Summary
Summary Real estate full notes
- Module
- Real Estate
- Institution
- University Of Law (ULaw)
Perfect for the real estate exams
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Seller
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Real Estate – Taking InstructionsUn-registered system
Seller proves title by establishing he has been in undisturbed possession of the land for a
long time.
Ownership proved by seller producing title deeds & seller must show buyer title deeds to
demonstrate his undisputed ownership of the land from the present day to a point in time
at least 15 years before.
Registered system
Gov maintains register of title to land . Land transfers take place by notifying registry of
change of ownership. Register sets out benefits & burdens enjoyed by the land
Outline of a simple transaction
Typical conveyancing transaction has 3 stages :
a) Pre contract stage – longest stage
b) Post contract (pre-completion) stage
c) Post completion
Seller Buyer
Early stages
Energy Performance Certificate
Must have been commissioned (even though not
received) before the property can be marketed.
Seller must obtain EPC from accredited energy
assessor when building is to be sold or rented
at earliest opportunity
obligation to ensure EPC has been received
by buyer within 7 days of marketing - if
not, further 21 days to obtain
Sellers responsibility to ensure EPC has been
given FREE of charge to buyer/tenant
financial penalties for failure ^
Green deal plan - EPC will disclose : gov plan
allowing property owners/tenants to carry out
range of efficiency measures = no extra cost.
Minimum energy efficiency standard
E . if doesn’t meet, landlords of certain
domestic/non buildings cant grant new or
renew leases.
If landlord letting sub-standard property &
has F or G – must undertake energy
efficiency improvement UNLESS landlord
improvement = negative effect on the
structure /fabric of property OR obtained
report from surveyor that making
improvements would result in 5% reduction
in market value of property
Marketing the property
Seller putting property on market (usually
1
, using estate agent)= transaction begins. BUT
EPC must be commissioned before by an estate
agent or the seller.
Once a buyer is found, and price agreed =
conveyancing process can then begin.
NO legally binding relationship here,
Taking instructions
Instructions should be confirmed in writing,
including costs client needs to pay – break
down costs
Obtain proof of the client’s identity due to
money laundering regulations.
Indirect instructions (e.g. from an estate agent
on behalf of the client) must be confirmed
directly by the client.
Info solicitor needs to obtain for instructions :
LOOK BELOW
Pre contract stage ( not legally binding)
Pre – contract package
Includes:
1. Draft contract
2. Evidence of sellers legal title to the property
o Documents proving sellers ownership
of land.
Queries arising from
documents are raised with
sellers solicitor by
‘requisitions’
o Usually clause excluding buyer from
questioning sellers title once
contracts have been entered into
3. Sometimes Result of pre-contract searches
seller has limited duty to disclose defects
in his legal title (not physical defects)
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.
Pre- contract searches & enquiries/
Commission survey
Application of the caveat emptor ‘Let buyer
beware’ principle = searches vital
Buyers finance
Must check client has sufficient funds to
purchase property including stamp duty &
deposit payable when entering into
contract (usually 10%)
Check draft contract
Once buyer is happy with search results,
proof of sellers title & terms of draft
contact, will return contract to sellers
2
, solicitor saying terms are approved &
ready to enter into contract
Contract will be printed, 2 copies
incorporating any agreed amendments
Exchange of contracts – Legally binding stage
Stage in transaction where binding contract comes into existence & parties cant withdraw without
incurring liability for breach
Buyer receives copy signed by seller and vice versa.
OR telephonic exchange: parties agree over the phone that contract has come into existence at
that moment
On exchange, buyer usually pays a deposit & us held as a ‘statement of intent’ by seller until
completion & can also insure property
Pre- Completion stage
Raise Requisitions with the seller
Q’s 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 the draft transfer deed at same time
as raising requisitions ( activates terms of
contract – no new terms)
Send transfer deed to seller for approval
Contract : what parties agreed to do BUT
Transfer deed: carries out what the
parties agreed to do in the contract
( must reflect terms of contract)
NB : sometimes contract states that seller
prepares this with the draft contract
If registered land, takes standard form of
transfer, as prescribed by LR rules – if
unregistered- usually traditional
conveyance
Approve transfer deed
when approved by sellers solicitor the
transfer deed is ‘engrossed’- copy is then
prepared containing agreed amendments
( copy that will be signed by both parties)
Seller must sign otherwise legal title in
estate doesn’t pass
Buyers lender
Lender may have instructed solicitors to
act for him for loan at same time as
transfer deed prep, Must complete work
for buyers lender
Lender must be certain that property he is
accepting as security for loan has good
title & necessary documents are
completed to effect the mortgage
Para 6.2 SRA acting for more than 1
party is restricted BUT here usually
allowed
3
, Solicitor acting for buyers lender must :
a) Draw up mortgage deed for signature by
borrower
b) Certify to lender that legal title to property
is in order (report on title)
Obtain a clear bankruptcy search against
borrower
Must also ensure buyer has funds to
complete transaction including deposit etc
Perform Pre-completion searches
Just to check that info that was checked before
exchange remains valid
Preparation for completion Preparation for completion
Discharge of sellers mortgage :
Sellers solicitor must confirm exact amount Final Checks
Checklist of what is to happen at
Final Checks completion
Checklist of what is to happen at completion Appointment for completion to start
Appointment for completion to start
Completion
Common today for clients to “agree through the post” – method is agreed at requisitions stage
Postal completion – time completion is due has to be agreed during phone call between the
solicitors & sellers solicitor is temporarily appointed to be the agent for the buyers solicitor &whilst
acting as such must carry out all the steps which the buyers solicitor instructs him to do . in
accordance with Law Society’s guidelines
On completion day : must transmit to sellers solicitor the money required for completion
Money sent to solicitors bank by electronic transfer from buyer to sellers solicitors account NO
PHYSICAL TRANSFER
Client should be informed by phone immediately after completion has taken place & sellers told
they are in possession of proceeds of sale & buyers can take possession of the property
Post completion
Must send sellers lender amount to pay of their Deal with payment of SDLT within 30
mortgage, obtain receipt & send receipt to days
buyers solicitor – proves to LR mortgage has Particulars of transaction must be
been discharged) delivered to HMRC after completion in
Must account to client for proceeds of sale & form of land transaction return, then
submit bill of costs - do not delay issued certificate – without certificate – no
CAN THEN CLOSE FILE legal ownership/registry
Once formalities are completed, must
apply to LR to register clients title, then LR
provides buyer with title info document
THEN CAN SEND FILE TO STORAGE
Linked transactions : solicitor must ensure that sale & purchase transactions are synchronised ( no
client left without home or 2 homes)
Preliminary questions: Other issues on which instructions should be obtained
ISSUE Acting for the seller Acting for the buyer
[Details required about the property
usually found on the register or the
title]
Personal details Full names and addresses of sellers/buyers, and home and business
4
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