Property Practice

Chapter 1 - Key Elements and Structure of Freehold Property

Transactions: an Overview
● Key elements and structure of freehold property transactions
○ Conveyancing - process of transfer of title (ownership) to property between the seller
(transferor) and buyer (transferee).
○ (1) Pre contract stage -
■ (1) Instructions taken from client
■ (2) sellers solicitor carries out an investigation of title
● (title to property is checked and examined to ensure it is good with no
encumbrances etc) and then
● undertakes a deduction of title (sellers solicitor provides buyers
solicitor proof/evidence of the seller's title - copy title deeds or official
copies of registers of title) for the buyers solicitor.
○ If registered - apply to HMLR for official copies using form OC1
● Standard pre-contract enquiries are made of sellers solicitor to
ascertain further info about the property that should be known by seller
- pre-contract searches are made of third parties such as local
authority and local water authority to ascertain important information
about property that is held by third parties
■ (3) Provide a draft contract and supporting documentation as well as replies to
standard pre-contract enquiries and requisitions on title (additional enquiries
of sellers solicitor about issues - buyer generally cannot raise further ones
after contracts exchanged) raised by buyers solicitor - also deal with any
proposals to amend the draft contract, produce clean copies for signature and
request a redemption statement from any mortgagees.
■ (4) Buyers solicitor carries out an investigation of title under principle of caveat
emptor (onus is on buyer to investigate title fully and its problems or issues -
seller has a limited duty of disclosure)- check approve and may amend draft
contract and check and review results of standard pre-contract searches and
enquiries of both seller and third parties - also raise any additional enquiries
and requisitions on title. Both solicitors arrange for contract to be signed and
buyers solicitor reports to their client and possibly mortgagee and obtains the
deposit in readiness for exchange of contracts - buyer is usually advised to
insure property from exchange of contracts
○ (2) Exchange of contracts - deposit is paid (typically 10% of purchase price) and held
by the sellers solicitor as a stakeholder and cannot be released to either party without
consent of the buyer (one exception: can be used to fund deposit on any onward
purchase provided it will also be held as stakeholder up the chain) and both parties
become bound to complete the transaction on the agreed completion date - buyer
gains an equitable interest under a constructive trust - until exchange of contracts the
parties are usually free to withdraw from the transaction as it remains subject to
contract - but after cannot without negative effects
○ (3) Pre- completion stage -
■ buyers solicitor prepares the draft transfer deed for approval by sellers
solicitor and the mortgage deed for execution by buyer - carry out pre-
completion searches and enquiries of the sellers solicitor and third parties
 (things relating to practicalities of completion like discharge of mortgages),
submit their certificate of title/ report on title to lender and request mortgage
advance -
■ also request from clients the balance due in order to complete and deal with
any amendments to transfer deed requested by sellers solicitor, producing a
clean copy for execution.
■ Sellers solicitor approves the transfer deed and arranges for it to be executed
by seller - also respond to buyers completion information and undertakings
form which includes an undertaking to discharge any pre-existing mortgages
○ (4) Completion - when the balance purchase price is paid, keys handed over and
transfer deed becomes completed. Buyer becomes entitled to apply to become
registered as the proprietor and gains legal ownership subject to registration at HM
Land Registry - more specifically in the case of land with registered title the legal
transfer does not technically take place until registered at LR -
■ if unregistered it must be registered within 2 months of completion otherwise
will be void and held on a bare trust
○ (5) Post completion Stage
■ Sellers solicitor discharges/ redeems any existing mortgages and provides
buyers solicitor with proof of discharge - also pay any estate agents costs (if
authorised to do so by seller) and account to their client
■ Buyers solicitor deals with submission of Stamp Duty/ Land Transaction Tax
return and payment of the tax to HMRC
■ Buyers solicitor then deal with registration at HM land Registry and sometimes
companies house
● Taking Instructions
○ Need to take detailed instructions and anticipate any potential issues at the beginning
of a transaction
○ Some basic transactional information will be provided by the estate agent as part of a
memorandum of the sale - but instructions should be confirmed with the client in all
cases - most firms will provide a standard checklist but key issues of concern are:
■ In all cases:
● Full details of buyer and seller
● Estate agents details
● Details of solicitors acting for other side
● Property address and tenure (freehold/ leasehold)
● Agreed purchase price and deposit
● Details of any fixtures to be removed or fittings to be included - fixtures
pass on completion whereas fittings do not - thus important to contract
out of the general rules by specifying any fixtures that are to be
removed and any fittings to remain
● Anticipated/ proposed completion date
● Details of any related sale/purchase where synchronisation will be
required
● Position as to the Energy Performance Certificate
● Details of who is in occupation - will be relevant for the purposes of the
contract
● Details of existing use and past alterations and additions - will be
relevant when considering planning matters
● Conduct issues
● Verify clients identity + money laundering checks
 ● Advise on costs, funds required on account and anticipated
disbursements
● Produce formal engagement letter
● For non-residential ascertain the VAT position
● Details of any other terms agreed between the parties
■ For the seller
● Details of agreed estate agents fees
● Details of any existing mortgage including approximate balances due
account numbers and location of any title deeds
● Ask client to complete standard property info forms
● In case of co-owned property ascertain the equitable interest (joint
tenants or tenants in common)
● Ask if any preliminary deposit has been paid by the buyer as this will
need to be set off in final completion statement - confirms the buyers
financial position
● Advice on liability for CGT
■ For buyer
● Details of any proposed mortgage and if required, generic advice on
the opinions
● Position concerning age of the property, property survey and advice on
types of survey
● Details of the proposed use and proposed alterations and additions -
will be relevant when considering planning matters
● Situation of the property -is it near to industrial premises, open land or
a watercourse, will be relevant when considering which optional
searches and enquiries to undertake
● Advise on co-ownership and holding of the equitable interest -
depending on the circumstances an express declaration of trust and
the making of wills should be advices
● Advice on potential future liability for CGT
○ Synchronisation - imperative where a client has a related sale and purchase - ie
buying house when selling old one - making sure that contracts on the sale are
exchanged at the same time as those on the purchase with same completion date -
○ Energy Performance Certificate - produced by an accredited energy assessor
detailing the properties energy use, costs and efficiency based on an official rating
from A to G and is valid for 10 years - must usually be made available by seller
without charge before or within 7 days of marketing and 28 days. Listed properties
are excepted
○ Sources of Finance/ Types of Mortgage - most clients will need to rely on borrowing
to finance a purchase - usually from a high street bank of building society - if acting
for both parties a solicitor will have two clients whose needs to both be balanced and
satisfied
■ Client may require advice concerning a mortgage - can only give generic
advice - ie repayment mortgage or interest only mortgage
● Repayment mortgage - entire loan is repayable over a set term by
monthly repayments of both interest and capital
● Interest only - borrower makes monthly payments of interest only - at
end of term must repay the whole capital advance to the lender
● Endowment mortgages - type of interest only mortgage where
borrower takes out an endowment policy on his life in the same sum
 as the amount of the loan - will only pay back interest normally but also
will at the end of the mortgage term or death the endowment sum must
be repaid - but endowment policy should produce a lump sum which
should be sufficient to pay off the outstanding sum
○ If the borrower wishes to sell the property within a few years of
having bought it the whole debt becomes repayable on sale
■ Mortgage is based on the value of the property not the purchase price -
lenders will require the property to be valued by a surveyor giving the market
value
■ If the lender agrees to lend a large amount ie 90% then they may insist that
the borrower secures a mortgage insurance scheme in case payments are not
made by the borrower - provides financial protection for the lender if they
default
○ Advice on Survey - buyer should be advised whether to commission a survey
(professionally produced report following inspection) of the property before exchange
of contracts. Any adverse mattress and reduction in purchase price must be reported
to buyers mortgagee who may withdraw or change terms. Different types of survey:
■ Basic valuation - does not assess physical state and condition of property -
commissioned by a lender as a minimum requirement to ascertain its market
value for secured lending purposes - ensure that they will get their money
back
■ Full structural survey (RICS level 3)- most comprehensive form and contains
detailed assessment of physical state and condition of the property, also the
most expensive type but might be worth it if property is old, particularly
valuable or have been alterations in past - can be used to re-negotiate
purchase price (must be reported to lender)
■ Homebuyers Valuation and Report/ Survey -Details of homebuyers valuation
and report/ survey lies somewhere in the middle - will refer to need for repairs
but this inspection will be limited often to exposed and accessible areas
■ Surveyor owes a DOC to his client to carry out the survey with reasonable skill
and care - if surveyor is negligent in preparing the report and as a result the
buyer suffers loss the surveyor can be sued for breach of contract/ negligence
- any clause to limit or exclude liability for negligence must be reasonable
○ Structural defects insurance policy - covers defects in design and construction for a
period of 10 years, NHBC through its Buildmark scheme provides the most common
type of policy although other products are available - for first two years from
construction the builder is responsible and for the final 8 years NHBC is responsible
● The Law Society Conveyancing Protocol
○ Protocol sets out to standardise the residential conveyancing process making it more
transparent and efficient and improving the experience for all involved - provides a
standard set of steps to follow for freehold or leasehold as a home for an owner
occupier and also provides standard forms to be used as part of the conveyancing
process - e.g. property information from and completion information and undertakings
form
○ Only compulsory to adopt the protocol for firms part of the Law Society's
Conveyancing Quality Scheme - provides for members accredited as part of the
scheme a recognised quality standard for residential conveyancing practices - aims to
improve consumer confidence by including a client service charter and mandatory
training and enforcement procedures - membership is often a prerequisite to act for
major lenders
 ● Acting for more than one Party
○ Buyer and seller
■ Significant risk of conflict of interest
■ Code does not expressly prohibit a solicitor from acting for a buyer and seller
or landlord and tenant - but cannot act if there is a client conflict or significant
risk thereof unless one of the exceptions applies (ie substantially common
interest in relation to the matter)
○ Lender and borrower
■ Common for mortgagee to also instruct the buyers solicitor to act on its behalf
in connection with mortgage
■ In most cases mortgagor and mortgagees interests are the same - issues
arise when financial position, or intending to breach one of the offer terms, not
willing to disclose facts etc
■ In such instances solicitor should cease acting for one or both
■ No express rule preventing solicitor for acting for both
○ Acting for Joint borrowers
■ No rule preventing this - but problems could emerge if a conflict of interest
caused by duress arises
■ Ie solicitor acting for husband must advise wife to take independent legal
advice and provide an Etridge letter to banks solicitor confirming that he had
given her such advice

Chapter 2 - Pre- Contract (1) Deduction and Investigation of Title

● Intro
○ Requirements differ according to whether there is registered or unregistered title to
the property
■ Registered title - where title is registered and is deduced by sellers solicitor
providing to buyers officials copies of register and TP and official copies of
any documents referred to and filed under title
■ Unregistered title - where title is not registered - is deduced by sellers solicitor
providing to buyers an epitome of title (copy paper title deeds and documents)
- can also accept a summary in place of seeing original documents provided
that they are accompanied by a certificate certifying that it is a true complete
and accurate copy
○ Investigation of title is an important first step of the sellers solicitor as a precursor to
deduction of title - enables them to pre-empt any potential issues likely to be raised
by the buyers solicitor specify relevant incumbrances in the contract and consider
possible solutions to problems at an early stage - buyers solicitor will then carry out
their own investigation of title, raise requisitions on title and will need to make sure
that the sellers solicitor resolves any issues - buyers lender will need to be satisfied
that title is good and marketable and in accordance with its requirements so that they
may be able to sell the property in the event of default
● Deduction and Investigation of Title - Registered Freehold Titles
○ If registered then title is deduced (ownership proved) by sellers solicitor providing
official copies from LR and any other documents referred to. Requirement of Law
Society Conveyancing Protocol that documents must be official not copies and no
more than 6 months old
○ Official copies will have a search from date as to then they were issued by HM land
registry:
 ■ Title plan - visual representation of the estate usually showing the physical
extent of land edged in red and any leases edged in blue
■ Register of title - text based description of estate
○ Overriding interests are interests which while not substantively registrable can bind a
purchaser - include persons in actual occupation, local land charges, legal
easements arising by virtue of long user prescription and legal leases of 7 years or
less - existence of overriding interests is usually ascertained through pre-contract
searches
■ However if it is a lease under 7 years but to start at some time over 3 months
in the future (reversionary) then it is essential for it to be registered
○ Three separate registers comprising registers of title:
■ Property register - describes the property, its extent and rights (e.g covenants)
benefiting it. Whether freehold or leasehold, a description with reference to
title plan, any exclusions or limitations on title, rights benefiting or burdening
the property e.g. easements and finally will have any declarations as to light
and air
■ Proprietorship register - contains details as to the ownership of the property,
class of title (absolute, possessory, qualified or good leasehold title) and any
restrictions (most common is form a/ co-ownership restriction and restriction to
protect a mortgagee's interest). It includes the following info:
● Names and addresses of the registered proprietors - if not the same as
sellers there may be issues
● For dispositions registered after 2000 the price paid by current owner
● Whether an indemnity covenant was given by the owner on purchase
○ Restrictions are only entered into proprietorship register to limit
the circumstances in which the proprietor can dispose of the
land
■ Charges register - contains adverse matters affecting the property such as
incumbrances or things burdening it such as:
● Mortgages and charges
● Covenants burdening the property
● Leases
● Notices
■ Title is deduced when sellers solicitor sends the contract bundle to buyers
solicitor:
● Draft contract
● Copy of register and title plan and any other official documents - less
than 6 months old
● Explanation and evidence if name of owner is different ie marriage
certificate
● Whether any info needs to be updated on the register prior to sale
● Replies to property info form
● Replies to fittings and contents form
● Copies of any other relevant docs like PP building regulations
approvals guarantees etc
● EPC
● Deduction and Investigation of Title - Unregistered Freehold Titles
○ If land is unregistered then title is deduced by the seller's solicitor providing to the
buyer an epitome of title and must evidence a good root of title. First step will be to
obtain original title deeds and documents and confirm that the property has not
previously been registered
■ Title deeds - conveyances, deeds of gift, assents, mortgages, land charges
searches and sometimes ancillary documents like old pre-contract searches
and copy planning documents
● Will often be held by mortgagee - released to sellers solicitor on
receipt of an undertaking that they will hold and return them
● Sellers solicitor will not send them until completion - instead will send
an epitome of title
■ Epitome of title - simply a list of material title deeds and documents in date
order - will be copies of the documents and original documents will be handed
over on completion
● Will begin with a good root of title - best option is a conveyance on
sale or a charge (mortgage)
○ Be at least 15 years old
○ Deal with whole legal and equitable ownership of the property
○ Contain an adequate description of the property which
comprises both a detailed plan showing extent of property and
postal description
○ Contain nothing to cast doubt on title
○ Should include land charges search results, index map etc
○ Does not need to include, leases that expired through the
effluxion of time and pre-root documents
● Once received the buyers solicitor must review the documents in the
epitome of title as part of the process of investigation of title:
○ Check there is a clear and unbroken ownership chain
○ Make sure property description is clear and consistent
○ Check all documents have been properly stamped
○ Make sure all documents have been properly executed
○ Check for encumbrances (easements and covenants
burdening the property) and ancillary rights (easements
benefiting)
○ Check land charges searches
● If shows that it should have been registered and was not within 2
months then will have been void so solicitor should insist on seller
being registered as proprietor
■ Good root of title - is at least 15 years old and deals with the whole of the legal
and equitable/beneficial interest in the property (fee simple). Provides an
adequate and identifiable description (does not need to be a plan- ie could not
raise requisition just because not present) of the property and does not cast
doubt on title
● Best root of title is a conveyance - basically been investigated twice
● Mortgage can be used but is less satisfactory
● Deed of gift or an assent (transfer by PRs) can be used but does not
have the double guarantee of a conveyance and will not have been
investigated by sellers solicitor so best to avoid
● Generally do not need to deduce any pre-root documents - buyer
cannot ask unless it is:
○ POA under which any deed was executed
 ○ Where property is sold subject to any matter that is created
pre-root or contained in a pre root document
○ Document creating any limitation or trust by which any part of
the property is disposed of
○ Once has deduced title to the property it is the role of the buyers solicitor to
investigate and ensure it is good and marketable free from unknown or unacceptable
incumberances
○ Requisition on title will be sent by buyer to seller for each defect or adverse search
result
○ Buyers solicitor will also want to check that the property is not already registered and
that there are no cautions against first registration - can be ascertained by carrying
out an index map search
○ Also important to check whether property should have been registered before (if not
registered within 2 months of a triggering event then transaction would be void)
○ Clear and unbroken chain of ownership - must lead to current owners
■ Check spellings and sellers solicitor should be asked to account for any
missing links
■ evidence of deaths or changes to name will need to be provided
■ For disposition by PRs a certified copy for grant of representation to be
obtained
○ Property description must be clear and consistent throughout title documents and
reflected in contract - land registry will not accept if not at least one deed with an
adequate description of the property with a plan showing location and extent
○ Proper stamping of documents - before Stamp Duty Land Tax there used to be a
system of stamp duty in place. Were two types of stamp duty
■ 1) - ad valorem - payable on the value of a conveyance on sale - low value
transactions were exempt or subject to a reduced rate - was not payable on
mortgages after 1971 and deeds or gifts of assent after april 1987
■ 2) other type of stamp duty was the inland revenue particulars delivered which
required conveyances on sale and some other documents to be stamped from
1931
○ Proper execution of documents - generally all conveyances must be made by deed
otherwise void
■ Before 31 July 1990 - deed had to be signed sealed and delivered
■ After 31 July 1990 - document must be:
● In writing and clear on the face that it is intended to be a deed
● Signed in presence of witness (also signs)
● Delivered as a deed - executing party intends to be bound by the deed
(presumed following execution)
■ Sellers must always execute transfers of land - buyers only need to execute
when making a new declaration e.g. a declaration of trust as to co-ownership
of the questionable interest or declaration as to light and air
○ Ancillary Rights and Incumberances - buyers solicitor must check that the property
has the benefit of all necessary ancillary rights for the reasonable and proper use of
the property - includes easements benefiting the property and that it is not subject to
materially adverse rights or restrictions (incumberances) such as easements
burdening the property
○ Land Charges Searches - land charges have had to be registered since 1925 -
necessary to protect the holder of the right and bind subsequent owners - land
charges search using form K15 must be made against all estate owners mentioned in
 documents within the epitome of title for their years of ownership unless search
results have already been provided as part of epitome - remember that this is
different from land charges registry which deals with those administered by local
authorities or HM land registry. Will need to make sure to search against all counties
including historic ones. Will not bind a purchaser if not registered but will if was not for
value ie a gift Examples:
■ Puisne mortgage - Class C
■ Equitable charge - Class C
■ Estate contract - Class C
■ Restrictive covenant - Class D
■ Equitable easement - Class D
■ Home rights - Class F
● Legal interests which are not registerable will be binding regardless of
if they had knowledge as they bind the world as a whole
○ Buyers solicitor should also carry out a search of the index map (if not following the
protocol in which case the sellers solicitor will provide the index map search as part of
the contract bundle)
● Title Problems and Solutions
○ All mortgages which form part of the deduced title must be discharged otherwise the
buyer will purchase subject to the existing mortgage (will only be discharged when
lender executes a vacating receipt confirming that mortgage has been repaid)
○ Mines and minerals are excluded from title (in either property register or title
documents) - rights are usually vested in the Coal Authority. Should raise the
following enquiries:
■ If known who has benefit of the right
■ Have the rights been exercised in the past and any compensation payable
■ Is the seller aware of any proposals to exercise such rights
■ Has the property suffered from any structural problems
○ Rights Benefiting the Property -should be checked to make sure that the property has
the benefit of all ancillary rights (rights of way, rights of support and rights to services/
utilities and drainage running over private land). Benefits of legal easements will run
with the land but the terms should be checked carefully to make sure that they are
suitable - right of way should be at all times and for all purposes connected with the
reasonable use and enjoyment of the land. The Following enquiries should be raised:
■ Have there been problems or disputes with regard to the exercise of the rights
or payment towards them
■ Have there been any notices with regard to the rights
■ Have any contributions towards maintenance been paid or requested and are
any costs anticipated
○ Seller is not the same as the registered proprietor - can be for a number of reasons -
death of co-owner, sale by PRs or marriage - evidence of such should be provided
○ Marriage - a non owning spouse can be registered as having a right under Family
Law Act 1996 - can be registered any time up to completion and cannot be removed
by overreaching - buyers solicitor should insist the spouse signs special condition 7
os SCS to confirm that they will vacate and not have any interest
○ Co-Ownership - concurrent ownership of the same property by more than one person
and always gives rise to a trust of land - separation of legal and equitable interests -
legal interest will always be joint tenants and equitable can either be joint tenancy or
tenancy in common
 ■ Joint tenancy - own whole of the interest together and individually hold
nothing, right of survivorship applies and is not possible to leave a beneficial
share under a normal will or on intestacy - property will automatically pass to
the survivor on death
■ Tenancy in common - own separate undivided shares of the equitable
interest, right of survivorship does not apply
■ In registered land the position is that “equity follows the law” and co-owners
will hold the equitable interest as joint tenants unless there is a Form A
restriction in the proprietorship register
■ Unregistered land - deed transferring the property to the co-owners will
usually expressly state whether being held as joint tenants or tenants in
common- if it is silent a buyer is entitled to assume co-owners are holding as
joint tenants and has been no severance provided:
● (1) Conveyance from survivor - statement that they are the beneficial
owner
● (2) That no memorandum of severance has been endorsed on
conveyance
● (3) That neither joint tenant has been declared bankrupt - performing
Land Charges Search against each joint tenant
● If there are bankruptcy proceedings or a memorandum of severance
the tenancy must be regarded as a TIC
■ Once beneficial ownership of co-owners has been ascertained the following
should be taken if death of a co-owner:
● Beneficial joint tenants
○ All cases - obtain certified copy of death certificate, in order to
make sure that it was not severed then you should obtain a
statement from the survivor that they are the sole beneficial
owner (assuming that there is no clear severance/ bankruptcy)
○ Registered - surviving co-owner can convey the property - can
be assumed there has been no severance of the equitable joint
tenancy unless a Form A restriction entered into in
proprietorship register
○ Unregistered land - surviving co-owners can convey property
provided that: no memorandum of severance, no bankruptcy
(form K15) proceedings and transfer states that survivor is
solely and beneficially entitled to the land
■ Land charges search, conveyance inspected and
confirmed conveyance will contain necessary statement
● Beneficial tenants in common -
○ All cases obtain a certified copy of the death certificate. Also if
sole surviving co-owner then a second trustee must be
appointed to overreach the equitable interest of the deceased
○ Trusts
■ Buyer is protected where at least two trustees consent - but should get a copy
of the trust instrument to ensure that those two people are actually trustees
● If they are trustees but they used their power ultra views then
overreaching will still occur but may be a reserved power by someone
needed to authorise the trustees to dispose though - will have rights
against trustees not purchaser
 ● If have notice that it is being disposed in breach of trust then it will be
unlawful and overreaching cannot occur
○ Personal Representatives - can give valid receipt for capital monies but all PRs must
be joined to conveyance - if any have died will need evidence
■ Will want to see the grant of representation if sold by PRs (or even the
beneficiary under will)
■ Registered title
● PRs may apply to be registered as proprietors - will be no
conveyancing problems provided any restriction in the register is
complied with otherwise may sell property or pass legal estate to
beneficiaries under an assent (vesting of legal estate in beneficiary
rather than transfer to a third party)
● Form AS1 (whole of land) or AS3 (part of land must be used
● On sale by PRs who are not registered as proprietors a buyer should
not complete until seller has provided a certified copy of court issued
grant of representation otherwise PRs will not be able to deal with
estate of deceased
■ Unregistered title
● Property may inadvertently be disposed of more than once as buyer is
not entitled to see the will they may not be sure the person who the
property was assented to was the properly entitled person -
● S36(6) AEA - buyer will take good title provided that:
○ Conveyance to buyer contains a S36 statement (confirming
that there have been no previous dispositions of the same land
by the PRs)
○ There is no memorandum of a previous conveyance or assent
endorsed on the grant of representation and
○ Any prior disposition is not for valuable consideration
● On a sale by PRs of land with unregistered title the following should be
checked:
○ Certified copy grant of representation
○ That all PRs are joined in
○ That there is no memorandum of a previous disposition
endorsed on the grant of representation
○ That a memorandum of the conveyance is endorsed on the
grant of representation
○ That the conveyance to the buyer contains a S36 statement
● Must ensure that property has been properly vested by way of an
assent - in unregistered land any assent by PRs must be in writing and
made by deed if assentee gives new covenants
● On an assent by PRs with unregistered title the following must be
checked:
○ Certified copy grant of representation to check PRs authority
○ That all PRs are joined in
○ That there is no memorandum of a previous endorsed on the
grant of representation
○ That a memorandum of the conveyance is endorsed on the
grant of representation
○ That the assent contains an acknowledgement for production
of the original grant
○ Class of title
■ If property is registered with less than absolute title then usual concerns would
apply - lenders requirements should be checked and complied with - may
require indemnity insurance to be in place
■ Sellers should remedy problems at their own expense - if they have had
possessory title for 12 years may be possible to make an application to HM
Land Registry to upgrade to absolute title. If qualified title then should ask if
document can be located and sent to HM Land Registry whereupon it may be
upgraded to absolute title
■ If cannot upgrade then Indemnity Insurance must be provided at sellers
expense to cover risk of enforcement or legal action in respect of a defect in
title)
○ Restrictions
■ Terms of any restrictions in proprietorship register must be checked carefully
as disposition cannot usually be registered without compliance with their
terms
■ Most common is form A and restriction to protect a mortgagee
■ Usually removed on disposition to buyer
○ Declarations on light and air
■ Common on sale of part of land within a title - will appear on property register
(RL) or title documents within epitome (UL)
■ Specific enquiry should be made as to the extent of the land benefiting
○ Mortgages
■ Existing undischarged mortgages entered into in charges register or referred
to in epitome of tile will not usually be a problem and buyer will not take
subject to them provided:
● An undertaking will be in place to discharge them on completion (ie
obtain a vacating receipt)
● They are not included in the list of specified incumbrances
■ Worth raising requisition of sellers solicitor that undertaking will be provided
before completion to discharge or do so before completion and provide
evidence
■ Registered land- mortgage will be protected as follows:
● Two entries in charges register - one for date and another giving
details of proprietor of charge
● Entries are usually supported by restriction in the proprietorship
register providing no disposition of the property may be made without
consent of the lender
■ Unregistered - copy of any mortgage will be provided as part of epitome of tile
● Mortgages are protected by lender retaining title deeds
● Second and subsequent mortgages carry no right to hold the deeds
and are protected as a class C land charge
■ Mortgages can be legal or equitable
● If legal then the owners will still be legal and equitable but the bank will
have a legal interest in the property until the loan is repaid - does not
transfer legal or equitable ownership - just an interest for bank
○ Restrictive Covenants
■ Restrict the use of land - they are subtractive in that they take rights away
from the owner of land - question of whether it is restrictive in nature is one of
substance rather than form
 ■ Registerable by way of notice in the Charges Register of the servient land and
a notice in the property register of the dominant land
■ Burden of a restrictive covenant usually runs with the land and so are normally
binding on buyer following completion - covenants in registered land will
usually be set out or referred to in charges register and in unregistered will
need to be registered as a class D land charge
■ If there are restrictive covenants affecting title the following should be raised:
● Has the covenant been complied with and can evidence of compliance
be provided?
● Has/ Have there been any breaches of covenant - if so details should
be provided
● Have there been any notices served, any action taken or is any action
anticipated in respect of the covenants?
■ Any breaches should be rectified at sellers expense or indemnity insurance
should be considered as the main option.
■ 3 Solutions if restrictive covenant is likely to be problematic for a buyer:
● 1) - ascertain from seller who has the benefit of the covenant so that
they can be approached with a request to release or vary the covenant
or provide a one off deed of consent
● 2) Make an application to upper tribunal for modification or discharge
under S84 LPA
● 3) Ask seller to provide restrictive covenant indemnity policy for buyer,
mortgagee and successors in title
○ Positive Covenants
■ Require owner of land positively to do something - typically expending money
■ Usually do not run with the land but can be binding through chain of indemnity
covenants
■ First ascertain if current seller gave indemnity covenant to transferor when
they acquired the property - will appear in conveyance itself or proprietorship
register - if so it is likely the seller will usually insist the buyer gives a
corresponding indemnity on acquisition
■ If buyer will be liable then following additional enquiries should be raised:
● Have covenants been complied with and have they been enforced -
details of them
● What costs have been involved in complying with covenant
● Have there been any problems or disputes with regard to the
covenants or payments made under them
● Have there been any notices served, any action taken or is any action
anticipated in respect of the covenants or any payment made under
them
● Have any contributions been paid or requested and are any costs
anticipated
○ Missing Covenants - substance is unknown because of lost or missing deed - buyer
should insist on indemnity insurance policy
○ Adverse rights/ easements
● Have they been exercised
● Have there been any problems or disputes with regard to them
● Have there been any notices with regard to the rights
● Have any contributions towards maintenance been paid or requested
and any costs anticipated - further details required
 ■ Indemnity insurance could be considered as an option particularly if rights are
old and have not been exercised
○ Leases
■ If subject to a legal lease of more than 7 years this should be noted against
landlords title in charges register - of 7 years or less may be overriding
interests and equitable leases may also be overriding interests if tenant is in
actual occupation
○ Notices and Home rights
■ Notices may be registered in charges register to protect 3rd party interests -
can be entered into either with or without consent of owner
■ Used often to protect rights such as of estate contracts or of non-owning
spouse to occupy property
■ If home rights are revealed in addition to seeking removal of the notice/ land
charge the interested party should also waive their rights in the property in the
contract
■ If other notice is revealed seller must be asked to confirm the interest to which
it relates or seller should be asked to remove on or before completion

Chapter 3 - Pre-Contact (2) Searches, Enquiries and Planning

Matters
● Pre-contract searches and enquiries + why they are carried out -
○ Usually undertaken by buyers solicitor prior in order to ascertain as much information
as possible about the property from the seller and third parties - buyers solicitor
needs to carry them out due to the principle of caveat emptor but a seller may be
liable in misrepresentation for misleading replies to enquiries - under no duty
positively to disclose adverse matters safe for specific encumbrances affecting the
title - if cannot be resolved to buyers satisfaction they may withdraw from the
transaction.
■ The only thing the seller must warrant is that there are no latent defects on
title (defects unascertainable through visual examination)
○ Property is sold subject to any encumbrances which are:
■ Specified in contract,
■ Those the buyer knows of
■ Recorded in a public register (regardless of if they know)
■ Discoverable by inspection of property
■ Seller does not and could not reasonably know of
■ Public requirements
○ Enquiries before contract - all situations - enquiries raised by the buyer's solicitor
concerning information that should be known to the seller, will vary according to the
nature of the property and provide useful information that may not usually be
available from third parties. Seller is technically not obliged to answer these but must
not make misrepresentations to induce the buyer to enter the contract- seller also
cannot contract out liability for any misrepresentations unless it is fair and reasonable
to do so. Only warranty given is that there are no latent defects - ie those
unascertainable through visual examination
■ Residential property - For solicitors using the law society conveyancing
protocol standard forms will be used for things like new homes (TA8),
leasehold information (TA7), fittings and contents form for what is to be
 removed or included in sale (TA10) and property information on things like
boundaries, disputes, notices and proposals, environmental matters etc (TA6)
■ Commercial property - more detailed enquiries may be used but is common to
use the Commercial Property Standard Enquiries
○ Property inspection/ survey - all situations - buyer should carry out a personal
inspection before exchange of contracts
● Searches that must always be carried out
○ Local search - all situations - submitted to local authority together with a plan of the
property and fee
■ Local land charges search form (LLC1) - provides details of financial charges
or restrictions on the use of land imposed by public authorities under statute
and known to local authority - most likely to reveal planning consents with
conditions, financial charges, enforcement notices, tree preservation order,
CPOs etc
■ Enquiries of the local authority (form CON29) - first part is standard enquiries
routinely raised in all transactions (planning and building regulations,
restrictions on development, public rights of way listed buildings etc). Second
is optional enquiries to consider on a case by case basis by solicitor asking
the local authority (CON290) which a solicitor may choose to raise based on
property/ transaction circumstances - more property specific enquiries like
environmental/ pollution notices, food safety notices and commons
registration
○ Water/ drainage search - all situations - made routinely in all transactions - it is
submitted to the local water authority/ company with plan of property - form
CON29DW - confirms whether foul and surface water drains have been adopted, if
property is connected to mains and what charges are payable - if have been any
building works over should also obtain a copy of the build over consent
○ Environmental search -all situations - desktop report compiling data and outlining
whether the property is likely to be classed as contaminated land in the future under
EPA 1990 - if it is then effects of EPA should be told to client - normally polluter would
pay for remedying but if cannot be found or no longer exists then liability may fall to
the owner of the land
○ Flood search - all situations - reveals whether the property is or is likely to be affected
by a river, coast, surface or groundwater flooding - can be incorporated with an
environmental search - important for various reasons but also to know whether flood
insurance will be available at a reasonable rate - if a risk is identified then may need
to do a further more detailed report
■ If prone to flooding - there is the Flood Re scheme that may make insurance
affordable - must be residential or a residential buy to let built before 2009 and
purchase price below a certain threshold with a council tax band of A-H
○ Physical inspection of the property should also be done
● Searches that depend on location of property and / or circumstances of transaction
○ Chancel repair liability search - routine but particularly important where no prior
disposal for value since 13 October 2013 - insurance may be more cost effective -
submitted to private search provider - revealed whether the property is or is likely to
be affected by liability to contribute towards the cost of repairing and maintaining the
chancel (part of a church in the vicinity) - whether this will be an overriding interest
will depend on whether the last disposition for value was before 13 October 2013 or
not - is no longer an overriding interest so requires protection by a notice in charges
 register (registered land) or in title documents or caution against first registration
(unregistered) -
■ Is also the possibility of a protective unilateral notice being entered in due
course which a buyer would need to contest - HM Land Registry does not
guarantee the validity of any right to register it
■ If it is uncovered can usually obtain insurance at a relatively small cost
○ Mining searches - in mining areas or where reserved in title - form CON29M
submitted to the Coal Authority or via private search provider - reveals details of past
and proposed mining activity within proximity - may also require other mining
searches in some areas
○ Canal and River Trust/ Environment Agency/ Natural Resources Wales search -
where property is near river or canal - ascertain liability for the repair, rebuilding or
maintenance of waterways, banks and towpaths
○ Commons registration search - where open land is nearby or property constructed on
a greenfield site - CON290 - search reveals whether the property is designated as
common land or village green which the general public have access to and
development will not be protected
○ Highways search - where potential gap between property and the highway - search of
the local highways authority which confirms the precise extent of the publicly
maintainable highway so far as it relates to the property
○ Railways search - where near/ adjacent to a railway line and development works
proposed - Network Rail will need to be consulted about any proposed development
work close to the boundary - specific enquiries should also be made of the seller as to
whether any notices have been served by Network Rail and whether any payments
have been paid, demanded or are anticipated in respect of the maintenance of the
boundary features
○ Index map search (SIM)- where title is unregistered or where mines and minerals are
excepted and reserved from title - to HM Land Registry - ascertains details of any
registered titles affecting the property, any pending applications for registration and
cautions against using registration - should also be undertaken if mines/ minerals are
reserved from the title and can be useful for complex sites were a number of
registered titled
○ Land charges searches - where title is unregistered - search of Land Charges
Department in Plymouth using form K15 - will not be registered against the address
but against owners - includes a bankruptcy search
○ Company search - where seller is a company or title is unregistered and epitome
reveals company estate owners - if unregistered then should make a company search
against all corporate owners - Company search - checks whether company is in
existence, subject to any insolvency proceedings or procedures and hether it has
granted any fixed or floating charges over its assets - should also be checked
whether company is able to enter into the transaction under its constitutional
documents and who officers/ directors are
■ Any charges over company assets (ie mortgages) must be registered within
21 calendar days
○ Bankruptcy/ insolvency search - where a lender is involved -
● Results of Searches and Enquiries
○ Planning permission and building regulations approvals - buyers solicitor should seek
copies of all planning permissions building regulations and associated certificates of
compliance/ completion - in respect of works carried out on the property and replies
to pre-contract enquiries additional enquiries should be made as to whether
 permissions have been implemented/ works completed and planning conditions
complied with - should also be asked whether any notices have been served or
whether any action is anticipated -
○ Adoption of roads - risk that any private access road may be sought by local authority
at a later date to adopt and the costs will be on the owners of the properties to bring it
to an adoptable standard - common issue with newbuild properties
○ Adoption of sewers - foul and surface water from the property do not drain to public
sewers then enquiries should be made about alternative arrangements - e.g. private
septic tanks
○ Tree preservation orders - if subject to a TPO then details of the order and the
protected trees should be ascertained - buyer should also be made aware that it will
usually be a criminal offence to lop or fell protected trees
○ Smoke control - common and relatively uncontroversial type of local land charge
which is not normally a concern to a buyer - practical implications are only smokeless
or other authorised fuels may be combusted on the property
○ Listed buildings and conservation areas- if the property is a listed building or is in an a
conservation area - this will mean that the use and development of the property may
be limited and will be more difficult to make changes
○ Occupiers - any non-owning adult occupiers may have a beneficial interest in the
property or other statutory rights - they should therefore be required to sign a
waiver/release of their rights and an agreement to vacate on completion - usually
dealt with as a special condition within a contract
● National Land Information Service
○ NLIS is a collaboration between local authorities in England and Wales, HM Land
Registry water companies and other organisations such as Companies House,
Environment Agency and the Coal Authority

Planning Law should ideally be its own chapter

● Core Principles of Planning Law
● Will need to check whether all permissions and approvals are in place, whether there are any
conditions attached to planning permissions and whether they are complied with. Also
whether the property is listed or is within a conservation area and that all necessary
conditions have been complied with.
● Definition of development (when planning permission is required under S57(1) TCPA) - “the
carrying out of building, engineering, mining or other operations in, on, over or under land
or the making of any material change in the use of any building or other land”
● Matters that do not constitute development and usually do not require PP
○ Maintenance, improvement or other alteration of any building of works which affect
only the interior of the building or do not materially affect the external appearance of
the building
■ However will need planning permission where it will increase the gross floor
space of a retail building by 201 sqr metres or more
○ Use of any buildings or surrounding land for any purpose incidental to the enjoyment
of a dwellinghouse
○ Change of the primary use within the same class (non-material change of use)
○ The use of the land for agriculture or forestry - but may be a change of use
○ Work carried out by a local authority or statutory undertaker for public utilities works
(inspecting and repairing and maintenance)
● Use Classes - change of use within the same use class does not require planning
permission. If does not fall within a use class or goes over multiple then planning permission
is not required
○ B - general industrial, storage or distribution
○ C - residential uses (including hotels houses, HMOs etc)
○ E - commercial business and service
○ F - schools, places of learning and/or worship and non-residential institutions like
community facilities
○ Exception when a change of use within a class would require planning permission - id
a direction to change development rights has been made (article 4 direction)
● Matters that do not require express planning permission
○ Small extensions, improvements or other alterations within the curtilage of a dwelling
house
○ If constructing new building necessitates the demolition of another - no need to apply
for separate PP to demolish - just to build
○ Maintenance
○ Use of land or building within the curtilage of a dwelling house for any purpose
incidental to the enjoyment or porches and small extensions
○ Minor operations like painting the exterior of a a building or erection of fences
○ Certain changes between use classes -
○ While GPDO automatically gives gives permission for certain permitted development
subject to an article 4 direction - but this will show up in local search results - in such
areas express planning permission will not be required and will not need to apply
● Applying for Planning Permission
○ Must be made to LA - can be outline (if granted will be in principle with various
conditions attached) or full with detailed plans and specifications
○ Where planning consent is granted the applicant must begin the building works within
3 years from date of approval - LA can determine longer or shorter periods too
● Building regulations approval
○ Any new building work will need to comply with building regulations that govern the
quality of the building and ensure its safety
○ Required for structural alterations, new windows, boilers, electric work etc
○ Deposit plans with LA who will review plans and if necessary perform site inspections
■ Full plans application - more major works
■ Building notice - more minor works
○ Will be necessary otherwise can have issues with sale or leasing
○ Necessary even if PP is not
○ Enforceable:
■ Prosecute in Magistrates within 6 months of breach being discovered
■ Serve enforcement notice within 12 months of completion
■ Apply for injunction to stop building being used following a breach
● Enforcement of Planning Law
○ A breach of planning law:
■ Carrying out of development without required PP; or
■ Falling to comply with any condition or limitation subject to which PP has been
granted
○ As a precursor to taking action the authority may enter the property and/or issue a
planning contravention notice - request for information about any operations or
activities on the property and potential breaches of 21 days of the notice or to provide
false or misleading info in response to it
 ○ If satisfied there has been a breach then may issue a completion notice, enforcement
notice, stop notice, breach of condition notice or request an injunction
○ (a) Completion notice / planning enforcement order- if concerned that it may not be
completed before date specified then may do so if development has stalled - if not
then PP will lapse - application must be made to magistrates within 6 months of when
the breach came to LPAs knowledge
○ (b) Enforcement notice - may be issued where local authority satisfied there has been
a breach - notice should specify the breach and what steps are required to remedy it -
which activities are to cease and must be served on the owner, occupier and anyone
with 28 days after issue or before the expiry of the notice (whichever is last) - it is a
criminal offence to fail to comply with an enforcement notice otherwise fine will be
payable - can appeal (but must do so before the notice becomes effective)
■ Breach did not occur
■ PP condition ought to be removed
■ PP was not needed
■ Enforcement notice was out of time/ not properly served
■ Compliance conditions are excessive or notice too short
○ (c) Stop notice - may only be issued following service of an enforcement notice -
requires activities alleged to be in breach of planning to cease - can also have
temporary ones for 28 days if LA thinks it is expedient for the activities to cease
immediately - contravention of this is a criminal offence - Cannot appeal
○ (d) Breach of condition notice - may be issued by LA in the event the conditions
attached to a planning permission it requires compliance with them for a specified
period (minimum 28 days)- criminal offence not to do so - cannot appeal (JR in HC is
only remedy)
○ (e) Injunction - LA may apply to court for an injunction when expedient - discretionary
and an equitable remedy may not always be granted
○ (f) may also not take any formal action - more likely if it is a mistake that was
immediately remedies
○ (g) may also grant retrospective planning permission
■ If 4 years have passed then should apply for this - only if it needed PP but did
not have - otherwise (ie breach of PP or didnt need PP) then LDC
○ (f) Lawful Development Certificate - confirms that an existing use of land or some
operational development/ activity in breach of a planning condition is lawful for
planning purposes - such as if planning permission was not needed (ie permitted
development)
● Time Limits for enforcement action
○ Operational development - 4 years from substantial completion - effectively anything
that did not have PP for (including if had PP for other works)
○ Unauthorised change of use to a single dwelling house - 4 years from breach
○ Any other breach - 10 years (things like material changes of use or failing to comply
with a condition attached to PP) - basically breaches of the planning permission
○ However if the person has deliberately conceals an unauthorised development then
will still be able to enforce after the time
● Building Control
○ Buildings regulations approval is a separate and distinct requirement to PP and is
required for of construction of significant alterations or extensions to buildings in order
to ensure that they meet standards as to health and safety design, permitted
materials and standard of workmanship and construction
 ○ Is required for electrical installations, plumbing installations (not like-for-like
replacement of bathroom fixtures) replacement windows and doors, heating systems
and replacement roofs
○ Compliance with building regulations control involves an initial approval being granted
to the proposed plans with a building control officer inspecting the works and issuing
a certificate - of compliance (formerly known as a completion certificate)
○ It can be prosecuted in the magistrates within 6 months of discovering the breach and
2 years of completion of the building work that was in breach
○ Serve enforcement notice within 12 months of date of completion of the work in
breach
○ Apply to the court for an injunction
○ Enforcement time limits
■ Is two years from completion of the work - may also be issued within one year
of completion of the work requiring the works or be altered or removed
■ If all documentation is not in place a suitable indemnity insurance policy may
be an option to cover potential enforcement action being taken
■ Alternatively can request a regularisation certificate may be requested from
the local authority - indicating the work required to bring it up to to standard
■ Power to request an injunction is not time limited
● Listed buildings
○ Important for a buyer to ascertain whether the building and its curtilage is listed as
having special architecture and historical interest - shown in local search
○ Listing building consent will be required in addition to planning permission and also
for internal works
● Conservation areas
○ Important to ascertain whether property is situated in a conservation area - will be
revealed by the results of the local search - designation of conservation areas serves
to protect the special architecture and historical interest of an area
○ If it is then will need additional planning restrictions curtailing rights under GPDO -
consent will be required to cut down, top or lop trees

Chapter 4 - Draft Contract and exchange of contracts

● S2 LPA 1989 - a contract for the sale of land must:
○ Be in writing
○ Contain or incorporate all of the terms expressly agreed by the parties; and
○ Be signed on or on behalf of the parties
● The Purpose and Need for a Contract
○ Until exchange of contracts parties are usually free to withdraw without penalty -
contract serves the important purpose of locking the parties into the deal and making
it legally binding giving the parties certainty that the title will pass and completion take
place
○ Will set out the obligations of the parties and provide for remedies for delay or failure
to complete
○ Although it is always necessary to have transfer by deed of the legal interest on
completion it is not strictly necessary to necessary to have a contract in a
conveyancing transaction - but is uncommon especially in residential as need to
organise moving and removals etc
● Drafting and Agreeing the Contract
○ Form of Contract and the Standard Conditions
 ■ Form of contract used will depend on nature of property and the transaction
as well as the firm's standard practice - if residential it is not uncommon to
have a standard form but for commercial and more complex it is generally
bespoke
■ Will normally comprise:
● Particular details of the transaction (particulars of sale)
● Incorporation of standard conditions:
○ Standard conditions of sale (residential) - current edition is 5th
2018
○ Standard Commercial Property Conditions - current edition is
3rd 2018
● Addition of any special conditions
○ If there is a conflict between a standard condition and a special
condition the special condition will take precedence
○ Particulars of Sale when Drafting Alongside SCs
■ Date (inserted on exchange)
■ Seller information
■ Buyer - name and current address
■ Property type as freehold or leasehold as well as address, if whole of land in
unregistered then will require a description of the property and things like red
line plan, for sale of part of land description will need to be clear
■ Title number/ root of title - title number if registered and conveyance or other
root document if unregistered
■ Specified incumbrances - refer to adverse incumbrances (if registered dont
need to include existing mortgages as these should be discharged on
completion). It is important to specify the relevant incumbrances for a number
of reasons:
● Usually run with the land and will adversely affect a buyer
● Makes it expressly clear that a buyer is subject to them
● Seller agrees (under standard conditions) to sell free from
incumbrances
● Buyer will not usually be able to raise requisitions about the specified
incumbrances after exchange of contracts
● Buyer purchases the property subject to:
○ Incumberances specified in the contract
○ Those discoverable on reasonable inspection
○ Those the seller does not and could not reasonably know about
○ Those other than mortgages that the buyer knows of
○ Entries made in HMLR, CH or Land Charges Dept before
exchange
○ Other than mortgages those which would have been disclosed
through searches and enquiries of a reasonably prudent lawyer
○ Public requirements
■ Title guarantee (either full or limited) -refers to implied covenants for title that
are inserted into the transfer under Law of Property Act - relate to the
guarantee that the seller can give about the title and incumbrances and
assistance they will give to transfer it - ultimately title guarantee depends on
the status of the seller and the three main options are:
● Full title guarantee - Seller owns the whole legal and equitable interest
in the property. Seller covenants that they have the right to dispose of
 the property, will at their own cost do all they reasonably can to give
the title they purport to give and that the property is free from all
charges, incumbrances and third party rights other than those that the
seller could not reasonably know of
● Limited title guarantee - usually given when the seller does not own
the whole legal and equitable interest and has limited knowledge (ie a
trustee). Seller covenants that they have the right to dispose of the
property, will at their own cost do all they reasonably can to give the
title they purport to give and that they have not since the last
disposition for value charged or encumbered the property or granted
any third party rights
● No title guarantee - seller has no knowledge about the property and is
simply disposing of it in a professional capacity
■ Completion date - should be left blank and inserted on exchange
■ Contract rate - typically the Law Society's interest rate from time to time in
force - intended to be a penalty
■ Purchase price - could be set out in another document so long as it is signed
by both parties
■ Deposit - sum representing part of the purchase price that is paid by the buyer
on exchange of contracts as a demonstration of commitment to the purchase
(usually 10% whether commercial or residential) - seller may forfeit and keep
deposit in event of failure to complete
■ Contents price - only ever in residential if paying additional amount for
contents - does not need o be attached to the contract but can just have a
simple clause referring to their purchase - they are not subject to SDLT as
they are chattels
● Can also exclude any fittings or fixtures
● If VAT is payable though then this will include chattels too
■ Balance (what is payable on completion)
○ Special conditions
■ Typical special conditions
● 1) incorporates SCs and terms within them into contract
● 2) combines the terms of the contract the SCs and the agreement to
transfer with the appropriate title guarantee
● 3) Provides for sale including chattels/fittings or exclusion of them that
will be set out in a list
● 4) Two alternatives - either sold with vacant possession or subject to
the following leases or tenancies
● 5) Amends standard time for completion to an earlier time (standard is
2pm) - often important when a chain of transactions
● 6) parties can generally only rely on written representations passing
between parties or solicitors
● 7) occupiers consent - provides from adult occupies an agreement to
sale, release/ waiver of any rights in property and an agreement to
vacate on the completion date
○ If reasonably enquiry is made but they fail to disclose their
interest then it will not bind
○ Can be protected by a class F land charge or registration in
charges register (registered/ unregistered)- does not need any
 form of interest - just to be married - can register even after the
contract
■ Bespoke additional special conditions may also need to be added to deal with:
● An indemnity covenant to be given by the buyer in the transfer (is a
covenant to be inserted into the transfer that the buyer will observe
and perform covenants affecting the title and will indemnify the seller in
respect of any future breach) - generally do not run with the land unlike
restrictive covenants.
○ If seller is original covenantor or gave an indemnity covenant to
the then seller then they should insist that the buyer provide an
indemnity covenant as they may continue to be liable under
positive covenants
○ Indemnity covenant is automatically provided for under SC and
SCPC where these circumstances apply but it is standard
practice to include a specific obligation to enter into an
indemnity covenant in the transfer at this stage and to include
restrictive as well as positive covenants
● Appointment of an additional trustee to receive the proceeds of sale,
the effect of overreaching
● Provision of an indemnity insurance policy in respect of any defect in
title not been remedied
● Payment of a reduced deposit or for the deposit to be held as agent
● Removal of fixtures
● VAT insurance and passing of risk
● Others that relate to the grant of parts such as the grant of easements
○ Insurance and the Passing of Risk
■ Under standard conditions the risk of damage to and/or destruction of the
property passess to the buyer on exchange of contracts - therefore in such an
event the buyer would still be bound to complete notwithstanding the damage
or destruction
■ Buyer of a freehold property must therefore be advised to put buildings
insurance “on risk” immediately from exchange and will also usually be a
requirement of their lender that suitable insurance is in place and the buyer
should be made aware of any specific requirements of the lender as to the
nature of the policy - usually need to be for the full reinstatement value and
cover a comprehensive list of insured risks
■ A seller should be advised to maintain their buildings insurance until
completion notwithstanding that risk passes - although the seller will usually
be under no contractual obligation to the buyer to insure the seller will usually
be obligated to keep it insured under the terms of any existing mortgage
● Any monies received from insurance must be paid to the buyer on
completion
■ A solicitor who gives incorrect advice as to the passing of risk and the
responsibility for insurance is likely to be liable in negligence should their
client suffer loss as a result
○ VAT
■ Residential property does not normally attract VAT
■ New commercial property (completed up to 3 years ago) - automatically
standard rated
● But generally any lease rather than freehold is VAT free
 ■ Old commercial property (older than 3 years) - exempt from VAT - no VAT
payable unless an option to tax has been exercised by the seller - if so then
standard rated VAT
● If wishes to charge VAT- must be registered for VAT and have served
written notice on HMRC in respect of the specific property within 30
days of waiving the exemption
● Following a decision to tax all supplies made by the owner or lessor
e.g. rent or service charge will be chargeable supplies
● May choose an option to tax in order to offset the input tax paid
● Cannot be revoked for 20 years once made

Exchange of contracts
● Purpose and Process of Reporting to the Client -
○ It is always necessary to report to the client in a conveyancing transaction before
exchange of contracts and best practice to do so in person
○ Reporting to the client:
■ Results of the investigation of title - ancillary rights as well as adverse rights
and covenants should be relayed to buyer
■ Results of searches and enquiries - all relevant issues should be relayed to
the buyer
■ The contract - key terms and its effect and implications should be outlined for
the seller and the buyer
■ Mortgage - key terms should be outlined to the buyer - including the interest
rate and any conditions attached to the mortgage - e.g. early repayment
charges - more generally the client should understand the consequences of
default including the mortgagees rights and clients obligations
● Acting for a Lender and Lender Requirements
○ Lender requirements
■ First make note of any specific requirements or conditions attached to the
borrowing or release of funds such as expiry of the offer - can vary from
lender to lender but will usually be set out in the instruction letter and
mortgage offer or facility letter- should not exchange contracts unless all
fulfilled
■ Most require mortgage to be registered against the property as security
○ UK Finance Mortgage Lenders Handbook
■ Applies to most main high street lenders in residential and sometimes
commercial lending
■ Contains key info on requirements of conveyancers in secured lending
■ Any mortgage must be made by deed - S52 LPA and lender will usually
provide a partially pre-printed deed for completion and execution by buyer/
borrower
■ Standard requirement of most lenders is that any adult occupier of the
property must sign a waiver of their rights in the property
● Purpose and Importance of a Certificate of Title and Timing of its Issue
○ Certificate of title - (also called report on title) is a formal document addressed to the
lender from buyers solicitor confirming it is safe to lend and that charge will be
registered and buyers title will be good and marketable - generally sent a few days
before completion
■ Explanation of property, address and boundary plan
 ■ Explanation of the title and all things affecting it like easements and
covenants, defects
■ Explanation of the pre-contract searches and enquiries performed nd any
issues and how they can be resolved
■ Reference to survey and that the client must be satisfied
■ Explanation of mortgage offer
■ Overview of clients finances
■ Advice to ensure client ensures property from exchange of contracts
■ Explanation of the effect of exchanging contracts
■ Request for the client to revert with their instructions on any matters requested
○ Purpose for lender - to be sure charge will be duly registered and they will be able to
sell if need be
● Pre-exchange steps
○ Sellers solicitor should take the following steps:
■ Prepare two identical clean copies of the contract and send another to the
buyers solicitor
■ Arrange for the contract to be signed by or on behalf of the seller and by any
non-owning adult occupier
■ Agree a completion date in principle with the client and any other solicitor,
request a redemption statement (amount required to redeem the mortgage -
important to ensure that it related to all accounts secured by relevant charges)
■ Arrange synchronisation where there is a related purchase
○ Buyers Solicitor should:
■ Check there are no outstanding points regarding investigation of title, survey
and searches and enquiries
■ Check that there are no outstanding points/ conditions regarding the mortgage
■ Arrange for the contract to be signed by or on behalf of the buyer
■ Report to the client - make sure report on title has been given covering
everything
■ Report to the lender
■ Obtain cleared funds for the agreed deposit and confirmation regarding the
balance due
■ Advise client regarding insurance - often need buildings insurance in place
from moment contracts are exchanged
■ Agree a completion date in principle with client and other solicitor
● Practice Method and Authority to Exchange
○ Due to importance and significant consequence of exchange of contracts it is
important to seek the clients written authority to do so - most importantly the client
must be aware that they will be locked into terms agreed and the completion date
○ Contract must incorporate all agreed terms and signed by or on behalf of parties
(would need clear written authority to do so)
○ Although exchange of contracts may take place in person or by post/ document
exchange it is common to adopt law society formula A, B or C for exchange
■ A - when one solicitor holds both parts of the signed contract - buyers solicitor
will usually have sent over their part signed contract and a client account
cheque in respect of the deposit to be held to their order - deposit is released
on condition the sellers solicitor undertakes:
● They hold both parts of the signed contract
● Will insert the completion date
● Will hold their client part contract to the order of the buyers solicitor
 ● Will send their clients part contract out to the buyers solicitor that day
by first class post, document exchange or personal delivery
■ B - most popular of the formulae and used when each solicitor holds their
clients own signed part of the contract - each solicitor undertakes:
● They hold their clients signed contract
● Will insert the completion date
● Will hold their clients signed part to the others order and will send it out
to them that day
■ C - used in chain transactions where deposit is sent further up the chain and
need to be synchronised
● 1) - solicitor at one end of the chain telephones the next one and each
confirms that they hold part contract signed by their client, solicitor
undertakes to exchange if they are called back y the other within a
specified time on the same day - repeated until hits other end of chain
● 2) - are then exchanges back along the chain
■ Following exchange of contracts a file note should be made recording:
● Names of solicitors affecting the exchange
● Date and time of exchange
● Formula used and agreed variations to it
● Deposit
● Completion date
○ Consequence of exchange:
■ Parties become committed under a binding contract to complete on the
agreed completion date
■ Seller retains legal ownership although the buyer gains an equitable interest
under an estate contract (basically held on constructive trust)- - this means
the seller has a DOC to take reasonable care of the property
■ Contract becomes an estate contract which can be registered and protected
■ Risk and responsibility to pay for and insure the property both usually pass to
the buyer under the SCs
● Except from intentional or negligent damage for which the seller will be
liable
■ If buyer occupies the property before completion they do so as licensee
although mortgagees consent would be required and not recommended - if so
any obligations on the seller to look after the property will lapse
● Risk is that if the sale then falls through the buyer will not be able to be
evicted without a court order
■ If a deposit cheque is dishonoured then the seller can terminate the contract
within 7 working days of being notified by serving notice on the buyer
○ Contract race
■ Contract races are possible if have multiple people interested
■ Effectively will be sold to the first buyer to exchange contracts
■ Solicitor cannot act for a seller if they refuse to disclose to all prospective
buyers that it is a contract race
○ Death between sale and completion
■ Sole owner - contract remains binding - goes to estate and PRs will obtain
grant of representation to enable legal title to be conveyed (likely lead to some
delays)
 ■ Co-owner - (no issue if joint tenants), but if TiC - can just wait until PRs get
grant of representation or appoint another trustee (so have 2) and can
overreach
■ Sole buyer - deceased's PRs have contractual duty to complete - must get
grant of representation first. Issue is that lender will withdraw so must attempt
to get other funding otherwise seller can make action for breach of contract
■ Co-buyer - survivor has contractual duty to complete - risk mortgage offer will
be withdrawn and can delay for a while
○ Bankruptcy between sale and completion
■ In either instance must wait until bankruptcy trustee is appointed - following
this will complete - but can disclaim onerous transactions (more likely if buyer
went bankrupt)
■ Buyer must have purchased in good faith without notice of the bankruptcy
petition (wil be deemed to have had notice if has been registered as a Land
Charge)
○ Property is damaged or destroyed between Exchange and Completion
■ Buyer is not entitled to withdraw, claim damages (unless caused by
negligence)
■ This is why the buyer must have building insurance when contracts
exchanged

Chapter 5 Pre- Completion, completion and post-completion

matters
● The Transfer Deed
○ Transfer deed is required to transfer the legal estate to the buyer (S52(2) LPA)-
because a conveyance of land or an interest in it will usually be void for the purposes
of creating a legal estate unless it is made by deed
○ Drafting the transfer deed: responsibilities and timing -
■ usual convention is that buyers solicitor produces the draft transfer deed (if
the sellers solicitor wants to draft it then will need to insert a special condition)
■ using the information from the contract and title/deeds and if not sending it
electronically provides two hard copies to the sellers solicitor - sellers solicitor
then approves and/or amends the draft transfer - if it is approved as drawn the
sellers solicitor will use one copy as the final version and arrange for it to be
executed
■ Must be sent at least 12 working days before completion - seller then has 4
working days to approve or revise
○ Form of transfer deed - in registered land the HM Land Registry standard forms of
transfer deed must be used - Form TR1 or in some circumstances form TP1-
generally drafted by buyers solicitor
■ TR1 - for transfer of whole of land
■ TP1 - part of land
○ Formalities:
■ In writing
■ Clear on its face that it is intended to be a deed
■ Validly executed by parties to the deed; and
■ Must be delivered as a deed - parties need to show intention to be bound by
deed by words or conduct
● Sellers must always execute deed
 ○ Drafting Forms TR1 and TP1
■ 1) title numbers
■ 2) Property
■ 3) Date (left blank until completion date)
■ 4) Transferor - insert from contract/ official copies/ title documents
■ 5) Transferee for entry in the register - insert from contract
■ 6) Transferee's intended address(es) for service - usually be the property
address but may be buyers home or business address
■ 7) Transfer - main operational part of transfer - simply declares that transferor
transfers property to transferee
■ 8) consideration - purchase price, not including any separate price for chattels
must be stated here in both words and figures
■ 9) title guarantee - should reflect what was agreed in the contract - full, limited
or no title guarantee
■ 10) declaration of trust - in case of co-ownership this should be completely
based on client's instruction on how the beneficial interest should be held -
there are three options; joint tenants, tenants in common in equal shares or
another way
■ 11) Additional provisions - should be inserted as provided for in the contract -
■ 12) Execution -must be correctly executed as a deed so it validly conveyed
the legal estate - for newly granted deeds:
● Must be clear on the face of it that it is a deed
● Must be signed by parties and delivered (intended to take effect)
● Signature also needs to be attested (witnessed by independent adult
witness - not family member or party- it does not need to be signed by
the witness at the time of witnessing - they could theoretically sign it
weeks later)
○ Company may execute via company seal - otherwise two
directors (or one and an independent witness)
○ Or two authorised signatures e.g. director and secretary and no
witness
○ Will not be valid if it is witnessed by another party to the deed
○ If validly executed then it is presumed to have been delivered
unless a contrary intention shown as to when delivery should
be construed
● Pre-Completion Searches and Enquiries
○ Pre-completion searches and enquiries - to update information provided and confirm
solvency of the seller and buyer as well as arrange for completion
○ HM Land Registry Search: Registered Land
■ If registered must undertake a HM Land Registry Search - updates the official
copies provided and investigated pre-exchange to confirm if any adverse
entries have been made to the title since the issue date
■ Provides buyers solicitor with a 30 working day priority period to submit the
HM Land Registry application to register the transfer and any mortgage -
provided that the application is submitted in time it will take priority over any
other submitted applications
● Effectively third parties cannot register anything against during this
window
■ Most common types are OS1 and OS2 search
 ■ OS1 - official search with priority of the whole of the land in a registered title
and all being transferred
● Gives a 30 business day priority period
■ OS2 - is an official search with priority of part of the land in a registered title -
used when part of the land in title is being transferred which would typically
include the sale of a property on a new development - plan must usually be
submitted with application as whole of tile will not be affected
● Both searches should be made against title number and in the name of
lender of a mortgage involved as search in name of buyer would only
protect them
○ Land Charges Search: Unregistered Land
■ Land charges searched using form K15 will already have been undertaken at
the pre-contract stage against all known estate owners referred to in the
epitome
■ The results of the search gives the buyer a 15 business day priority period to
complete the transaction - means they will not take subject to any land
charges registered against the name of the sellers after the date of the search
■ It is not necessary to search against the names of former estate owners again
at this stage
○ Insolvency Searches - All land
■ If buyer is an individual and borrowing money to fund the purchase a
bankruptcy search must be made against them for the benefit of the lender
who will be keen to ensure that they are not subject to bankruptcy
proceedings
■ If adverse entries are revealed then the buyer should be asked to confirm that
the entries do not relate to them - the buyer signing a simple certification by
way of an endorsement on the form usually achieves this
■ In the case of registered and unregistered land where a buyer who is a
company as opposed to an individual is borrowing to fund the purchase a
company search must be made against them for the benefit of the lender who
will be keen to ensure that they are not subject to insolvency proceedings and
articles of association must be checked to ensure company has power to
borrow money
○ Company Search - all land where seller/ landlord is a company
■ Checks whether the company is in existence, subject to any insolvency
proceedings or procedures and whether it has granted any fixed or floating
charges over its assets
■ Sellers solicitor must be asked to provide an undertaking to discharge any
fixed charges on or before completion and to provide written confirmation that
any floating charges have not become fixed through crystallisation
■ If floating charge is found over assets - should obtain a letter of non-
crystallisation from lender on the morning of completion
■ Have no priority period so should be done as close as possible to completion
○ Personal Inspection: Registered and Unregistered Land - wise to remind client of the
need to carry out a personal inspection of the property prior to completion to check
things
○ Completion information and undertakings
■ At this stage the buyers solicitor must also raise pre-completion requisitions
on title of the sellers solicitor - usually deal with key practice issues
 surrounding completion and it is common practice to use the standard Law
Society Conveyancing Protocol Form which deals with:
● Vacant possession and key arrangements
● What deeds and documents will be handed over on completion
● Place and method of completion with an undertaking
● Amount payable on completion and sellers solicitors bank details
● Undertaking to redeem or discharge specified mortgages on or before
completion and send form DS1 (executed by lender confirming the
charge has been discharged over all of title), DS3 (form executed by
lender confirming that a charge has been discharged over part of title)
and receipted charge (receipt for mortgage for unregistered)
■ May also deal with apportionment - the sharing of any expenses between the
seller and buyer - most commonly when it is a leasehold and seller may have
payed for ground rent but may want to apportion it
○ Financial Matters -once buyers solicitor has confirmation of balance due they should:
■ If not already submitted, issue the certificate of title to the lender or its solicitor
with any additional information required such as a copy of the executed
mortgage, pre-completion search results
■ Request the balance due from the client in the form of a financial statement,
including the balance due to the sellers solicitor on completion, professional
charges, disbursements and anticipated disbursements
○ Financial Matters - Sellers solicitor
■ Sellers solicitor must contact all mortgagees to obtain a redemptions
statement for the completion date - with a daily rate of interest for each date
completion is delayed
● Completion
○ At completion
■ Balance purchase price is transferred to sellers solicitor
■ Deposit is released
■ Transfer deed and buyers mortgage deed are dated
■ Sellers solicitor immediately sends the amount required to redeem any
existing mortgages to the mortgagees by way of telegraphic transfer in
fulfilment of their undertaking to do so
○ Date time and place of completion and law society code of practice for completion by
post
■ If no date is set it will be 20 working days after date of contract
■ Time for completion will be 2pm
● If want to change date or time will need to enter into a contract to vary
■ If funds have not been sent or seller has not vacated then will be next working
day and remedies available for late completion
■ Usually takes place at the office of the sellers solicitor, it is rare for completion
to take place through attendance in person and it is usual to adopt the Law
Society's Code for Completion by Post (sellers solicitor acts as an unpaid
agent for buyers solicitor in completing the transaction and undertakes to send
the completion documents out by first class post or through the document
exchange system on the day of completion - at buyer's risk)
■ Purchase monies will be held buy buyers solicitor until completion following
which any title deeds and documents will be held to the order of the buyer
 ■ There is an implied undertaking that the sellers solicitor will carry out the
instructions of the buyers solicitor on completion so important to specify what
is expected and what documents must be handed over
○ Effect of completion - legal title passes to the buyer - however in registered/ land
subject to first registration, legal title does not technically pass until disposition is
completed by registration
● Post Completion
○ Following completion, the main tasks of the sellers solicitor after sending money to
mortgage will be
■ Send dated transfer deed and other documents to buyers solicitor - will hold
these to order - will be sent within a day of completion via first class post
(docs sent by post are at the risk of the buyer) and will notify the sellers estate
agent that completion has occurred and authorise the release of the keys to
the buyer
■ If registered and mortgaged - Complete DS1 or DS3 as appropriate
■ Unregistered with mortgage - send original legal mortgage back to mortgagee
for vacating receipt to be endorsed
● Unregistered - send all originals mentioned in epitome of title and
abstract (except original deeds if retaining some of the parcel of land)
■ Send appropriate evidence of discharge - or confirmation of electronic
discharge to buyers solicitor as soon as it is received to fulfil the undertaking
given
■ Redeem and arrange for discharge of sellers mortgage
■ Account to the client for the balance due following deduction of estate agents
fees where authority has been given to pay them, costs and disbursements
including official copy fees and bank transfer charges
■ May need to provide any documents for indemnity insurance, planning
consents, building regs approvals etc
■ Provide receipt acknowledging that payment has been received for the
chattels
■ Other stuff
● Confirmation of completion to seller, sellers estate agent and buyers
solicitor
● Redeem and arrange for discharge of the sellers mortgage
● Issue bill to seller
● Account to the seller for net proceeds
● Post deeds and docs to buyers solicitor no later than end of next
working day after completion
○ Following completion buyers main tasks:
■ Check documents received from sellers solicitor
■ Date mortgage deed
■ Deal with SDLT/ LLT formalities
● SDLT return must be completed and sent to HMRC within 14 days of
completion - will be marked as received when relevant return has been
made and duty paid - it is required to go with the application to register
the disposition of property at HM Land Registry
○ If go into occupation of a lease before completion - then 14
days from going into occupation
■ Registration (regardless if leasehold or freehold)
 ● Involving registered land must be registered with HMLR within 30
working days (at what point legal title transfers to buyer)
○ AP1 if whole of registered title
● Unregistered within 2 months (will legally be owner from completion
but will become void if not registered within 2 months) - form FR1
● Following registration HMLR will send the buyers solicitor a title
information document - important to check this carefully for any errors
■ Other stuff
● Date mortgage deed
● Confirm completion to buyer
● Issue bill to buyer
● Examine the deeds and documents sent by the sellers solicitor for
completeness and accuracy
■ If buyer is a company and there is a mortgage or other charge then will
register at companies house
● Must be registered within 21 days sending form MR01, a certified copy
of charge and relevant fee
● Failure to register means it will be void and could have a negligence
claim
■ Check title info document from HM LR then send to lender and client
● Register at HM LR using form AP1 within the priority period of the
OS1/ OS2 search
● Send, evidence of discharge, transfer, SDLT/LTT, mortgage etc and
form DI to disclose any overriding interests
● Following registration HMLR will send buyers solicitor a Title
Information Document
■ Make any necessary accounts transfers and close the file
● Remedies for Late Completion
○ Just because wasn't completed on time does not mean there is a right to rescind
○ Contractual compensation may however be payable on actual completion at the
contract rate on the balance purchase price less the deposit if the buyer is in default
for the period during which the party was in default - but buyer is not entitled to claim
for compensation
■ Usually worked out as a base rate + 4% bank base rate of total contract price
■ If buyer is in default it is purchase price less deposit
■ If seller is in default compensation is based on entire purchase price
○ Can serve a notice to complete - gives party in default 10 working days to complete -
if notice is not complied with the party serving the notice has the option to:
■ If the initial deposit was below 10% then the buyer must immediately pay the
remainder (residential)
■ If 10 days passed then can rescind the contract -
● If buyer in default seller can forfeit and retain any deposit plus interest
● If seller in default buyer can rescind and have the deposit and interest
repaid
● Contractual right of rescission operates regardless
● Equitable remedy of rescission only exists at discretion of court - both
returned to their position before contract was entered into
■ Sue for contractual damages (any losses that arise naturally) - put them in the
position as if the contract was carried out:
● Legal and other expenses
 ● Cost of moving into temporary accommodation
● Any diminution in value of property
● If innocent party is in a chain then damages to cover all losses
throughout caused by breach
● Subject to the remoteness test - those losses that may reasonably be
supposed to have been in the contemplation of the parties the time the
contract was formed
● Put party in position as if contract was correctly performed
■ Specific performance - can be applied for even if earlier if it is apparent they
have no intention of completion (don't actually need notice to complete first)
● Discretionary and court will not award if damages would adequately
compensate
● Could still potentially have damages as well as specific performance
though
○ Leasehold delayed due to lack of consent by head landlord - it is sellers job (selling
sub lease) to obtain consent of head landlord - if landlord has not provided consent
within 3 days before completion then either party can rescind

Part 2 - Chapter 6 - Structure and Content of a Lease

● Overview - typical structure of a commercial lease:
○ Prescribed clauses - compulsory for all after 2006 - landlords title is registered and
the lease is substantively registrable
■ If they are not included HMLR will refuse to register the lease (only relevant
for leases over 7 years)
○ Commencement dates and parties - commencement date will be the date of grant of
the lease, does not have to be the same date that the term commences
○ Definitions and interpretation - definitions help save space
○ Grant of the lease - main operative part provides that the landlord grants and the
tenant takes lease of premises at rent and gives details of rights
○ Rent and rent review
○ Tenants covenants - significant part of lease will be comprised of tenants covenants
for the benefit of the landlord, to protect their interests
■ Landlord may not impose clauses that are unreasonably restrictive or onerous
○ Landlords covenants - things such as allowing peaceful enjoyment
○ Provisos - conditions or qualifications attached to the grant of the lease - such as to
repossess property if non payment of rent
○ Schedules - used to improve flow of a lease by separating key detail/ information
○ Execution clause - leases must usually be executed as a deed although leases not
exceeding 3 years may be created informally
■ Full Repairing and Insuring lease - is a lease that requires the tenant to be
responsible for the costs of repairing and insuring the premises
■ Institutionally acceptable lease - one granted on acceptable FRI terms such
that it would be suitable as an investment for an institutional investor who will
be keen to get a steady stream of income
● Repair
○ Extent of the premises (lease of whole or lease of part)
■ When taking a lease of the whole of a building they will usually be responsible
for repair and maintenance of the whole of the premises to include landlords
fixtures
 ■ But if part of a building usually just that parts and exclude structure exterior
and common parts - may have to contribute to costs of repairing and
maintaining the structure exterior and common parts often through payment of
a service charge
● Service charges must be reasonable and works to a reasonable
standard - if not tenant can challenge
● Landlords must make reasonable adjustments to accommodate the
needs of disabled persons
● Residential only- if cost of works is likely to exceed £1k then landlord
must provide 2 quotes and circulate them amongst the tenants for
consultation at least a month before the work is to be carried out
○ Negotiation of the Clause
■ T should avoid an obligation to “put the property into repair” – more onerous
than “keeping the property in repair” - keep implies the same condition as it
was at the start but put may imply a better state
■ Avoid obligation to keep in “good condition” as this goes further than
“remedying disrepair”
■ Exclude liability for fair wear and tear
■ Exclude liability for historic contamination before tenant was there
■ Older properties - tenant will often seek to qualify the covenant by providing
the tenant will not be required to put or keep premises in any better state of
repair and condition than they are in at the date of the lease - do a schedule of
condition (surveyors report detailing state of repair and condition of property
prior to grant of the lease)
■ Newer properties - tenant should also seek to exclude the tenants liability to
remedy inherent defects in the design and construction of the building as
these would technically be classed as disrepair - landlord will often have
recourse to warranties given by professional team for several years after
construction
○ Damage caused by insured risks- clause should exclude damage caused by a risk
covered by landlords buildings insurance policy
■ Parties should also deal with what happens where the property is damaged or
destroyed by an uninsured risk like terrorism - if the lease is silent then the
damage will often fall to the Ts repairing obligation - responsible to reinstate
the property
● Insurance
○ Landlords concerns - will wish to ensure property is fully insured against risks like fire,
explosion, flood, storm etc
○ Tenants' concerns- ensure the building is fully covered against damage or
destruction, landlord is under an obligation to repair or reinstate in the event of such
damage or destruction. That they will not pay rent when premises are unsuitable and
have option to break the lease if reinstatement is not made
○ Landlords covenant to insure for full reinstatement value against insured risks -
should include costs of demolition, site clearance, professional fees and VAT, in the
case of a multi-let building insurance should extend beyond the premises to the whole
building, in the interests of the tenant for the list of insured risks to be suitably
comprehensive as tenant will be responsible for damage or destruction caused by
uninsured risks - however as tenant will be paying towards insurance policy they must
balance this against risks that would be prohibitively expensive
 ○ Tenants covenant to pay the insurance rent (policy premium and insurance premium
tax for buildings insurance in addition to insurance to cover for the landlord in the
event of a rent suspension - tenant will also often covenant to pay the cost of
insurance validations and any excesses.
○ Landlords covenant to apply the insurance proceeds/ repair/ reinstate - landlord will
normally covenant to apply the insurance proceeds (bar for loss of rent) in repairing
and reinstating the property and will make up any deficiency out of their own funds
○ Rent suspension - provision in the lease that the tenants obligation to pay annual rent
or a fair proportion of it will be suspended when the premises including the building
are damaged or destroyed by an insured risk to the extent that the premises are
unsuitable or unfit for occupation or use - will often have a time limit
○ Termination - lease should provide that the landlord will be able to terminate the
lease should repair/ reinstatement become impossible or impractical - tenant should
also insist that they have a right to terminate following rent suspension period if
premises have not been repaired - on termination it is typical to provide that the
insurance proceeds will belong to the landlord
● Alterations
○ Tenants concerns - most tenants will wish to make alterations to the premises to suit
their requirements and would usually like to have as few restrictions as possible -
unduly restrictive provisions on alterations could also have an impact on their ability
to deal with the lease in the future
○ Landlords concerns - making sure tenants alterations wont impact properties value or
impact other tenants
○ Absolute covenant - usually against structural or exterior alterations - only way
around this would be to approach the landlord for a one off consent/ the exercise of
discretion, a deed of variation of the lease or to proceed and risk forfeiture of the
lease or other action by the landlord. Can still rely on S3 LTA:
■ T serves notice on landlord with details of proposals for improvements
(alterations increasing value or usefulness from Ts point of view)
■ L has 3 months to object or offer to carry out works in return for reasonable
increase in rent
■ If landlord does not respond T may proceed with the works
■ If L objects T may apply to court for an order
■ It T rejects Ls offer the T cannot carry them out
○ Qualified covenants - action is permitted with landlords consent - under Landlord and
Tenant Act 1927 consent may not be unreasonably withheld for work classed as
improvements - but landlord may require reasonable compensation for any reduction
in value of its reservation or payment of legal etc costs
■ If increases the value of the property the landlord will be liable to pay client
compensation to cost of works at end of lease
● For other qualified covenants - ie those that dont relate to
improvements or alienation it is not implied that it will become a fully
qualified covenant - ie if saying cant use for business use without
consent of landlord - it is not implied that this wont be unreasonably
withheld
○ Licence to alter - formal document providing consent to proposed alterations, often
with plans annexed - usually deals with carrying out of the works and supervision by
landlords surveyor, obtaining all other necessary consents, payment costs and
reinstatement at end of term
 ○ Compensation for improvements - under S1 LTA a tenant may be entitled to
compensation for improvements which add to the letting value of the property - but is
very rare and alterations typically have to be removed at the end of the term - no
compensation payable
● User and Planning
○ Landlords concerns - will usually wish to limit tenants permitted use of property due to
potential impact on the use of adjoining property by the landlord or others
○ Tenants concerns- tenant would ideally like to have relatively few restrictions on use
as could restrict future uses
○ Typical provisions - typical clause will specify a use and allow diversification within a
specific use class or classes within the schedule to the Town and Country Planning
Order - or a covenant allowing variation of use with consent of landlord
■ S19(3) LTA 1927 - no fine or increased rent may be charged as a condition of
giving consent provided no structural alteration is involved (can still charge for
expenses and loss of value)
■ It is tenants responsibility to ensure that their proposed use complies with
planning law, any covenants within the title and other statutory provisions
● Rent
○ Payable in advance on a set day each month or quarterly, at common law though it
will be payable in arrears unless specified otherwise
○ Rent is typically payable by standing order or other electronic transfer and should
include an obligation to pay any VAT properly payable
○ Proportionate sum of rent normally payable on completion unless grant of lease falls
on a rent payment date then all payable
● Rent Review
○ Most leases provide rent will be subject to review throughout the term
○ Most common form of rent review is an open market rent review provision - but can
also have it go up a set amount or be linked to things like indexed increase based on
% or tenants turnover
○ Assumptions and disregards - designed to ensure that the reviewed rent under the
terms of the hypothetical lease is fair to both parties
○ Assumptions
■ Willing landlord and tennant
■ Property is to be let with vacant possession
■ Leases will be on the same terms, excluding the rent but including the rent
review provisions - terms should reflect reality such as how onerous
covenants are. It is fair to disregard existing rent as it is the market rent that is
relevant
■ That the term will be equal to the unexpired residue of the term
■ That the tenant has complied with its covenants - should not benefit from its
own breaches, ie that it has let a property fall into disrepair
■ That the property has been reinstated if damaged or destroyed - tenant would
pay less for a destroyed building so unfair to base reviewed rent on state of
the premises at that specific time
○ Disregards
■ Tenants occupation - would pay more to avoid moving
■ Goodwill of tenant - tenant should not be punished for being successful
■ Effect of voluntary improvements by tenant
○ The Review Process - the most popular method of determining the reviewed rent in
modern leases is a provision that the parties will try to agree the reviewed rent
 between themselves first with rent being determined by an independent third party if
they cannot agree.
■ Usual to provide that the existing rent will continue to be payable until the
reviewed rent is determined and once agreed tenant will pay interest at a non-
penal rate to compensate landlord for delay in receipt of funds, will also
provide for a memorandum of the review to be endorsed on both parts of the
lease
■ Ie rent will be back payable with interest from the date that it was specified to
be reviewed - even if it took some time to agree
■ Surveyors may be appointed by either party to act as an expert of an arbitrator
depending on what was agreed in the lease to determine the revised rent - but
must be fully independent of both parties - costs to be apportioned between
them
■ Generally time is not of the essence - can be rebutted in the lease such as by
a deeming notice which gives the T a short period in which they can serve a
counter notice after receiving a rent review notice otherwise deemed to have
accepted the Ls proposal
● Alienation - concerns dealing with the tenants interest under the lease
○ Concerns of the parties
■ Landlord will usually wish to have control over who occupies or has an interest
in the property other than the tenant to protect their own interests
○ Typical alienation clause - absent any express restriction the T will be able to deal
with their interest in any way that they wish
■ Landlord will often have requirement to have their expenses in dealing with
alienation dealt with - but prohibited from imposing any fine or premium
○ Assignment - transfer of an existing lease by the existing tenant to another
■ Assignment of whole - is normally permitted with landlords consent
■ Assignment of part is usually prohibited as underleases are generally
preferred
■ Generally whether or not refusal of consent is reasonable or not will be a
question of fact. However, reasons must relate to the landlord and tenant
relationship in the lease and the landlord must act reasonably and not
discriminatively
○ Charging of whole - charging or mortgaging will normally not be permitted except for
a charge of the whole by way of a floating charge. In any event the typical forfeiture
clause in a commercial lease will be unsuitable for most lenders as they typically
provide for forfeiture on insolvency - when a lender would usually seek to repossess
and lease is unlikely to have a capital value if it was not granted for a premium -
would be unsuitable as security as would not have realisable sale value
○ Subletting/ underletting - grant of a further lease carved out of an existing lease which
may compromise the whole or part of the premises - is often permitted with landlords
consent (remember will only be able to grant a sublease on the same standard - ie if
only had an equitable lease will only be able to grant an equitable sublease which
cannot be registered at HMLR). Underlease may be preferable to parties because:
■ Tenant:
● May dispose of whole or part of a property on a temporary basis
● In a rising market they may be able to make a profit from the
underlease rent
● Will not be liable under an Authorised Guarantee Agreement (AGA)
and will be able to take control in the event of default by undertenant
 ● In failing market may be able to recover some of their costs
■ Landlord
● Existing tenant will remain liable under lease
● But risk is that they will lose direct control over occupation of property
and may become landlord of an undesirable subtenant
■ May have conditions like:
● Underlease is on same terms as headlease
● Rent is not less than rent on head lease or proportionate part
○ Sharing occupation - include a licence where exclusive possession is not given so
that the occupant is sharing occupation - will normally permit sharing with other
companies in same group
○ Parting with or sharing possession- include formal as well as informal assignment and
underletting or other arrangements with the same effect
○ Typically will be an absolute covenant against assignment, underletting, charging,
sharing occupation etc
○ Statutory modification of alienation covenants
■ S19(1)(a) LTA - provides that a qualified covenant is automatically upgraded
to a fully qualified covenant - consent is not to be unreasonably withheld -
applies to qualified covenants against assignment, underletting, charging or
parting with possession in all leases
● Preventing competition with the landlords own business would be a
reasonable reason to refuse
● As would maintaining a healthy mix of tenants
● The landlord wanting to take possession of the premises for his own
use would be unreasonable
● Must be connected with the subject matter of the lease - refusing
because dont want a tenant to move would be unreasonable
● Refusal should be within a reasonable amount of time (4 weeks)
■ S19(1A) LTA - allows parties to specify circumstances and conditions to
proposed assignments for insertion into the lease - conditions typically include
the provision of an AGA (authorised guarantee agreement) and circumstances
typically include there being no outstanding sums under the lease and
landlord being satisfied with assignees covenant strength - landlord would not
be unreasonable in withholding consent if not complied with (has ability to
require if reasonable to do so in the circumstances or is a condition of
assignment in the lease)- only applies to absolute or qualified covenants
against assignment in new leases
■ S1 Landlord and Tenant Act - for a qualified covenant the landlord must within
a reasonable time of written application being served- give consent unless
reasonable not to, give written notice of the decision specifying any conditions
to the consent or reasons for withholding - applies to qualified covenants
against assignment, underletting, charging or parting with possession in all
leases -
● Options for the Term of a Lease
○ Fixed term - most popular type and can be any period of time
○ Periodic tenancy - tenancy from one period to another - e.g. week to week or month
to month - can arise expressly or impliedly and term is determined by frequency of
payment of rent - gives tenant greater flexibility but can usually be determined at
common law by either party giving one periods notice (but a year period only requires
6 months)
 ○ Tenancy at will -can be determined by either party at any time
○ Tenancy at sufferance - where a tenant continues to be in possession after expiry of
the lease and the L has not confirmed whether to extend the lease- differs from
tenancy at will as there was no agreement with the landlord
● Code for Leasing business premises
○ Code is now mandatory - most recent is 2019 - introduced by Royal Institution of
Chartered Surveyors (RICS)- contains principles of professional standards and
statements of best practice
○ Lease negotiations must be approached in a constructive and collaborative manner
and heads of terms should be in writing and suitably comprehensive to aid easier
negotiation of the terms of leases, must inform non-members of the code and advise
them to take independent advice
○ RICS members may be subject to an action in negligence or disciplinary action by the
professional body in the event of a breach of the code

Chapter 7 - Grant and Assignment of Commercial Leases

● Grant of Commercial Leases and Underleases
○ Lease - granted by freeholder to tennant
○ Underlease - Granted by a leaseholder to an undertenant - any underlease must be
granted for a term at least one day less than the lease otherwise it will take effect as
an assignment of the lease
○ Landlords concerns - main concern is that tenant will be able to pay the rent ans
observe and perform the tenant covenants under the lease - known as covenant
strength
■ In some circumstances the landlord may require tenant references or a
personal guarantee
■ Sometimes a rent deposit may also be negotiated
○ Deduction and investigation of title - landlords solicitor should investigate title and
deduce title to tenants solicitor
■ Lenders consent - if a lender has a charge over the property, its terms will
typically require the lenders consent to the proposed lease and its terms - in
registered land this will usually be supported by a restriction in the
proprietorship register prohibiting disposition or dealing without its consent
(lender will probably have to approve the lease) - without consent the landlord
will be in breach of terms of the charge and tenant will be unable to register
the lease
■ Leases - in the case of the grant of a lease, whether out of registered or
unregistered land the landlord will usually deduce title to the freehold - if
landlords title is registered and title is not deduced then the tenant can and
should obtain official copies and filed/ TP from HM LR so it is not completely
necessary to deduce if registered. It is always best practice for a tenant to
obtain deduction of the landlord's registered title and is essential where the
proposed lease is substantively registrable (ie over 7 years) - will be required
for the purpose of investigation of title and may also be useful for other HM LR
applications. If landlords title is unregistered the landlord must deduce title if
the lease is to be granted for 7 years or more and will thus be substantively
registrable otherwise HM LR will not be able to register unless title has been
deduced
 ● If formalities are not complied with for a lease over 3 years to be made
by deed will then have an equitable lease/ estate contract - can rectify
via specific performance. Should in the meantime protect via class C
land charge against the freeholders name if unregistered nor notice in
charges register if registered - will bind all but bona fide purchaser
● If the landlord does not deduce title then the T will either have the
option to rescind or obtain good leasehold title
■ Underleases - in case of underleases, title to the head lease should be
deduced - if headlease is registered then official copies and filed plan should
be provided, if title is not deduced then tenant may still obtain official copies
and filed plan from HM LR. Will absolutely want to deduce superior landlord's
title if it is good leasehold title
● If headlease is not registered with absolute leasehold title it is not
strictly necessary for the freehold title to be deduced - because all
relevant entries e.g. rights granted and reserved and covenants should
also appear on the registered title to the lease and HM LR - will have
been satisfied with the superior title upon registration but still often
deduced to identify current head landlord - if unregistered landlord is
only obliged to deduce the freehold title if the proposed lease is to be
substantively registrable (more than 7 years) however the undertenant
can ask to see deduction of the leasehold title going back 15 years
● New sublease will be bound by any encumbrances affecting the head
landlords superior freehold title
■ Standard conditions - provide that where a new lease is substantively
registrable then title should be deduced so that the lease may be registered
with absolute leasehold title - however these will only apply if they are
incorporated into a contract for the grant of the lease or underlease
○ Pre-contract searches and enquiries
■ Landlords solicitor will send to tenants:
● Evidence of title,
● Draft agreement for lease
● Copies of any relevant documents held by the landlord such as
planning permissions
● Replies to standard pre-contract enquiries
■ Tenants solicitor will then:
● Investigate title
● Raise detailed standard enquiries
● Undertake the usual pre-contract searches
● In case of an underlease, request draft licence to underlet from
landlords solicitor
○ Landlord's consent (licence to underlet)
■ Licence to underlet will normally be a requirement of the lease - purpose is to
provide superior landlords approval to the proposed underlease and provide
privity of contract between head landlord and undertenant
■ Parties will normally be landlord, tenant and undertenant - undertenant
covenants directly with head landlord to observe and perform the tenant
covenants in both the head lease so far as they relate to the property and the
underlease, whilst the undertenant is bound by the tenant covenants in the
underlease - effect of privity of contract meaning that the head landlord will be
able to pursue undertenant for any breaches
 ■ Will normally be obliged to pay head landlords costs in connection with the
preparation, negotiation and completion of the licence to underlet and
approval of underlease - landlord normally drafts so likely to be biassed in
their favour
○ Drafting the agreement for lease
■ Most commercial leases and underleases will proceed straight to completion
with no need for an agreement for lease (contract or agreement to enter into
the lease/underlease on completion)
■ May be useful if:
● Will be some delay in completion and want to be formally committed
● If needs to be works carried out on property before lease or
underlease is formally granted
● Where a third party consent is required to grant the lease/ underlease
or the tenants proposed use
● Where another tenant is in occupation and need to coincide with their
surrender of their interest
■ Will be prepared by the sellers solicitor
■ It is usual to incorporate standard conditions into an agreement for lease
○ Drafting the lease
■ Landlords solicitor usually drafts and submits to tenants solicitor for approval -
terms will be negotiated between the parties until they are agreed
■ Landlords main concern will be to have a lease that gives it suitable control
over the property and which is institutionally acceptable could affect the value
of the property
■ Tenants main concern will be to have a lease that will enable it to occupy the
property on reasonable terms without unduly onerous liabilities and
restrictions - a lease is unduly onerous or restrictive could be difficult to deal
with in the future, lead to additional financial liability and effet the tenants day
to day use and enjoyment
○ Pre-completion matters
■ Once lease is agreed the landlords solicitor will prepare engrossments of the
lease and counterpart lease for execution - send to T 5 working days before
completion
■ Lease must usually be executed as a deed to take effect as a conveyance in
law (exception if 3 years of less which do not require a deed and can be made
orally)
■ In case of an underlease the head landlord will normally produce
engrossments of the licence to underlet
○ Completion
■ Licence to underlet should be completed before completion of any underlease
and tenants solicitor should also insist on seeing a copy of any lenders
consent before completion
○ Post completion matters
■ Stamp Duty Land Tax (SDLT)/ Land Transaction Tax (LLT) - must be
submitted and duty paid within 14 days (SDLT) or 30 days (LLT) of completion
● Only payable on leases over 7 years
■ HM Land Registry Formalities: Legal Leases of more than 7 Years -
substantively registrable and so have their own title number - this is the case
whether superior title is registered or unregistered - will be a registrable
 disposition and an application to change the register (form AP1) must be
submitted within priority period
● If title is unregistered then tenants application will be for first
registration of the lease on form FR1 with DL in duplicate (registered
within 2 months of completion) and serve notice on the landlord
● Lease will be registered with good leasehold title if the superior title is
unregistered and the relevant title documents have not been submitted
to HM LR with the application for registration of the lease or if the
superior title is not registered with absolute title
● Leases less than 7 years are not substantively registrable
○ In registered land they will be an overriding interest
○ In unregistered - legal leases bind any owner of the land and
will be an overriding interest on first registration of the superior
title
○ 3-7 year leases it is generally best practice to apply to enter a
notice of the lease - agreed or unilateral notice
○ Short leases - up to 3 years - it is not possible to apply to enter
a notice and is possible and best practice to apply for
registration of the easements within the lease against the
superior title
■ Notice of underlease - on grant of an underlease formal notification of
completion is usually to be served on the superior landlord under the terms of
the lease/ licence to underlet
● Assignment of Commercial Leases and Underleases
○ Assignment is transfer of unexpired residue of term of an existing lease by existing
tenant to a new tenant
○ Will be no scope to amend the lease unless the landlord is prepared to enter into a
deed of variation of its terms
○ Commercial leases typically permit the assignment of the whole of the tenants
interest with the landlord's written consent under a qualified or fully qualified covenant
- a formal licence to assign will therefore be a key element of such a transaction
○ Deduction and investigation of title
■ Lease with registered title
● Leasehold title - official copies and title plan with official copy of the
lease and any other ancillary documents or those referred to in title
● Superior title - assignor is under no obligation to deduce the superior
title - it is not strictly necessary to see the superior title if the lease is
registered with absolute leasehold title, but is best practice. If good
leasehold title only then superior title should be deduced so it may be
upgraded to absolute leasehold title.
■ Unregistered
● Leasehold title - copy of lease and any assignments as well as any
other documents and deeds ancillary or collateral to the lease for the
last 15 years (ie showing epitome and good root of title - assignment of
the lease at least 15 years old) and all root documents like mortgages
and subsequent assignments
● Superior - should also be deduced and if so lease will be substantively
registrable
○ Pre-contract searches and enquiries
■ At pre-contract stage the assigned solicitor will:
 ● Raise details standard enquiries and any appropriate specific
enquiries/requisitions
● Undertake the usual pre-contract searches
● Request draft licence to assign from assignors solicitor
○ Landlord's consent (licence to assign)
■ Where landlords consent is to a proposed assignment is required the first step
will be for assignor to consider full terms of alienation covenant and to
approach the landlord for consent in principle
■ Assignor must apply for consent at their own expense and make all
reasonable efforts to obtain it -
■ Will be in the form of a licence to assign - gives the landlords formal written
consent to the proposed assignment
■ Landlords concerns and costs - will have similar ones to the grant of a new
lease and will need to ensure the proposed assignee has sufficient covenant
strength - as with grant of a lease may require references or a personal
guarantee from an individual
● Will typically require an undertaking from assignors solicitors to be
responsible for the landlords legal and other professional costs in
respect of the proposed assignment - could include review of
references to provide agreement in principle and preparation,
negotiation and completion of the licence to assign
■ Need for a contract - most assignments will proceed straight to completion
without a formal contract / agreement - parties must not complete until formal
licence to assign has been completed - if they proceed by way of contract it is
best practice to complete any required normal licence to assign before
exchange as the consequences under the standard conditions may create
uncertainty if consent is not in place by the completion date
■ An assignment without consent where required would be a breach of the
lease and also mean that the assignment was unlawful
● If consent is not obtained before consent then completion is postponed
for 5 working days
● Even if assignment was in breach of an alienation provision it is still
possible for the subtenant to enjoy the protection of the LTA
● Landlord can claim damages from original T, bring an injunction
against sub-tenant requiring surrender of tenancy if the sub T knew of
the breach
● Parties can only rescind if consent has not been granted within 6
months of the original completion date
■ The landlords solicitor prepares the draft licence for approval by the solicitors
acting for the assignor and assignee - parties to it are usually landlord,
assignor, assignee and any guarantor -
■ Key provisions in the licence:
● Landlord's consent to the proposed assignment for a specific period/
window of time after which the consent will expire
● For new leases (post 1 Jan 1996) if required to enter into an AGA the
licence will state this
● Old leases - direct covenant between assignee and landlord to
observe and perform the tenant covenants for the rest of the term
● Assignors agreement to meet the landlords costs as agreed- although
the landlord should have security of the undertaking from the
 assignors solicitor - makes it clear that the assignor is meeting these
costs
○ Often will contain an indemnity from assignor and assignee to
pay for any losses caused as a result of breach of the licence
● Obligation to serve notice of the assignment on landlord
○ Privity of contract and how the licence deals with this (privity is what prevents contract
being enforced by third parties)
■ Old leases - will be no privity between landlord and assignee - provides that
the assignee will be liable to the landlord for the observance and performance
of tenant covenants which touch and concern the land whilst the lease is
vested in them - to upgrade to privity of contract can obtain a direct covenant
from the assignee in the licence to assign and observe all tenant covenants in
lease
● Assignor will remain liable under terms of lease even after disposal
■ New leases - will be no privity of contract - any tenant will be liable to the
landlord for the observance and performance of all the tenant covenants in the
lease, not just those which touch and concern the land while the lease is
vested in them - landlord may in some circumstances require an Authorised
Guarantee Agreement from the assignor, any direct covenant must be limited
only to the time whilst the lease is vested in the assignee
○ Date of assignment and covenants for title
■ The draft deed of assignment (formal conveyance of the legal interest in the
lease) is prepared by the assignees solicitor and submitted to the assignors
solicitor for approval. Once agreed the assignees solicitor produces an
engrossment or engrossments for execution - sometimes executed in two
parts or in duplicate
■ Form
● Assignment of registered lease - TR1 (in all cases regardless of time
left to run)
● Assignment of unregistered lease with more than 7 years - usually
TR1 - this is on the original lease - if original lease was over >7 years
but only has 3 years left to run when assigned then must still transfer
with TR1
● Unregistered lease with 7 years or less - deed of assignment
■ The Need for an Express Indemnity
● The standard conditions if incorporated into a contract provide for an
express indemnity given by assignee to assignor where assignor may
remain liable following completion
● In old leases an express indemnity should usually be given in the deed
- but will automatically be implied on (a) assignment of a registered
lease or (b) assignment of an unregistered lease for value
● For new leases an express indemnity should be given in the deed
■ Covenants for title
● Transfer of leasehold property with full or limited title guarantee - it is
implied that the covenants in the lease have been complied with,
However the assignor should not be providing any warranties in
respect of the repair and condition of the property as caveat emptor
usually applies
○ Authorised Guarantee Agreement (AGA)
 ■ For new leases is often required for assignment of whole - if not required then
landlord can still insist on one (absolute covenant) or provided that it is
reasonable to do so (qualified/ fully qualified covenant)
■ Provide that the assignor will
● Guarantee the assignees payment of rent and observance of tenant
covenants and indemnify landlord for any breach
○ Guarantor of assignor may not be required to directly
guarantee assignee but may be required to guarantee
assignors performance under the AGA thereby indirectly
guaranteeing the assignee
● Pay the rent and observe and perform the covenants in default of the
assignee
● Take a new lease if the lease is disclaimed on insolvency
○ Pre Completion matters -
■ Usual pre-completion searches should be undertaken
■ Landlords solicitor engrosses the licence to assign for execution by the parties
- licence to assign may incorporate the AGA or this may be contained within a
separate deed
■ Assignors solicitor should produce a completion statement for assignees
solicitor
○ Completion
■ Balance due should be submitted to assignors solicitors with assignee solicitor
handing over part licence to assign
■ Assignee should receive:
● Original lease and ancillary docs
● Deed of assignment / TR1
● Part licence to assign executed by landlord
● Certified copy - unregistered title information if required
● Receipt for rent
○ Post completion
■ SDLT/ LLT formalities - assignees solicitor must deal with these
■ HM LR formalities - assignees solicitor must then deal with this:
● Registered lease - application to register disposition using form AP1
and submitted within OS1 priority period
● Unregistered lease with >7 years - application for first registration of
lease using form FR1 and DL in duplicate within 2 months of
completion
● Other leases where superior title is registered - same against
registered
● Other leases where ST is unregistered - consider a caution against
first registration against name of estate owner to protect tenant on first
registration of superior title - will bind everyone purchasing the land
■ Notice of assignment - confirms that assignment was authorised and has
taken place -served on the landlord in duplicate accompanied by relevant fee
and one copy of the receipted notice should be kept with the lease
● Must be served if required by the lease or if being purchased using a
mortgage lender

Chapter 8 - Commercial Leasehold Remedies

● Liability Under Leasehold Covenants
 ○ Old leases
■ Original tenant - will be liable for all the tenant covenants under the lease for
the entire term by virtue of privity of contract - thus will remain liable even after
they have assigned their interest and will likely want an express indemnity
from assignee/ transferee (wil be implied if lease is registered or if transfer is
for value)
■ Subsequent tenants - will remain liable under the rules of privity of estate for
tenant covenants that touch and concern the land during their period of
ownership - will be most covenants that affect the relationship of landlord and
tenant and refer to the subject matter of the lease directly affect the premises
other than those that are expressed to be personal (ie only intended to bind
that particular tenant) - common for landlords to to require subsequent tenants
to enter into a direct covenant with landlord to observe all covenants under
lease for remainder of term - upgrades privity of estate to privity of contract
■ Original landlord - original landlord will be liable for all the landlord covenants
under the lease for the full term - thus usually will obtain an express indemnity
when their interest is transferred
■ Subsequent landlords - by virtue of privity of estate will be liable for covenants
that touch and concern the land during their period of ownership
■ Original guarantor - will be liable for all tenant covenants for the full term by
virtue of privity of contract
■ Subsequent guarantors - will depend on the terms of their guarantee -
whether they guarantee the performance and observance of the tenant
covenants by the person they guarantee or for the remainder of the term
■ If a lease is varied so that the term is increased then this will act as a new
lease - so may be a red herring - replaces the old lease and its new date -
could be within new lease category
○ New Leases - 1995 Act abolished the doctrine of privity of contract for new leases so
does not distinguish between the original and successive parties
■ Original and Successive tenants - both will be liable for breaches of all
covenants (unless individually specific) - will be automatically released from
future liability on lawful assignment - thus if landlords consent was required to
an assignment and was not obtained then the assignor will not be released
● Lease could specify requirements for proposed assignments -
including the tenant entering into an AGA
■ Original and successive landlords
● Both will be liable for covenants (other than individually specific) but
will not automatically be released when transferring their interest- they
may apply for a release:
○ Landlord serves a notice on the tenant either before or within 4
weeks of the assignment requesting to be released
○ T has 4 weeks to respond
○ If no response received then L is released
○ If T objects the L may apply to County Court for a declaration
■ Original and Successive Guarantors - any guarantor may not be required
directly to guarantee future assignees - also released on lawful assignment by
tenant that they agreed to guarantee - ie the assignor however they may
lawfully be required to guarantee the assignors performance under the AGA
thereby indirectly guaranteeing the immediate assignee
● Remedies for Breach of Leasehold Covenants
● Remedies for Breach of Covenant(s) to Pay Rent(s)
○ Debt action or insolvency proceedings
■ May be brought in CC or HC - limitation period for rent is 6 years regardless of
whether it is made by deed or oral etc (6 years for service charges if made by
contract or 12 if made by deed) - landlord should consider tenants actual
ability to pay the rent(s) before pursuing this remedy as the process can be
costly and time consuming - may also impact on the landlord-tenant
relationship
■ Alternatively and if debt is not disputed the landlord may consider
commencing insolvency proceedings (min £5k if personal) or corporate
winding up (min £750) - but as an unsecured creditor the landlord may not
receive the full amount owed
● Cant serve a statutory demand if below this figure
○ Forfeiture - power to re-enter and take possession of the premises and bring lease to
a premature end
■ To rely on this remedy there must be a clause in lease dealing with the
specific circumstances -
■ Forfeiture clause will usually be the subject of negotiation on the grant of a
new lease to ensure that its terms are not unduly onerous -
■ If words “whether formally demanded or not” are within the clause the landlord
would need to make a formal demand (unless half a years rent is outstanding
and are insufficient goods available on premises for recovery)
■ Landlord may forfeit by way of a court order or through peaceable re-entry
and changing the locks
■ Waiver of the right to forfeit - should avoid waiving the right to forfeit by doing
anything which acknowledges the landlord and tenant relationship to be
continuing such as accepting rents, or pursuing CRAR (Commercial Rent
Arrears Recovery). Non payment of rent is a once and for all breach (right to
forfeit will not arise again in respect of that breach) as opposed to a continuing
breach (one that continues as the tenant remains in breach) e.g. breach of
repair or user covenant - waiving the right in in these circumstances could be
fatal to the landlords claim in respect of past arrears.
■ If there are more than 6 months of rent outstanding and insufficient seizable
goods the landlord does not need to send a demand to T before forfeiting
■ Discretionary relief from forfeiture - tenant can apply for relief from forfeiture
generally for up to 6 months after recovery of possession - if such an
application is successful then the lease will continue - typically granted then T
agrees to pay outstanding arrears and costs
● If tenant pays arrears and legal costs (into court) prior to the court
date then there will be relief from forfeiture and an automatic stay
● If there is a subtenant - their lease will also be determined but they too
will be able to apply for relief from forfeiture
● Can also be applied to by a lender who holds a charge over the lease
○ Commercial rent arrears recovery (cannot be used for residential or mixed)
■ Process whereby the landlord may enter commercial premises when a written
tenancy in order to seize foods belonging to the tenant, sell them and use the
proceeds to settle rent arrears
■ Can only be used to recover annual rent including VAT and not other sums
reserved as rent such as insurance rent or service charges - in the past it was
 common to reserve these but has now been abolished for commercial
tenancies
■ Procedural requirements:
● Must be at least 7 days rent outstanding when notice is served and
goods are taken
● Tenant must generally be given 7 days notice
● Authorised enforcement agent must be used
● Agent can only remove property belonging to the tenant
● Cannot take goods up to the value of £1350 that are necessary for the
tenants business
● Generally goods must be sold at public auction with tenant given 7
days notice of the sale
■ If property has been sublet it may also be possible to recover directly from
them if given 14 days notice - the sub tenant will then be able to deduct this
from their immediate landlord
■ If occurred during covid may have to do dispute resolution
○ Pursuit of former tenants and guarantors
■ Old leases - original guarantor will be liable by virtue of privity of contract to
guarantee the payment of rent and observance and performance of the tenant
covenants, indemnifying the landlord in the event of any tenant breached
during the entire term - subsequent guarantors may also be liable, depending
on the terms of their guarantee - e.g. if they gave a direct covenant for the
whole of the remainder of the term
■ New leases - guarantor will automatically be released on lawful assignment of
the lease and can't be required to guarantee a future assignee - unless done
indirectly through an AGA
■ Before proceeding against a former tenant or guarantor it is necessary to
serve a section 17 notice (default notice for recovery of a fixed charge - must
be served within 6 months of the sum falling due) - regardless of if new or old
- so wouldnt be able to claim any rent arrears under an AGA that are older
than 6 months
● If pays the recipient may call for an overriding lease within 12 months -
intermediate lease that slots in between landlord and existing tenant
making the former tenant or guarantor the immediate landlord of the
tenant - enables then to take back control
○ Recourse to rent deposit - landlord may also rely on deposit as security for the
payment of rents and sometimes the performance and observance of other
covenants - if provided it is usual to have a formal rent deposit deed outlining the
terms on which it is held and procedure for withdrawals, top up and repayment/ return
■ If tenant is in financial distress though there is no guarantee that this will be
resolved quickly
● Remedies for Breach of Other Covenants
○ Specific Performance - discretionary equitable remedy requiring the tenant to take
action to remedy a breach - as an equitable remedy it will only usually be appropriate
where other remedies are unavailable - landlord must come to equity with clean
hands
○ Damages - may be available under normal contractual principles - however landlord
may not be able to recover the full amount in the event of a breach of a repairing
covenant:
 ■ S18 LTA - damages are limited to the amount that the reversion is diminished
not the cost of repairs, no damages if landlord plans to demolish or make
structural alterations that would make it valueless
■ Leasehold Property Repairs Act 1938 - if lease is 7+ years then notice to sue
must be given - T will have 28 days to serve a counter notice claiming
protection - if served the landlord will require leave of the court to proceed
where it must be proved that the breach needs to be remedied immediately -
act does not apply to breaches of a covenant to put premises into repair within
reasonable time of T taking possession
○ Self-help -Jervis v Harris clause - must include a clause that usually provides:
■ A right of entry for landlord to check compliance with Ts repairing covenant
■ Right to serve a notice of any breach on T with details of works required
■ Obligation on T to proceed diligently and expeditiously with the work
■ Right for landlord to enter and carry out the works if T does not comply with its
obligations
■ Right to recover costs of executing such repairs from T as a debt (not extra
rent)
○ Forfeiture
■ Must first serve a S146 notice - should be first checked that there is a
forfeiture provision in the lease and that it has become exercisable. S146
notice
● Specifies the breach
● Requires remedy within a reasonable period
● Requires T to pay compensation for the breach
● Failure to require T to remedy the breach within a reasonable period
will invalidate notice
■ Methods of forfeiture - landlord may proceed to forfeit the lease either by court
action or peaceable re-entry if T does not comply with notice
● Can only be court order if it is a residential lease
■ Waiver of the right to forfeit - landlord must take care not to waive its right to
forfeit - of particular note is that the breach of a repairing covenant is a
continuing breach
■ Relief - T can apply for relief
● Court proceedings - application may be made any time before re-entry
● Peaceable re-entry - reasonable period after reentry
● Will usually be granted if breach is capable of remedy, has been
remedied and L will not be materially adversely affected
○ Pursuit of former tenants and guarantors
○ Rent deposit
○ Injunction- may usually be sought for breaches of restrictive covenants or anticipated
breaches - like specific performance an injunction is a discretionary equitable remedy
so damages may be awarded instead if they would be adequate
○ Surrender - although not a remedy as such, it can bring a lease to an end relatively
cheaply where the parties agree and wish to sever their connections

Chapter 9 - Termination of Leases and Security of Tenure under

Part II of the Landlord and Tenant Act 1954
● Application of the Act, Implications and Exclusion From the Act
○ Act automatically provides security of tenure for business tenancies - but is possible
to exclude a business tenancy in some situations. Security of tenure:
■ Common law methods of termination of a lease may not apply, instead a
lease may continue under the act unless and until it is terminated
■ On termination there is a presumption that the T will generally be entitled to a
new protected lease usually on similar terms, subject to reasonable updating -
if parties cant agree these terms then court can intervene
■ If renewal lease is not granted then T may be entitled to compensation
■ Normally competent landlord will be owner of freehold but if a sub lease then
will be sub-landlord unless sub-landlords lease with superior landlord ends
less than 14 months from now (and whole of the holding is let to the T)
○ Common law methods of termination
■ Effluxion of time - automatically ends following expiry of the contractual term
without the need to give notice
■ Notice to quit - a periodic tenancy may be terminated by either party giving
one full periods notice or at least 6 months if a yearly periodic tenancy
■ Surrender - when the parties each agree for the lease to come to an end
before the contractual expiry date - causes the lease to be merged with
landlords reversionary interest - e.g. its estate in land - usually the freehold or
superior leasehold - To take effect in law must be made by deed. If there is a
sublease and head lease is surrendered the subtenant becomes immediate
tenant of head landlord on terms of the sublease
● Can also take effect without a deed (operation of law)- through mutual
agreement followed by unequivocal conduct showing reclaim of
possession - e.g. handing over the keys and the keys being accepted
by the landlord
■ Merger - when the T acquires the immediate landlords estate/ reversion - ie
the freehold - lease is merged into freehold title
● Leasehold will be extinguished by merger immediately - however the
LR will not terminate the title until any incumberances such as
mortgages are discharged
○ Application of the act - only applies to business tenancies
■ Must be a tenancy with exclusive possession - property must also be
occupied by tenant for business purposes - includes occupation by an agent
or manager or company in which the T has a controlling interest
● But does not include when no longer in occupation themselves - ie if
sublet it then would not be in occupation
■ If it is mixed use then property will still be business use so long as it is not
merely incidental to residential use
■ Excludes:
● Licences that don't confer exclusive possession
● Tenancies at will
● Some short term fixed tenancies under 6 months - unless provision for
extending beyond 6 months or T in any capacity has been there for
over 12 months
● Leases of agricultural or mining tenancies
● Contracted out tenancies
○ Contracted out tenancies - fixed term tenancy under which the parties expressly
agree using a prescribed process that the provisions of the act will not apply
 ■ To contract out the lease must be for at least a term of years certain (no
period of extension or holding over) and correct procedure must be adhered to
■ Must be made and responded to before the lease is entered into and the
lease must be for a term certain - if not then it will be void
■ Landlord must serve notice on tenant in prescribed form (very specific
procedure to follow) warning them of the proposed exclusion and advising
them to take independent advice
● If 14 days have passed since service then T must make declaration
that they agree
● If less than 14 days then T must make a statutory declaration in
presence of an independent solicitor that they agree
■ Exclusion notice must be referred to in lease itself, usually through a standard
clause towards the end of a lease
■ If adhered to correctly then the lease will come to an end on the contractual
expiry date and the T must move out
■ If lease granted prior to June 2003 - need to obtain a court order confirming
the lease was contracted out of the LTA
■ To have protection of the LTA - must be in occupation of the premises being
leased - even just regularly occupying the parking space of a car park but not
the building would count - can always return to occupying to renew the
protection after an absence
● But if has given up occupying some part of the premises it wont apply
● The Continuation Tenancy and Methods of Termination Under the Act
○ Methods of termination under the act
■ Surrender
■ Forfeiture
■ Service by the tenant of a notice to quit if they have been in occupation for at
least a month
■ Ceasing to be in occupation on the expiry of a fixed term lease - expires by
effluxion of time
■ Also:
○ Can only serve a S25, 26 or 27 notice - cant do more than one
○ S25 Notice - a landlords notice to terminate a fixed term or periodic tenancy with or
without proposals for a new one
■ If proposing new tenancy the notice must state their proposals
■ If not proposing new tenancy - landlord must include the relevant grounds for
refusing a new tenancy - great care must be taken as the grounds cannot be
changed once notice has been served
● Court will allow very minor omissions ao long as it is sufficiently clear
as to its intention
● Tenant can apply to CC before termination date if they object (both
can agree to extending termination date though)
■ Must also state the date the tenancy will terminate (no earlier than contract
end date) and be served not less than 6 or 12 months before proposed
termination date
■ If not met then notice will be invalid and a fresh notice should be served
■ If notice contains dishonest statement from the landlord then it will be invalid
and unenforceable - will be valid if it has errors so long as they would not
mislead a reasonable recipient
■ Must be signed by the landlord
 ○ S26 Request - can be used to terminate a tenancy protected under the act - to
terminate an existing fixed term tenancy and have a new tenancy
■ Can only be served if T has a fixed term tenancy of over one year
■ Could wish to respond to falling market prices, assign the lease, sell assets
etc
■ Cannot if L has already issued a S25 notice
■ Cannot if T is no longer in occupation of the entire premises
■ Tenant must state their proposals for a new tenancy, date it will begin (no
earlier than contractual end date) be served no less than 6 months and no
more than 12 before expiry date
■ If not complied with then will be invalid
■ If landlord opposes:
● Must serve counter notice within 2 months - if doesn't then loses right
to oppose tenancy
● If L has offered suitable alternative accommodation (on reasonable
terms) the court must refuse the application and has no discretion
otherwise
● T must make application to court for new tenancy after period of
counter notice has expired but before commencement - landlord can
apply to court for termination before they do
● If landlord does not oppose - counter notice does not need to be
served - can apply to court for a renewal lease once 2 months passed
● Must be served on competent landlord - the one with the freehold or
tenancy that will not come to an end by within 14 months
○ If there is any doubt as to the identity of the competent landlord
the tenant may serve a S40 notice on their immediate landlord
○ S27 Notice - a tenant who wishes to terminate rather than seek a renewal tenancy
provided that they have been in occupation for at least a month
■ Serve a notice on landlord under S27(1) giving not less than 3 months notice
to terminate on the contractual expiry date; or
■ Simply vacate the premises on/by the contractual expiry date in which it will
expire by sufficient effluxion of time; or
■ Serve a notice on the landlord giving not less than 3 months notice to
terminate after the contractual expiry date
○ Interim Rent - during continuation period the landlord or tenant may apply for an
interim rent under S24A until proceedings are concluded - usually decided on the
basis of a yearly tenancy but having regard to the terms of the existing lease if the
tenant applies for an interim rent they would usually do so when market rent is lower
■ Must be no later than 6 months after proposed termination date or
commencement date
■ If L is not opposing then interim will be market rent at termination date (unless
substantially different from current rent or proposed terms are different to
current lease)
■ If L is opposing then it will be a reasonable rent considering current rent and
considering if it were for a hypothetical 1 year term
● Landlords Grounds of Opposition
○ In response to s25 with no future tenancy or S26 request - landlord must specify its
grounds of opposition - if court accepts these then no new tenancy will be ordered
although the tenant may be entitled to compensation.
 ■ If been in occupation for under 14 years than compensation is based on the
rateable value of the property. If over 14 years then 2x the rateable value of
the property
○ S30(1)(a) - tenants failure to repair - discretionary - court may grant - depends on
seriousness, fairness to landlord and what if any undertakings the tenant has made to
remedy the breach - would not award compensation if the court uses discretion to
refuse
○ S30(1)(b) - persistent delay in paying rent - discretionary - depends on persistency,
extent, likelihood of future arrears, fairness to landlord of granting a new lease,
proposals to guarantee the payment of rent in renewal lease - if so then no
compensation
○ S30(1)(c) - substantial breaches of other obligations or any other reasons connected
with Ts use or management of the property -discretionary - are they so substantial
that granting a new lease would prejudice the landlords interest? - if so no
compensation
○ S30(1)(d) - landlord is able to offer provide or secure suitable alternative
accommodation for T - mandatory + no compensation - look at suitability of
accommodation, reasonableness of proposed terms, nature and type of the business
and size and location of the premises
○ S30(1)(e) - underletting of part but not landlord requires whole of the property -
discretionary and depends if aggregate of rent on separate letting would be
substantially less than rent for letting of the whole such that it would be uneconomical
to proceed with renewal - T may be entitled to compensation
○ S30(1)(f) - demolition or reconstruction to premises - mandatory - must be firm
intention (ie not just conditional on the T moving out) with evidence, must be
substantial works, must need legal possession to do so - T may be entitled to
compensation
○ S30(1)(g)- intention to occupy premises for landlords own purposes as a business or
residence- mandatory - must be firm and settled intention and landlord must have
owned their superior interest for at least 5 years - designed to prevent them taking
freehold with a lease then just getting vacant possession - T may be entitled to
compensation
● Terms of the Renewal Lease and Compensation
○ Tenants application for a new tenancy is successful they will be entitled to a new
lease of the holding (property comprised within current tenancy) - but landlord can
insist on them taking a lease of the whole property not just part
○ Terms of the renewal lease (determined by the court)
■ Term - will be for a reasonable term not exceeding 15 years and will
commence 3 months (+ 4 weeks to allow for time to appeal) after proceedings
are finally disposed of - court has a wide discretion and can consider many
factors
■ Rent and rent review - will be based on open market rent - disregarding
occupation by tenant, goodwill attached to the premises, effect of voluntary
improvements made by tenant, value of any applicable licence held by T
■ Other terms - court will consider terms of the existing lease and all other
relevant circumstances - new clauses or types of clause may only be added if
they are fair and reasonable in all the circumstances - burden of proof will be
on person seeking to impose the new clause - lease may require a guarantor
if reasonable in the circumstances
 ■If T is unhappy with the proposed terms they may apply for the court to revoke
it within 14 days
○ Compensation
■ If Ts application for a new tenancy is successfully opposed by landlord on
grounds that do not involve the default of the T then the T may be entitled to
compensation for disturbance
■ Compensation is equivalent to the rateable value of the property (value used
by local authority to calculate business rates for property if used for non-
domestic purposes) at the date of the relevant notice or request under the act
- increased to twice the rateable value plus additional compensation for their
losses resulting if T or their predecessors in same business have been in
occupation for at least 14 years

Chapter 10 - Property Taxation

● Property Taxation
○ SDLT and LLT are applicable to both residential and non-residential commercial
property and are paid by the buyer or tenant
○ VAT does not usually apply to residential property but may apply on sale of non-
residential or commercial property if it is less than 3 years old or owner has opted to
tax
○ Disposal of ones only or main residence is normally exempt from CGT under the
principle private dwelling house exemption - however for properties that do not fall
within this exemption CGT will apply or equivalent CT regardless if residential or not
● Stamp Duty and Land Tax and Land Transaction Tax
○ SDLT - tax on land transactions over a certain threshold (>£40k for freehold or lease
with 7+ years and premium is >£40k and annual rent >£1k)- the grant of a new lease
or the assignment of an existing lease - paid by buyer (includes the value of non
monetary consideration) - but is not off the market value just the monies paid
■ SDLT is payable on the chargeable consideration - usually just money but can
include non-monetary payment such as promises to repair the property, or
assuming liability for an existing debt
● Includes fixtures but not chattels
■ Chargeable consideration includes any VAT payable
■ HMRC must be notified of the transaction and paid SDLT within 14 days of
completion (earliest form of completion)
○ Land Transaction Tax - the same but in wales
○ Taxes are progressive in nature - rate rises as the value of the property does - apply
both to freehold and leasehold properties - for leasehold it is just based off the
premium and net present value of the rent to be paid
○ Transactions which are not notifiable:
■ Freehold land and property transactions with a total chargeable consideration
of less than £40k
● Chargeable consideration includes assumption of existing debts - so if
A owned a property worth 800k with an outstanding mortgage of 300k
and transferred 50% to his wife - is transferring ½ of a 300k debt - so
will need to pay SDLT on 150k
■ Transactions where no money changes hands
■ Property under a will
■ Property transferred due to divorce
■ Lease with a term less than 7 years
 ■ Grant or assignment of a lease with a term of 7 years of more where premium
is less than £40k and annual rent is less than £1k
■ Once notified and SDLT paid HMRC will issue a SDLT5 form - cannot register
without it
● Always first send SDLT1
● If more than 2 buyers or sellers also SDLT2
● If more than one property SDLT3
● If a complex lease, commercial translation and some residential
transactions - SDLT4
● SDLT5 is the return which comes back from HMRC when paid
○ SDLT rates - residential
■ Under £250k - 0%
■ 250,001 - 925,000 - 5%
■ 925,001 - 1.5M - 10%
■ Above 1.5m - 12%
○ SDLT rates - non-residential - includes bundles of houses (so long as over 6)
■ Up to 150k - 2% or is it 0%?
■ 150,001 - 250k - 2%
■ Anything above - 5%
○ First time buyers (not either alone or with others previously owned a freehold or
leasehold interest in the world and buying for only or main residence)- up to £625k
pay nothing up to 425k and then 5% from 425k - 625k - no relief is available if above
500k
○ Company buyers or those purchasing an additional property - pay 3% on top of main
rate yes - can apply for a refund if the home is sold within 36 months. Is also a special
rate of 15% on some purchases by companies of residential properties over £500k
■ If buying with someone else then no increased amount if their share is <£40k
■ E.g. under 250k 3%, 250k - 925k 8%
○ SDLT return and payment - must be sent to HMRC with consideration and tax
payable within 14 days of completion (or occupation - whichever comes first)
○ Non-UK residents - pay a 2% surcharge (not been in UK for at least 6 months in the
last 12 months)
○ LLT does have different rates but key differences is that there is no first time buyers
exemption and the surcharge for non-uk residents does not apply in wales
■ LTT rate for residential properties up to £225k is 0
■ 225,000 - 250,000 - 1%
■ 250,000- 1m - 5%
■ 1m+ - 6%
■ Also has late payment penalties - up to 6 months is £100, then an extra £300
or 5% of unpaid tax (whichever is higher) after 6 months, then an extra £300
or 5% of unpaid tax (whichever is higher) after 12 months
○ Leasehold transactions
■ Depends if new lease is granted or an existing lease is assigned to the buyer/
tenant
■ SDLT is payable on both the price paid including VAT on the same basis as
consideration for the purchase of freehold land and the net present value of
the lease -complex calculation that you don't really need to know
● Net present value will not be factored in if it is being assigned as SDLT
will already have been paid - if being assigned:
○ 0% - first 250k
 ○ 5% - 250k - 925k
● VAT
○ Basis of the charge to VAT and taxable supplies
■ VAT is charged on the supply of goods or services made in the UK when a
taxable supply by a taxable person
■ While all consideration will be subject to SDLT, only chargeable consideration
is subject to VAT - thus if paying in part and assuming a mortgage, VAT will
only be charged on the payment but SDLT will be charged on all of it
■ General rule is that VAT is not payable on residential or commercial property
transactions
○ Standard rated supplies - 20%
○ Zero rated supplies - still taxable supplies but at 0%
○ Exempt supplies - goods and services not taxable and do not attract vat
■ A business cannot register for VAT if it makes only exempt supplies - if only
zero rated then it can
○ VAT and residential property - not usually applicable to sale or letting of residential
property as such transactions are typically VAT exempt - sellers will also not usually
be acting in the course of a business. New Build residential property will be zero rates
○ VAT and commercial property and option to tax
■ Up to 3 years old will automatically be standard rated
■ Older than 3 years will be exempt but seller has ability to exercise option to
tax
■ Grant of lease is exempt but has the option to tax
■ Option to tax is an option by a person registered for VAT to charge the
property for VAT at the standard rate - the option will affect future supplies
relating to the property (rent or service charges etc) - must submit to HMRC
within 30 days of deciding to exercise it
● May be done to offset input tax paid on cost of services and supplies
received in dealing with a property such as construction and
refurbishment
● Can even elect to do so after having exchanged contracts
● Once opted in cannot revoke for 20 years
● Capital Gains Tax
○ CGT is payable on any gain made on the disposal of a chargeable asset - includes
selling it, gifting it, swapping iet etc (payable within 60 days of disposal completion
date but the tax rate will be based on the date of disposal which is when contract is
exchanged)
■ If disposes of land (in a total year) for £20k or less and proceeds represent
less than 20% of lands total value then can choose not to count as a disposal
■ Disposal date will be the date that the contracts are exchanged - tax will be
charged on the date the disposal becomes absolute (ie could have different
rate if contacts exchanged on Dec 4th when it was 15%, but then completed
after april 6 when it increased to 20%) - date of disposal is 4th Dec but tax is
20% (VAT is the same)
○ Principal private dwelling house exemption
■ Sale of a dwelling house used as a person's main or only residence
throughout their period of ownership - with a garden of no more than 0.5
hectares (5k sqr m) - anything over will attract CGT
■ Period of residence - can disregard the following
● Last 9 months of ownership or 36 months if disabled
 ● Up to the first 24 months of ownership if due to problems in selling
another property or due to a refurbishment or building works being
carried out
● Any period of employment where all duties are overseas (not self
employed)
● Up to 4 years absence required as a condition of employment
● Any other period for up to 3 years in total throughout the period of
ownership
■ Within 2 years of having more than one property - may elect which one is their
principal residence - such an election is revocable but can only opt for one if
married
■ If any part of the dwelling house has been used exclusively for business
purposes only part of the gain will be exempt
● If was PPDH but then later let as a residential accommodation (but
owner was in there as shared accommodation) then the portion of the
period during which it was PPDH +9 months will have relief (max of
£40k
■ Any CGT due will be payable within 60 days of completion of the sale
○ Otherwise can deduct:
■ Costs and expenses incurred in acquiring property such as purchase price,
legal and surveyors fees, SDLT, HMLR fees etc
■ Costs of any alterations that have enhanced the value of the property
■ Costs and expenses incurred on the sale - legal fees, estate agent etc
■ But NOT things like insurance and repairs