SQE1 FLK2 Property Practice Sample Questions July 2024

The correct answer is D. Registering the mortgage deed with the Land Registry is a crucial legal requirement for ensuring that the mortgage is legally binding and enforceable against the property. This records the mortgagee's interest in the property.

Option A is incorrect because there is no continuous requirement for submission of annual income statements to the mortgage lender under regulatory standards for a standard repayment mortgage.

Option B is incorrect as having a direct debit in place for monthly repayments, while advisable, is not a legal mandate for regulatory compliance.

Option C is incorrect because securing a home insurance policy approved by the mortgage lender, while common practice and often a lender's requirement, is not explicitly a legal regulatory requirement in the context of mortgage compliance.

Option E is incorrect as there is no requirement or standard practice entailing the announcement of a mortgage in a community newsletter for regulatory compliance or otherwise.

The correct answer is C. The developer would be liable to pay the standard LTT rates plus an additional 3% on the entire cost of the land, given that the purchase is not for their main residence and they own multiple properties.

Option A is incorrect because acquiring land for development does not exempt the buyer from LTT; LTT is due on all land transactions over a certain threshold.

Option B is incorrect as it ignores the fact that additional rates apply for purchasers owning more than one property, irrespective of the project's nature.

Option D is incorrect since LTT charges are not replaced with a fixed fee, regardless of the intended use of the land.

Option E is incorrect because the promotion of residential housing does not exempt the transaction from LTT.

The correct answer is A. The tenant breached the leasehold covenants by subletting a portion of the property without obtaining the landlord's written consent, as explicitly required by the lease agreement. Regardless of the sublet's potential to increase foot traffic or the property's value, the tenant's failure to adhere to the terms of the lease agreement constitutes a breach.

Option B is incorrect because the perceived benefit to the landlord does not override the explicit terms of the lease agreement requiring written consent for subletting.

Option C is incorrect because the temporary nature of the arrangement does not exempt the tenant from the requirement to obtain the landlord's written consent before subletting, as stipulated in the lease.

Option D is incorrect because the breach of the leasehold covenants occurs at the moment the tenant sublets without consent, irrespective of whether the landlord suffers financial loses.

Option E is incorrect because informing the landlord after the fact does not satisfy the requirement for prior written consent and still constitutes a breach of the leasehold covenants.

The correct answer is C. In England and Wales, a right of way can become legally binding through the doctrine of prescription if it has been exercised openly, without force, and without permission for a period of at least 20 years. This grants the right holder a legal easement over the land for continued use of the path.

Option A is incorrect because while rights of way are considered to pertain to the land, their enforceability against subsequent owners typically requires registration or an established legal basis such as prescription.

Option B is incorrect because the necessity to negotiate a new agreement overlooks the potential applicability of prescriptive rights, which can legitimize the use of the path without needing to renegotiate.

Option D is incorrect because the law does not require the neighbor's agreement to formalize a prescriptive right of way; it is based on the historical use of the path.

Option E is incorrect because it fails to consider that rights of way can indeed be transferred or continue to exist under certain conditions such as prescription, even if not explicitly mentioned in the deed or registered.

The correct answer is D. Ignoring the covenant and proceeding with the development in the hope that it remains unnoticed is the least effective method to deal with a restrictive covenant. This approach risks significant legal challenges and financial implications if the covenant is enforced.

Option A is incorrect because negotiating with the benefitting party for a formal release of the covenant is a viable and direct approach to resolving restrictions that impact development plans.

Option B is incorrect as applying to the Upper Tribunal (Lands Chamber) for the modification or discharge of the covenant is a legitimate legal avenue to challenge or change the terms of a restrictive covenant that affects the property’s use.

Option C is incorrect because taking out indemnity insurance provides a form of financial protection against the risks associated with the potential enforcement of the covenant, making it an effective risk management strategy.

Option E is incorrect because researching if the covenant has been historically breached without consequence could provide leverage or a basis for formally contesting the covenant's relevance or enforceability.

The correct answer is C. According to the Companies Act 2006, a company can validly execute a document as a deed if it is signed on behalf of the company by two authorised signatories. These signatories can be two directors or one director and the company secretary. This method ensures the agreement is legally binding.

Option A is incorrect because the presence of a public notary is not a requirement under the Companies Act 2006 for the execution of deeds or agreements by companies in England and Wales.

Option B is incorrect because the use of a company's seal is not necessary for the execution of deeds, nor is it required that all board members witness the sealing.

Option D is incorrect as the sole signature of the company secretary, even in the presence of two witnesses, does not meet the statutory requirements set out in the Companies Act 2006 for the execution of documents as deeds.

Option E is incorrect because, although electronic signatures are generally acceptable, the requirement under the Companies Act 2006 specifies that two authorized signatories must execute the document for it to be considered a validly executed deed. The countersignature by the company’s legal counsel does not satisfy this requirement.

The correct answer is C. Advising the client to send a certified letter to the landlord, formally requesting consent for the subletting arrangement, is the best practice. This method is legally sound as it adheres to the lease agreement's terms, respects the landlord's rights, and ensures clear documentation of the request and any response received, minimizing the risk of future disputes.

Option A is incorrect because proceeding with the subletting without informing the landlord can lead to breaches of the lease conditions and potentially serious legal consequences for the client.

Option B is incorrect because informal agreements, especially those not documented, may fail to meet the contractual requirements for consent under the lease and can lead to misunderstandings or disputes.

Option D is incorrect because subletting the property without prior consent can constitute a breach of the lease terms and can lead to legal action against the client.

Option E is incorrect because opting to ignore the consent requirement disregards the contract's legal stipulations and the landlord's rights, posing significant risks of breach and subsequent legal complications.

The correct answer is B. For a commercial property in Wales with a purchase price of £160,000, the LTT due would be £700. This is because the LTT on commercial properties starts at a threshold of £150,000, and the property price over this threshold up to £250,000 is charged at 1%.

Option A is incorrect because the LTT relief mentioned does not specifically apply to first-time buyers of commercial properties. The threshold for not paying the LTT is applicable to all transactions under £150,000 for commercial properties.

Option C is incorrect because it misrepresents the LTT rate that is applicable to the transaction amount over £150,000 and up to £250,000 for commercial properties in Wales.

Option D is incorrect as it confuses the exemption threshold with higher thresholds relevant to residential properties, not commercial ones. LTT applies to commercial properties over £150,000.

Option E is incorrect because LTT rates are not determined by whether the buyer is a first-time property owner but by the property price and its classification as residential or commercial.

The correct answer is C. It is crucial for Roberta to negotiate the special condition regarding the right of way dispute before proceeding. Unresolved disputes about rights of way can have significant implications on the enjoyment, value, and legal ownership of the property. Therefore, challenging or seeking amendment to such conditions is a prudent step.

Option A is incorrect because simply accepting a property 'as is' without seeking to understand or mitigate potential disputes can lead to significant legal and financial issues in the future. This approach does not protect Roberta's interests as a buyer.

Option B is incorrect because it is not always possible or required to resolve all disputes before the exchange of contracts. In some cases, negotiations or provisions such as indemnity insurance can be appropriate measures to deal with such disputes.

Option D is incorrect because, while obtaining an indemnity policy is one way to mitigate the risks associated with the right of way dispute, this option does not address the advisability of accepting the special condition without attempts to have it removed or modified in Roberta's favor. Indemnity insurance should be considered as part of a wider strategy.

Option E is incorrect because it does not acknowledge the agency and negotiation power Roberta holds as a buyer. While conducting due diligence is crucial, blindly adhering to the seller’s conditions without assessing or negotiating them can be disadvantageous.

The correct answer is C. Under the standard conditions of sale, if Tanya attempts to delay the completion without a contractual basis, Dev has the right to rescind the contract and may claim the deposit as forfeit. Additionally, Dev can seek compensation for any losses suffered due to the delay, such as additional legal fees or a loss in property value.

Option A is incorrect because the existence of a contract at an agreed price means that Dev is not obliged to renegotiate the price due to subsequent market changes; the contract price is binding unless mutually agreed otherwise.

Option B is incorrect because Tanya does not have the right to unilaterally delay completion without incurring penalties, and there's no provision in the standard conditions of sale that permits delaying completion to reassess property value due to market changes.

Option D is incorrect as Tanya cannot unilaterally decide to pay less than the agreed-upon price based on future developments; the contract binds both parties to the agreed terms unless both agree to renegotiate.

Option E is incorrect because the standard conditions of sale do not include automatic extensions for completion due to external developments like area redevelopment; any change to the completion date would need to be agreed upon by both parties.