University of Law Real Estate 2021/22 exam notes
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Broad Stages in the Sale and Purchase of a Registered Freehold: Caveat emptor is Latin
for "Let the buyer beware"
- Due diligence is key
• Taking instructions
Need to publish total cost of serve, basis for charges, hourly fixed rates, description of
disbursements and VAT.
Confirm to client written – obtain ID
• Pre-exchange stage
Due diligence
Examine title, enquiries (ALL SUBJECT TO CONTRACT)
- Draft contract (what seller is selling and on what terms)
- Evidence of legal title to property
- Searches that seller made – LA and LR – buyer to check
- Planning permissions
Seller has a limited duty to disclose defects in the legal title (but not
physical defects), the caveat emptor principle applies so that it is the
buyer’s responsibility to find out all the information.
Title – queries raised by way of a requisition (any questions requiring
seller to solve any issues)
(clause to prevent buyer asking questions once contract is entered into)
At the same time as sending the requisitions, the buyer’s solicitor sends
the draft transfer deed to the seller’s solicitor for their approval. Transfer
as prescribed by land registration rules
Checking buyer’s finances – to afford sale, deposit and SDLT
• Exchange of contracts
Binding contract
Once deposit paid, buyer has equitable interest in the property.
Will incur liability for breach of contract if withdraw at this stage
Buyer will pay deposit normally held by seller’s solicitor until completion –
statement of intent by the buyer that he is serious and intends to fulfil his
contractual obligations
,• Pre-completion stage
- From buyer’s perspective – preparing transfer documentation; nothing has
changed in the title from the start and practicalities – how money will be
transferred and existing mortgage paid off or redeemed etc
• Completion
- Important stage for buyer
- Transfer document is completed and balance of the purchase monies is paid
over
• Post-completion stage
- Really important for the buyer’s Solicitor
- Very important practical matters
- Stamp duty land tax
- Register with the land registry
- Registered title legal ownership passes on registration not completion
Acting for buyer and seller
Overview: Highly unlikely that a solicitor could act for both. it will almost certainly be a breach of the
Code (conflict of interests) and the exceptions are not likely to apply.
Principles and paragraphs to consider:
Principle 7 – you act in best interests of the client. Therefore…
Para 6.2 of SRA Code – you do not act in relation to a matter or particular aspect of it if you have
a conflict of interest of significant risk of such a conflict in relation to that matter or aspect of it.
o SRA Glossary states that conflict of interest is “situation where your separate duties to act
in the best interests of two or more client’s conflicts” (can arise from start or later into the
transaction)
Whilst the SRA Codes do not prohibit acting for both seller and buyer, it will likely breach para
6.2:
o Even in a situation where both parties agree a deal at the outset, there is still the risk of
a conflict coming to light
o E.g. as a result of the searches and enquiries which causes a buyer and seller to
come into conflict because, for instance, the buyer may want to reduce the purchase
price, or insert conditionality clauses into the contract
Is there a conflict of interests, or significant risk of such conflict?
APPLY TO THE FACTS
o Is there an existing risk of conflict or interest?
Example: need to advise to renegotiate purchase price or term in contract clearly
detrimental to one party
o Is there a significant risk of such conflict arising in the future?
They may need to re-negotiate terms of the contract or property survey may
identify problems with the property which could lead to re-negotiation over the
purchase price.
Factors to consider:
o Complexity of matter and length of conveyancing chain involved – more complex means
greater the risk of conflict
o Likelihood of negotiation having to take place – in higher value or complex transaction,
there is a greater likelihood of substantial contract negotiations = increasing risk of conflict
o Bargaining power of parties and any vulnerability of party. More difficult to act in interest
of both clients where there is unequal bargaining power
o HIGH VALUE?
June 2020 Law Society made clear in practice note:
“There is a high risk of a conflict of interest if you act for both a buyer and a seller. You’ll need
to decide whether there is a conflict in the circumstances. If there is, then you should not act
for both clients”
If you decide there is a conflict of interest, does an exception under para 6.2 apply?
Under the exception in 6.2(a), a solicitor can act where there is a conflict of interest if the clients
have a ‘substantial common interest’ and the conditions in para 6.2(i)-(iii) are met
o However, June 2020 Law Society made clear this exception does not apply where acting
for buyer and seller in purchase of property
“The SRA’s exception for circumstances where the two clients have a
“substantially common interest” does not apply to a property purchase. Although
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