Property Due Dilligence

• What is the first step a buyer should take in property due diligence?

  Advise the buyer to have a surveyor carry out a physical inspection of the property.
• What should a seller be advised regarding capital gains tax?

  The seller should be advised about capital gains tax.
• What is required when acting for a buyer and lender if the lender is an institutional lender?

  A standard certificate of title must be provided, and the solicitor must maintain client confidentiality.
• What advice should be provided when acting for two buyers?

  Provide co-ownership advice.
• What protocol must be followed in property transactions?

  Follow the Law Society Conveyancing protocol.
• What are the consequences of breaching the Law Society Conveyancing protocol?

  It may result in an action for specific performance or disciplinary action by the SRA.
• What must a seller provide regarding the Energy Performance Certificate?

  The seller must provide an Energy Performance Certificate for the last 10 years, except for listed buildings.
• What must be agreed upon for new commercial leases?

  Terms must be agreed upon, and heads of terms must be produced.
• What code must new commercial leases follow?

  They must follow the Code for Leasing Business Premises by the Royal Institution of Chartered Surveyors.
• What must landlords provide in relation to lease terms?

  Landlords must create clear terms regarding rent, length of term, rights to break the lease, rent review, rights to assign, and repair obligations.
• What is required for assigning a lease of commercial property?

  Landlord's consent is required for the assignment.
• What is an Authorised Guarantee Agreement (AGA)?

  An AGA requires the outgoing tenant to guarantee the incoming tenant as a condition of the assignment agreement.
• Who drafts the licence to assign in a lease assignment?

  The landlord's solicitor drafts the licence to assign, setting out the new conditions required of the assignee.
• What does the signing of the licence to assign create?

  It creates privity of contract among all parties.
• What must a seller's solicitor do when investigating the seller’s title?

  Investigate the title by downloading an official copy of the register of title and title plan for registered titles, or reviewing title needs and charges for unregistered titles.
• What must be done if there are defects in title?

  The Law Society Conveyancing Protocol requires the seller’s solicitors to take care of them.
• What must be sent to the seller regarding the title map?

  The title map must be sent to the seller to confirm that it represents the full extent of land being sold.
• What should be requested from the lender regarding the mortgage?

  Ask the lender for an indicative redemption figure to ensure proceeds will redeem the mortgage.
• What does the seller's solicitor send to the buyer's solicitor?

  The seller's solicitor sends a contract package to the buyer's solicitor.
• What is included in the property information form?

  The property information form contains information about disputes with neighbors, building works, notices received, flooding, services crossing the property, utilities, and occupiers.
• What is the purpose of the fittings and contents form?

  It details personal property included or excluded in the transaction and becomes part of the contract.
• What must be provided if the title is unregistered?

  If unregistered, an epitome of title with copies of documents showing an unbroken chain of ownership for 15 years must be sent.
• What must be provided if the title is registered?

  If registered, an official copy of the registered title must be sent.
• What additional documents must be included in the contract package?

  Include any guarantees or copies of planning permission.
• What is the seller's duty regarding latent defects?

  The seller has a duty to disclose latent defects and burdens that are not apparent from inspection.
• What happens if there is a breach of duty regarding latent defects?

  If there is a breach of duty, the buyer may have the right to withdraw from the contract after exchange and claim damages.
• What is included in the contract package for the assignment of an existing lease?

  It includes a draft contract in duplicate, official copies of leasehold title and plan, copy of the lease, property information form, leasehold information form, fittings and contents form, and other relevant documents.
• What is included in the contract package for a new lease?

  It includes a draft lease annexed to it, copy of the landlord's freehold title, property information form, replies to standard pre-contract enquiries, and relevant documents if the property is less than 10 years old.
• What conditions are used in residential transactions?

  Standard conditions of sale are used in residential transactions.
• What conditions are used in commercial transactions?

  Standard commercial property conditions are used in commercial transactions.
• What details are included in a residential contract?

  It includes particulars of sale, names of parties, freehold/leasehold status, type of title guarantee, completion date, and purchase price.
• What are the standard conditions of sale regarding the purchase price?

  The purchase price and contents price include VAT, and the buyer pays a 10% deposit.
• What can the seller do with the deposit received?

  The seller can use the deposit received as a deposit for a related purchase.
• What happens if the deposit is agreed to be less than 10%?

  If the deposit is agreed to be less than 10%, a breach of contract means the full 10% can be claimed.
• Who holds the deposit as a stakeholder?

  The deposit is held by the seller's solicitor as a stakeholder.
• What must the seller provide regarding title guarantee?

  The seller must provide full title guarantee that they are entitled to sell the property and will transfer their title to the buyer.
• What is a no title guarantee?

  A no title guarantee is usually given when a seller has no knowledge of the property at all, such as a bank in possession.
• What is a limited title guarantee?

  A limited title guarantee warns that the seller has not created any charges or granted any rights during their ownership that have not been disclosed.
• What obligations may be binding on the buyer?

  If the contract discloses obligations binding the buyer, such as maintaining a fence, the buyer agrees to perform the obligation and indemnify the seller if they breach it.
• What happens if the seller has paid service charges in advance?

  If the seller has paid service charges in advance, they must use estimates, and the buyer pays the shortfall.