Finance
A solicitor may give limited financial advice directly necessarily arising from legal issues. A solicitor may not provide financial advice beyond this unless he is regulated by the FCA (formerly FSA) (equivalent to the Irish Central Bank). The solicitor should be in a position to advise on the financial aspects and should ensure that his client has, or will have sufficient funds to complete the sale/purchase.
Buyer should be asked how he intends to raise contractual deposit payable on exchange of contracts, which is usually 10% of the price. Check with the buyer the position in respect of mortgage finance. He should review the buyer’s loan offer and associated security documents. He should ensure that the buyer understands his obligations and is in a position to comply with them.
Where acting for two or more buyers do they intend to purchase as joint tenants are tenants in common. Understand the distinction and give appropriate advice.
Advice on Survey and Inspection
The principle of “buyer beware” applies in relation to the purchase of land and the structures on it. As in Ireland, there no law against selling a “tumbledown” house. The buyer takes a second-hand property in its actual state and condition. The principle places the risk of hidden defects on the buyer, in the absence of fraud. This is an obvious and serious concern for the buyer. (There should be new home warranties and builders’ guarantees, in the case of newly developed houses and apartments.)
The buyer’s solicitors should advise his client in relation to the necessity/desirability of obtaining a full structural and physical survey. Lenders valuations are no substitute. Lenders undertake valuations which involve superficial checks on the property. As in Ireland, it is imprudent to rely on them, as they are not surveys.
A qualified and insured building surveyor should preferably examine the state and condition of the property. Much the same issues as arise in Ireland apply. There are different types of survey with an element of trade-off between cost and comprehensiveness. Ideally, a qualified building surveyor will examine the property and report on the state and condition to the greatest extent possible. The solicitor should err on the side of caution in giving advice.
A RICS (Royal Institute of Chartered Surveyors) Condition Report seeks to give the buyer of a newer and conventionally built house a concise picture of the state of the property. It is not an in-depth survey but sets out “traffic lights” ratings of the condition of different parts of the building, services and outbuildings. It seeks to highlight problems that require attention, including planning and building regulation issues.
A RICS Homebuyer report includes the elements of the RICs Condition Report with a valuation and rebuilding costs. The buyer’s lender might agree to have its valuer undertake this report concurrently with its valuation report for an additional fee. It is not a comprehensive survey report.
A RICs Building Survey is a structural survey. It is significantly more expensive than the above categories of report. The scope of the report is ultimately determined by the terms of the appointment. It is most appropriate in the case of higher value, older, “one-off”, detached or less conventionally built houses.
The solicitor must exercise due care if he goes through and reviews the report with his client. He should emphasise the limitations of the report, regardless of whether he does so.
It is a general principle of common law that rights apparent from inspection bind the buyer. Overriding interests (see above) bind the land without registration. Accordingly, the physical inspection must ascertain who is in occupation of the land. Easements apparent upon inspection will usually bind buyers. Similarly, the position of squatters and persons in occupation (who may have equitable interests) should be ascertained. It may be necessary that they confirm their interest in the property to the buyer.
Co-Owners
When acting for more than one buyer, consideration should be given to whether the property should be held by them jointly or as tenants in common. The concepts are broadly similar to those in the Republic of Ireland. Under the Law Property Act, 1925, co-ownership gives rise to a trust of land. Tenancy in common subsists in equity. The legal estate is held under a joint tenancy with a maximum number of four legal owners. All legal co-owners must join in transfers and dispositions of the property. The particulars of the co-ownership chosen may be recorded on the transfer deed. Co-ownership shares need not be equal. Tenancy in common may reflect any division of shares in the property.
The Land Registry automatically enters a standard restriction on the Register, when two or more persons appear to be registered as co-owners unless it is clear that they hold the property for themselves as joint tenants.
The legal position in relation to tenancy in common and joint tenancy in England and Wales is broadly similar to that in the Republic of Ireland. The most basic principle is that joint tenancies carry the right of survivorship. It is critical that the buyer’s solicitor obtains proper and informed instructions from his client on the matter.
