The Institute of Legal Executives - cilex.org.uk · Mortgage: £165,000 loan from KRBV Bank plc to...

23 October 2009 CONVEYANCING

SUBJECT 45

The Institute of Legal Executives

LEVEL 6 PROFESSIONAL HIGHER DIPLOMA IN LAW

CONVEYANCING

Time allowed: 3 hours and 15 minutes

The first 15 minutes are for you to read the question paper. During the 15 minutes reading time you may make notes on the perforated notes page at the

back of this question paper ONLY. These notes must be securely attached to your answer booklet at the end of the examination. You will then have 3 hours

in which to complete the examination.

Answer question 1, which is worth 70 marks, and EITHER question 2 OR question 3, each of which is worth 30 marks.

Full reasoning must be shown in answers – a yes or no answer will earn no marks.

Authorities and decided cases should be cited where appropriate.

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MATERIALS PROVIDED

DOCUMENT 1 - Attendance note.

DOCUMENT 2 - Official Copy of Register Entries for 23 Farriers Mews

DOCUMENT 3 - Draft contract for sale of 23 Farriers Mews.

DOCUMENT 4 - Blank Form TR1

Your firm, Bagshot Liverpool & Leicester, recently received instructions to act for first-time buyers Jonathon Jakes and Helen Spiers in their purchase of 23 Farriers Mews, Copper Leys, Farhill, Hampdenshire FH3 9TR for £185,000 (see Document 1).

Question 1

Since receiving instructions, you have received Documents 2 and 3 from the seller’s solicitors, together with a Home Information Pack. You have also received instructions to act for your buyer clients' proposed mortgagee.

(i) Explain the matters to which you will refer in the Client Care letter which is to be sent to your clients (note to candidates – you are not required to draft the client care letter).

(6 Marks)

(ii) Explain what documents you would expect to see in the Home Information Pack.

(10 marks)

(iii) Assuming that your buyer clients’ mortgagee is a member of the Council of Mortgage Lenders, explain the steps that you will take to comply with the requirements of the CML Handbook dealing with money laundering and fraud.

(7 Marks)

(iv) List and explain any amendments you would make to the draft contract for sale. Write your answer in the answer book provided and not on the draft contract itself.

(16 marks)

NOW ASSUME THAT ALL PRE-CONTRACT MATTERS HAVE BEEN RESOLVED SATISFACTORILY AND THAT EXCHANGE OF CONTRACTS CAN TAKE PLACE

(v) Explain how you will exchange contracts in respect of your clients' purchase and the undertaking you will give as a part of that exchange.

(8 marks)

(vi) The sellers' solicitor contacts you shortly after exchange and explains that Keith Draper, a serving Royal Naval officer, has received notice of an emergency posting. He will be leaving in the next few days and will be out of contact at completion. The solicitor proposes to complete by having Keith Draper appoint an attorney. Explain how you will satisfy yourself that the Power of Attorney is satisfactory to your clients.

(8 marks)

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(vii) Assuming that the buyers have no other significant assets, explain what advice you would give as to the buyers’ ownership of the beneficial interest in the property on completion.

(7 marks)

(viii) Explain how you will complete form TR1 (Document 4) for your clients' purchase. Write your answers in the answer book provided and not on the blank Form TR1 itself.

(8 marks) (Total: 70 marks)

ANSWER EITHER QUESTION 2 OR QUESTION 3

Question 2

You are instructed by Katie Lewis and Jessica Blakeney, both first-time buyers, in connection with their proposed purchase of 39 Saracen House, Kernden, Marfordshire, MA34 4LB, from Martin Ellis. The property is a registered leasehold flat. Your clients' purchase is part funded by Royal Bank of Wales Plc, a member of the Council for Mortgage Lenders, which has instructed you to act in the perfection of its charge over the property. The seller's solicitor sends you papers, including a Home Information Pack and a copy of the lease (note to candidates: these documents are not reproduced).You note from the information contained in the HIP that the seller bought the property as an investment, and, until the property was put on the market, it was occupied by tenants.

(i) Explain what considerations would affect your investigation of the terms of the draft lease in consequence of the requirements of the Lender’s Handbook.

(10 marks)

(ii) You note from the seller's replies to enquiries that the internal accommodation of the flat was re-arranged four months ago. The work involved the removal and re-erection of stud-walls, the installation of a new bathroom suite, and some re-wiring work. Assuming that the HIP contains no other documentation relating to this work, explain the further enquiries you will make of the seller's solicitor.

(8 marks)

NOW ASSUME THAT ALL PRE-CONTRACT MATTERS HAVE BEEN RESOLVED SATISFACTORILY AND EXCHANGE OF CONTRACTS HAS BEEN EFFECTED

(iii) Explain the pre-completion searches you will undertake. (4 marks)

(iv) Three days before completion you are informed that the mortgagee has withdrawn its offer of mortgage funding (having changed its lending policy in light of economic conditions). Your clients are unable to obtain substitute funding in time for completion. Explain the steps you expect the seller’s solicitor to take, and, assuming that your clients paid a 10% deposit on exchange, advise your clients of the potential consequences of their non-completion.


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Question 3

MATERIALS PROVIDED:

DOCUMENT 5 - Official copy of Register Entries

You are instructed by Angus McAlpine in connection with his purchase, for £220,000, of 27 De Havilland Close, Hoares Lane, Hampdenshire FH73 3LE from Nearhill Bank plc. You receive a draft contract and Home Information Pack from the seller's solicitor, which contains Official Copies of the register (see DOCUMENT 5). Angus is purchasing without mortgage finance.

(i) Explain how you will satisfy yourself that Nearhill Bank plc is entitled to sell the property.

(6 marks)

(ii) The Local Search results contained in the HIP reveal that the property is within a Smokeless Zone and that it is affected by a Tree Preservation Order. Explain any further steps you will take and the advice you will give to your client.

(4 marks)

(iii) Prior to exchange you receive funds for the deposit by telegraphic transfer from a Jersey bank account in the name of the "Douglas 2003 Settlement". Explain any concerns that you might have and what steps, if any, you would take in consequence of such concerns.

(8 marks)

(iv) Explain the undertakings you would expect to receive from the seller's solicitor on completion.

(6 marks)

(v) Explain what steps you will take after completion has taken place in order to be able to close your file.


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DOCUMENT 1

Attendance Note

Interview: 45 minutes (senior conveyancing partner Jack Aubrey)

Clients: Jonathon Jakes and Helen Spiers

Present Address: 12 Nelson House, Balcombe Road, Kerlow, Hampdenshire KE54 8JH (living with parents).

Property being : 23 Farriers Mews, Copper Leys, Farhill, Hampdenshire FH3 9TR purchased

Seller: Keith Draper and Mary Draper (no related transaction)

Seller’s solicitor: Hawkins & Co (Farhill office)

Seller’s agent: Sell2U, Farhill Office. Sale particulars seen (new build (completed 2008), two bedroomed terrace on new Copper Leys estate).

Purchase price: £185,000

Deposit: Buyer wishes to pay 5% on exchange.

Fixtures and fittings: Curtains and floor coverings included in purchase price.

Tenure: Freehold

Mortgage: £165,000 loan from KRBV Bank plc to be secured against property.

Survey: Mortgage survey only.

Completion: As soon as practical.

Linked transaction: None

Buyers’ ownership: To be advised.

Finance/cost: Balance of purchase price and costs to be provided from savings of £30,000.

Our costs estimated at £650 plus VAT and disbursements.

Other matters: Client care letter to be sent.

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DOCUMENT 2

OFFICIAL COPY OF REGISTER ENTRIES

This official copy shows the entries subsisting on the register on 15 September 2009 at 14.50 This date must be quoted as the ‘search from date’ in any official search application based on this copy. Under s.67 of the Land Registration Act 2002, this copy is admissible in evidence to the same extent as the original. Issued onThis title is dealt with by Marfordshire District Land Registry

Land Registry

Title Number : JT 65548

Edition Date : 3 September 2008

A: Property Register This register describes the land and estate comprised in the title.

COUNTY DISTRICT HAMPDENSHIRE FARHILL

1. (3 September 2008) The freehold land shown edged with red on the plan of the above Title filed at the Registry and being 23 Farriers Mews, Copper Leys, Farhill, Hampdenshire (FH3 9TR).

_________________________________________________________________

B: Proprietorship Register This register specifies the class of title and identifies the owner. It contains any entries that affect the right of disposal.

Title Absolute

1. (3 September 2008) PROPRIETOR: KEITH DRAPER and MARY DRAPER of 23 Farriers Mews, Copper Leys, Farhill, Hampdenshire FH3 9TR.

No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.

2. (3 September 2008) The price stated to have been paid on 12 August 2008 was £200,000.

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C: Charges Register This register contains any charges and other matters that affect the land.

1. (3 September 2008) A transfer of land in this title dated 12 August 2008 and made between (1) Barrel Homes plc (Vendor) and (2) Keith Draper and Mary Draper (Purchaser) contains covenants details of which are set out in the schedule of restrictive covenants hereto.

2. (3 September 2008) REGISTERED CHARGE dated 12 August 2008 to secure the monies including the further advances therein mentioned.

3. (3 September 2008) PROPRIETOR: HALLERSHAM BANK PLC of The Cloisters, Bank Street, Hallersham, Marfordshire, MA13 9AB

Note to Candidates: The Schedule of restrictive covenants has not been reproduced. You may assume that the covenants are “usual” and are acceptable to buyer and mortgagee clients.

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END OF REGISTER

NOTE: The date at the beginning of an entry is the date on which the entry was made in the Register.

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Blank Page

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DOCUMENT 3

CONTRACTIncorporating the Standard Conditions of sale (Fourth Edition)

Agreement date:

Seller: Keith Draper and Mary Draper of 23 Farriers Mews, Copper Leys, Farhill, Hampdenshire FH3 9TR

Buyer: Jonathon Jakes and Helen Spiers of 12 Nelson House, Balcombe Road, Kerlow, Hampdenshire KE54 8JH

Property: 23 Farriers Mews, Copper Leys, Farhill, Hampdenshire FH3 9TR

(Freehold/Leasehold)

Root of Title/Title Number: JT 66548

Incumbrances on the: With the benefit of and subject to those matters Property referred to in the register of the above title.

Title Guarantee: Full

Completion Date:

Contract Rate: The Law Society’s interest rate from time to time in force

Purchase Price ONE HUNDRED AND EIGHTY-FIVE THOUSAND POUNDS (£185,000)

Deposit: £18,500

Amount payable for : Nil chattels

Balance: £166,500

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DOCUMENT 2 (2 OF 4)

DOCUMENT 2 (3 OF 4)

SPECIAL CONDITIONS

1. (a) This contract incorporates the Standard Conditions of Sale (Fourth Edition). (b) The terms used in this contract have the same meaning when used in the Conditions.

2. Subject to the terms of this contract and to the Standard Conditions of Sale, the seller is to transfer the property with either full title guarantee or limited title guarantee, as specified on the front page.

3. The chattels which are on the property and are set out on any attached list are included in the sale and the buyer is to pay the chattels price for them.

4. The property is sold with vacant possession. (or)4. The property is sold subject to the following leases or tenancies:

5. Standard Conditions 2.2.4 shall be amended so as to delete the words “by a cheque drawn on a solicitor’s or licensed conveyancer’s client account”.

6. Standard Conditions 5.1.1 and 5.1.2(a) shall not apply.

7. Standard Conditions 6.1.2 and 6.1.3 shall be amended so as in each case the relevant time shall be 12 noon.

Seller’s Solicitors: Hawkins & Co Farhill Office

Buyer’s Solicitors: Bagshot, Liverpool and Leicester 3 Oxford Road Kerlow Hampdenshire

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If you need more room than is provided for in a panel, and your software allows, you can expand any panel in the form. Alternatively use continuation sheet CS and attach it to this form. Leave blank if not yet registered. 1 Title number(s) of the property:

Insert address including postcode (if any) or other description of the property, for example ‘land adjoining 2 Acacia Avenue’.

2 Property:

3 Date: Give full name(s). Complete as appropriate where the transferor is a company.

4 Transferor: For UK incorporated companies/LLPs Registered number of company or limited liability partnership including any prefix: For overseas companies (a) Territory of incorporation: (b) Registered number in England and Wales including any prefix:

Give full name(s). Complete as appropriate where the transferee is a company. Also, for an overseas company, unless an arrangement with Land Registry exists, lodge either a certificate in Form 7 in Schedule 3 to the Land Registration Rules 2003 or a certified copy of the constitution in English or Welsh, or other evidence permitted by rule 183 of the Land Registration Rules 2003.

5 Transferee for entry in the register: For UK incorporated companies/LLPs Registered number of company or limited liability partnership including any prefix: For overseas companies (a) Territory of incorporation: (b) Registered number in England and Wales including any prefix:

Each transferee may give up to three addresses for service, one of which must be a postal address whether or not in the UK (including the postcode, if any). The others can be any combination of a postal address, a UK DX box number or an electronic address.

6 Transferee’s intended address(es) for service for entry in the register:

7 The transferor transfers the property to the transferee

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DOCUMENT 4

8 Consideration Place 'X' in the appropriate box. State the currency unit if other than sterling. If none of the boxes apply, insert an appropriate memorandum in panel 11. The transferor has received from the transferee for the

property the following sum (in words and figures):

The transfer is not for money or anything that has a monetary value

Insert other receipt as appropriate: The transferor transfers with full title guarantee

Place 'X' in any box that applies. Add any modifications.

9

limited title guarantee

Where the transferee is more than one person, place 'X' in the appropriate box.

Declaration of trust. The transferee is more than one person and

they are to hold the property on trust for themselves as joint tenants

they are to hold the property on trust for themselves as tenants in common in equal shares

Complete as necessary.

10

they are to hold the property on trust:

Insert here any required or permitted statement, certificate or application and any agreed covenants, declarations and so on.

11 Additional provisions

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The transferor must execute this transfer as a deed using the space opposite. If there is more than one transferor, all must execute. Forms of execution are given in Schedule 9 to the Land Registration Rules 2003. If the transfer contains transferee’s covenants or declarations or contains an application by the transferee (such as for a restriction), it must also be executed by the transferee.

12 Execution

WARNING If you dishonestly enter information or make a statement that you know is, or might be, untrue or misleading, and intend by doing so to make a gain for yourself or another person, or to cause loss or the risk of loss to another person, you may commit the offence of fraud under section 1 of the Fraud Act 2006, the maximum penalty for which is 10 years’ imprisonment or an unlimited fine, or both. Failure to complete this form with proper care may result in a loss of protection under the Land Registration Act 2002 if, as a result, a mistake is made in the register. Under section 66 of the Land Registration Act 2002 most documents (including this form) kept by the registrar relating to an application to the registrar or referred to in the register are open to public inspection and copying. If you believe a document contains prejudicial information, you may apply for that part of the document to be made exempt using Form EX1, under rule 136 of the Land Registration Rules 2003.

© Crown copyright (ref: LR/HO) 07/08

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DOCUMENT 5

OFFICIAL COPY OF REGISTER ENTRIES

This official copy shows the entries subsisting on the register on 28th May 2008 at 14.50 This date must be quoted as the ‘search from date’ in any official search application based on this copy. Under s.67 of the Land Registration Act 2002, this copy is admissible in evidence to the same extent as the original. Issued on 28th May 2008 This title is dealt with by Marfordshire District Land Registry

Land Registry

Title Number : JT 54628

Edition Date: 15 May 2008

A: Property Register This register describes the land and estate comprised in the title.

COUNTY DISTRICT HAMPDENSHIRE FARHILL

1. (14 June 1982) The freehold land shown edged with red on the plan of the above Title filed at the Registry and being 27 De Havilland Close, Hoares Lane, Hampdenshire, (FH73 3LE).

_________________________________________________________________

B: Proprietorship Register This register specifies the class of title and identifies the owner. It contains any entries that affect the right of disposal.

Title Absolute

1. (12 November 2004) PROPRIETOR: JOHN ASCOT and FIONA WELLINGTON both of 27 De Havilland Close, Hoares Lane, Hampdenshire, FH7 3LE

NOTE: The transfer to the proprietor dated 19 October 2004 contains a covenant to observe and perform the covenants referred to in Entry No 1 of the Charges Register and for indemnity in respect thereof.

2. (12 November 2004) The price stated to have been paid on 19 October 2004 was £210,000.

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C: Charges Register This register contains any charges and other matters that affect the land.

Note to Candidates: The Schedule of restrictive covenants is not relevant and has not been reproduced

1. (12 November 2004) REGISTERED CHARGE dated 19 October 2004 to secure the monies including the further advances therein mentioned.

2. (12 November 2004) PROPRIETOR: HAMPDENSHIRE BUILDING SOCIETY of Hampdenshire House, High Street, Nearhill, Hampdenshire, FH13 5TF

3. (1 April 2005) REGISTERED CHARGE dated 19 March 2005 to secure the monies including the further advances therein mentioned.

4. (1 April 2005) PROPRIETOR: NEARHILL BANK PLC of The Cloisters, Bank Street, Nearhill, Hampdenshire, FH13 9AB

5. (6 January 2006) REGISTERED CHARGE dated 15 December 2005 to secure the monies including the further advances therein mentioned.

6. (6 January 2006) PROPRIETOR: ACRE HILL BANK PLC of 6 Law Street, Acre Hill, Bextonshire, AH13 9AB

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END OF REGISTER

NOTE: The date at the beginning of an entry is the date on which the entry was made in the Register.

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Candidate No………………………………….

23 October 2009 Conveyancing

NOTES PAGE The Institute of Legal Executives

During the 15 minutes reading time you may make notes on this notes page ONLY.

Write your candidate number in the place provided at the top of this page and securely attach these notes to your answer booklet at the end of the examination.

End of Paper © 2009 The Institute of Legal Executives

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