ks, lease engrossed and
- A - one sol holds both issued for signature as original & counterpart
EXCHANGE - B - both hold their own client’s - if assignment - exchange assignment docs
- C - chain of txns, 2 calls
S4 - Search: - If need, get LANDLORD consent
- REG: Land Registry Priority Searches - If new lease, engrossed lease ready for signature
PRE- - UNREG: Land Charges - Draft Completion Statement incl apportionments
COMPLETION - Draft Transfer Deed of rent service charge and all sums due
- Check Completion Info and Undertakings Form
- Draft Completion Statement
S5 - Transfer funds via bank transfer of cash - If need, complete License to Assign
- Date Transfer Deed - Complete and date lease and counterpart, or the
COMPLETION - Send title documents assignment
S6 - Pay estate agents - Draft Notice of Assignment to serve on
- Submit and pay any SDLT to HMRC LANDLORD
POST- - Register transfer and M at HMLR - Draft Notice of Charge to serve on LANDLORD if
COMPLETION BUYER has MORTGAGE
- Send Stock Transfer to LANDLORD and
Management Company to obtain new certificate
for BUYER
General Information
- Leasehold = apt to live in - can enforce covenants
- Freehold = house to live in - unlimited duration
- Residential Leasehold typically long term for apartment - 125, 699, 999 years; high premium up front
(purchase price) + nominal monthly rent
- Commercial Leasehold shorter term - 3, 7, 12 years; higher monthly rate
- Head lease = granted by Freehold owner to tenant
- Underlease = granted by tenant to subtenant out of head lease
- New lease granted = negotiable; freehold owner becomes landlord and buyer is first tenant; registrable if
>7y
- Assignment of existing lease = usually need landlord consent; transfer remaining term of existing leasehold;
any ∆ must be by Deed of Variation and must be neg’d by outgoing tenant and original landlord
Residential Leases
- Management Company: is party to lease & maintains property; buyer has share in MC on purchase of apt;
TENANT pays reasonable Service Charge
→ Residential Lease Terms
- Prescribed Clauses: standard form at front that summarize lease terms
2
, - General Provisions:
- Term - defined period; term <80yrs unacceptable to mortgage lender
- Easements & Exceptions - rights and access over common areas
- Suspension of Rent - if premises damaged
- Service Charge - assessment + payment
- Management Company - role of MC, landlord agreed to transfer freehold to MC, tenant takes share
- Tenant Covenants:
- Rent - nominal sum in long term
- Repair - tenant does inside repairs; landlord/MC do outside repairs
- Alterations - w/ consent
- Use - residential only
- Insurance - normally landlord buys and recovers via service charge paid by tenant
- Alienation - ability to sell or mortgage, usually no restriction in long term lease but may be restricted
in commercial
- Landlord Covenants:
- Quiet enjoyment
- Forfeiture
- Enforce other tenant’s covenants
- Unacceptable Covenants:
- Absolute prohibition on assignment in long term residential → if landlord refuses to amend an
unacceptable clause by Deed of Variation then buyer should not proceed
Commercial Leases
- Rent - paid monthly or quarterly
- Rent review - review + increase rent at specified intervals
- Use of property - specify type of commercial use
Professional Conduct Issues
a. Undertakings
i. If ⇌Ks via phone, both sol UT to send own client’s signed parts to e/o and bsol UT send 10% deposit
ii. If seller has mortgage, Ssol UT to Bsol to redeem mortgage out of sale proceeds on completion
iii. If seller has mortgage on UNREG land = ssol UT not to release deeds until in position to redeem
mortgage on completion
b. Confidentiality
- Sol can only discuss with 3P incl lender IF have client express authority
- Bsol acts for buyer and lender - bsol cannot disclose material facts to lender unless buyer instructs
- If buyer does not disclose material fact to lender, bsol must stop acting for lender
c. Conflicts of Interest
- Look for significant risk of COI
- DO NOT ACT FOR:
- Buyer + Seller
- 2 sellers who cannot agree on division of sale proceeds
- 2 sellers getting divorce
- 2 buyers who cannot agree on ownership of benf interests
- Buyer + parents who gifted money
- If acting for 2 parties, ensure you receive Joint Instructions
- Risk COI btwn buyer and lender when buyer does not want to disclose materially relevant info, OR
buyer intends to use money for business when lender only giving to buy house → IF COI, STOP
ACTING FOR BOTH
3
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