Workshop 14 Task 2 PDF

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REAL ESTATE (SKILLS) Unit 14 UNIT WORKSHOP TASK 2

SK Property Investments Limited (“SKP”) owns the freehold of The Quays Centre in Liverpool (“the Centre”) as part of its property portfolio. Lila Fashions Limited (“Lila”) has been the tenant of Unit 27 at the Centre (“the Property”) for the past four years. Lila decided that it wished to assign the lease and SKP agreed to give its consent. It is now four weeks since the licence to assign was entered into and Lila and Cecil Sharp Music Limited (“Cecil Sharp”), the assignee, have now exchanged contracts. Assume for the purposes of this Task only that you act on behalf of Cecil Sharp. The consideration was £5,000 and Lila agreed not to opt to charge VAT on the sale. 1.

Using the Property Law and Practice textbook, answer the following question: There is a clause in the contract which refers to the Seller (i.e. the current tenant Lila) transferring the title with full title guarantee: (a)

What does this mean? (18.8.3.1 in textbook)

The inclusion of statement full title guarantee means it will give buyer the benefit of full range of covenants implied by the 1994 Act. title guarantee, the covenants implied into the transfer can be summarised as follows: (a). A covenant that the seller has the right to dispose of the land. (b). A covenant that the seller will do all he reasonably can to transfer the title (c). If the land disposed of is leasehold land, a covenant that the lease is subsisting at the time it is disposed of, and that there is no breach of covenant making the lease liable to forfeiture. (d). A covenant that the land is disposed of free from incumbrances, other than those the seller does not know about and could not reasonably know about. Whilst this implied covenant can seem rather wide, s 6 of the 1994 Act does limit its effect. (b)

What are the reasons for and the implications of Standard Commercial Property Conditions 4.2.2 and 7.6.4?

Where full title guarantee is given at completion the seller is promising to the buyer that they have complied with all covenants under the lease whilst they were in occupation. The giving of this guarantee makes the seller liable to the buyer should any breach of the seller come to light.

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The promise of the seller given above conflicts with the usual position of caveat emptor, which requires the buyer to fully satisfy themselves as to the position before completing a transaction. SCPC conditions 4.2.2 and 7.6.4 seek to address this conflict by modifying the covenants for title to bring them into line with caveat emptor, by excluding obligations to repair. SCPC 4.2.2: Despite covenants implied by s.4 LPA 1994, Leasehold Premises is sold subject to repairing covenant SCPS 7.6.4: Any transfer of Leasehold ought to include a statement confirming that the implied covenants does not extend to a breach of prior covenants. This brings Leasehold sale transactions in line with Freehold transactions. Addresses the contradiction between implied covenants on the title and caveat emptor. 2.

You are now required to draft the transfer deed. You are to assume that the title number is MS523521, Cecil Sharp’s company number is 2806196 and that two directors will execute the transfer deed on behalf of each company.

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