The Practical Lawyer

There can be confusion on how to deal with a nil-rate band discretionary trust (usually created for IHT purposes). In particular, there can be confusion because an individual holds the property in his or her sole name, but in different capacities (eg as the surviving registered proprietor, as trustee of a trust of land, and/or as PR of the deceased joint proprietor).

A reminder of the procedures to be adopted when involved in a ‘virtual’ signing (ie where some or all of the parties are not physically present at the same meeting). In practice, this covers the situation where clients pre-sign, and the signature pages are then sent by the solicitors to the other side by e-mail or fax.

All practitioners should now be familiar with the LR’s policy of ‘early completion’, which came into force last August. The new policy applies whenever an application for discharge on the existing charge of whole is made, together with other applications (eg to register a transfer and a new charge), but without there being evidence of the discharge of the existing charge. In that situation, the LR will reject the application for discharge – but complete the other applications. Thus, the old (existing) charge will remain registered.

The Building Societies Association issued its own standard set of mortgage instructions at the beginning of January. This is partly because some building societies want to remain independent of the Council of Mortgage Lenders, whilst others are reluctant to pay the higher fees charged by the CML. The end result is that we now have a second set of standard instructions – although, in practice, the differences are minor.

If the seller goes bankrupt, then you need to distinguish between a sole proprietor and joint proprietors:

the legal estate passes to the trustee in bankruptcy, and therefore the buyer must deal with the trustee (and not the seller). If necessary, the trustee could be forced to complete the sale by an action for specific performance, although he would have a right to disclaim (s315 Insolvency Act 1986) if the contract is ‘onerous’ or at an undervalue.

If a buyer is being forced to complete a new build purchase contract, but is short of funding (eg because the mortgage has been withdrawn due to the reduced loan-to-value ratio), then it may be worth offering to make a partial payment to the developer, with the balance being owed to the developer secured by a second mortgage over the property.

An unhappy buyer trying to get out of a new build contract (typically because of a decline in property prices) will often find that a mortgage offer has been withdrawn because of the reduced loan-to-value ratio. In practice, this will usually mean that the buyer cannot proceed, even if he is willing to do so.

With new build developments, it has long been common for developers to use sale contracts that provide for completion to be fixed by reference to the date of service of a notice by the developer (ie the seller) confirming that the property is practically complete. This, of course, allows the developer to control the completion timetable.

The Building Societies Association issued a standard set of mortgage instructions at the beginning of January. These will apply in residential transactions involving BSA members (which includes most of the major societies).

The Zurich has closed its Zurich Building Guarantee business, covering new home warranties and building control.