Lecture notes
Real estate workshop 1 (one) university of law (ULaw)
Detailed notes on the first workshop of real estate law and practice
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Seller
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RE1 Alice HickReal Estate – Taking Instructions
Outline of a simple transaction
Seller Buyer
EARLY STAGES
Marketing the property
The transaction will begin with the seller putting the property on
the market.
- Will usually engage in an estate agent.
- Will need to have commissioned an Energy Performance
Certificate.
Once a buyer is found, and price agreed, the conveyancing process
can then begin.
- Should be understood that the parties have not entered any
legally binding relationship with each other, and can walk away
from the transaction at any point until exchange of contracts.
Energy Performance Certificate
Must have been commissioned (even though not received) before
the property can be marketed.
- Obligation to use all reasonable efforts to ensure that it is
received within seven days of marketing.
- If not received, further 21 days.
- Once obtained, estate agent must provide a copy of the EPC
with the sale particulars and in the advising.
- Responsibility of seller or landlord to ensure that a valid EPC
free of charge is given to the person who becomes the buyer
or tenant.
- Green Deal – EPC will disclose: Government initiation that
enables property owners and tenants to carry out range of
energy efficiency measures with no upfront cost.
Minimum energy efficiency standard: From April 2018
- Landlords of certain domestic or non-domestic buildings will
not be able to grant new tenancies or renew existing if the
building does not meet EPC rating E.
- A landlord who wishes to rent a sub-standard property will
have to undertake relevant improvements… unless:
obtained an opinion that improvement will have
negative impact on fabric/structure
tenant’s consent has not been forthcoming.
would result in reduction of more than 5% of price
PRE-CONTRACT STAGE Due diligence most time heavy aspect
Take instructions Take instructions
Obtain proof of the client’s identity due to money laundering Obtain proof of the client’s identity due to money laundering
regulations. regulations.
Indirect instructions (e.g. from an estate agent on behalf of the Indirect instructions (e.g. from an estate agent on behalf of the
client) must be confirmed directly by the client). client) must be confirmed directly by the client).
Prepare pre-contract package
o The draft contract, showing what land the seller is selling and
on what terms;
o Evidence of the seller’s legal title to the property;
o Sometimes, the results of pre-contract searches which the
seller has made.
Commission survey
Pre-contract searches and enquiries
Application of the caveat emptor principle which makes pre-
contract searches necessary. Let the buyer beware.
1
, RE1 Alice Hick
Investigate title
Buyer’s solicitor check documents carefully that the seller is entitled
to sell what he is purporting to sell. Any queries raised by
requisitions.
- Contract usually contains clause excluding buyer from
questioning the seller’s title once contracts for sale have been
entered. Thus, essential to be raised and resolved before.
Approve draft contract
Once satisfied, buyer’s solicitor ready to return the draft contract to
the seller’s solicitor, telling him the buyer has approved the terms.
- Then prepared for signing, with two copies printed off.
EXCHANGE OF CONTRACTS Legally binding stage
Contract comes into existence = buyer receives the copy signed by the seller, and vice versa.
Or telephonic exchange: parties agree over the phone that contract has come into existence at that moment
Normally pays deposit
THE PRE-COMPLETION STAGE
Raise requisitions with the seller
Questions usually directed at the resolution of procedural queries to
do with the mechanics of completion – e.g. who holds key, where
should payments be made.
Prepare transfer deed
- Send transfer deed to seller for approval.
- The transfer deed carries out what the parties agreed to do in
the contract.
- NB: sometimes contract states that seller prepares this with
the draft contract.
- If registered land, standard form of a transfer, as prescribed by
Land Registration Rules – if not traditional conveyance.
Approve transfer deed
- Then the transfer deed is ‘engrossed’ – copy is then prepared
containing agreed amendments.
- This is the copy that will be signed by the parties.
Perform pre-completion searches
- Just to check that the info that was checked before exchange
remains valid.
Discharge of mortgage
Often the seller will have a mortgage which must be removed on
completion. Seller’s solicitor must confirm the exact amount.
Prepare for completion Prepare for completion
COMPLETION
Common today for clients to “agree through the post” – method is agreement at requisitions stage.
On completion day, money is transferred to the seller’s solicitor’s account from the buyer’s solicitors account.
The seller’s solicitor will be notified by bank when received and continues with completion.
Seller’s solicitor will then telephone buyer’s solicitor of safe arrival of funds and completion has taken place.
Clients then informed by telephone – they do not attend.
Post-completion matters Post-completion matters
o Must send the seller’s lender the amount required to pay off o Must deal with the payment of stamp duty land tax. Must be
mortgage, obtain a receipt and send to buyer’s solicitor, who paid within 30 days of completion.
will need for Land Registry. o Particulars of the transaction send to the HMRC after
o Account to his client for the proceeds of sale and, if not completion. Certificate then issued by them as proof of
already, submit bill of costs. compliance. Without this, not possible to register.
o Must apply to Land Registry for his client’s title to be
registered.
o Provides buyer with Title Information Document confirming
ownership. Solicitor may have to forward to lender or buyer for
safe keeping, or keep themselves.
2
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