Real Estate LPC Notes (2022) - High distinction/89% attained
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DistinctionNotesLPC
WS1: Taking Instructions (Chapters 1, 2, 5, 6, 8 & 9)
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.
- Parties have not yet entered any legally binding
relationship with each other and can walk away
from the transaction at any point until exchange of
contracts.
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Energy Performance Certificate
Must be commissioned (even though not received)
before the property can be marketed.
- Obligation to use all reasonable efforts to ensure
that it is received within 7 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/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 Obtain proof of the client’s identity due to money
laundering regulations. laundering regulations.
Indirect instructions (e.g. from an estate agent on Indirect instructions (e.g. from an estate agent on
behalf of the client) must be confirmed directly by the behalf of the client) must be confirmed directly by the
client. 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
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Pre-contract searches and enquiries
Caveat emptor principle (let the buyer beware) makes
pre-contract searches necessary.
Investigate title
Buyer’s solicitor check documents carefully:
- Is seller entitled to sell what he is purporting to
sell?
- Any queries raised by requisitions?
N.B. Contract usually contains clause excluding buyer
from questioning the seller’s title once contracts for
sale have been entered.
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.
- Contract then prepared for signing, with 2 copies
printed off.
Buyer’s solicitor must check the client is financially
able to proceed with the transaction.
EXCHANGE OF CONTRACTS Legally binding stage – buyer gets an equitable interest over the property
Contract comes into existence = buyer receives 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.
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 – buyer gets legal title
Common for clients to “agree through the post” – method is agreement at requisitions stage.
On completion day, money is transferred to 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 that completion has taken
place.
Clients then informed by telephone.
Post-completion matters Post-completion matters
o Deal with the payment of stamp duty land tax.
o Must send the seller’s lender the amount required Must be paid within 30 days of completion.
to pay off mortgage, obtain a receipt and send to o Send particulars of the transaction to the HMRC
buyer’s solicitor, who will need for Land Registry. after completion. Certificate then issued by them
o Account to his client for the proceeds of sale and, if as proof of compliance. Without this, not possible
not already, submit bill of costs. to register.
o Must apply to Land Registry for 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.
Preliminary Questions: 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 telephone numbers of
sellers.
Name, address and person to contact at estate agents.
Name and address of the other party’s solicitor.
Property in Full address, description and plan of the property to be sold.
question Whether the property is freehold or leasehold tenure.
Price and financing The price at which the property is agreed to be sold.
Has a preliminary deposit been paid and if so, how much?
It is customary for a deposit of 10% of the Discuss how the deposit will be funded.
purchase price to be paid by the buyer when When will the deposit be payable? – often
the contract is entered into. If it is on exchange of contracts.
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