Law Society of Scotland Professional Education and Training (PEAT) PEAT 1: Conveyancing and Property Practice Flashcards

24 sample cards from the PEAT 1: Conveyancing and Property Practice deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What are the 'standard conditions' of a standard security and can they be varied?

   Schedule 3 of the 1970 Act sets out standard conditions regulating the debtor/creditor relationship (maintenance, insurance, default, the creditor's powers etc.). They apply to every standard security and may be varied by agreement, except certain conditions (notably those on redemption and the creditor's remedies/calling-up) which are mandatory.

2. What are the four default remedies available to a creditor under a standard security?

   On default the creditor may: (1) sell the property (power of sale), (2) enter into possession and let it, (3) carry out repairs/reconstruction, and (4) foreclose. These flow from the standard conditions and the 1970 Act, exercisable after the proper default procedure (calling-up or default notice).

3. What is a 'calling-up notice' under the 1970 Act and what is its period?

   A calling-up notice formally demands repayment of the whole debt; it is the standard route to enforcement and power of sale. The debtor has two months to comply; failure to pay entitles the creditor to exercise remedies including sale. (Royal Bank of Scotland v Wilson confirmed calling-up is generally required before sale.)

4. What is the difference between a calling-up notice and a notice of default under the 1970 Act?

   A calling-up notice demands repayment of the entire debt (used to enforce the whole loan, e.g. on redemption/sale). A notice of default is used where the debtor is in breach of a non-monetary standard condition or has failed to pay an instalment; it requires the breach to be remedied within the period (one month). Both can lead to enforcement.

5. What additional statutory protection applies before a creditor enforces a standard security over residential property?

   Under the Home Owner and Debtor Protection (Scotland) Act 2010, the creditor must apply to the court for warrant before repossessing/selling residential property (even after calling-up), serve prescribed notices, and the court considers the reasonableness of the order and the debtor's circumstances.

6. In a purchase with mortgage finance, what are the practical reasons a solicitor often acts for both buyer and lender?

   The lender requires the same good and marketable title and a valid first-ranking standard security; the buyer's solicitor already examines title and registers the disposition, so it is efficient and standard for one firm to certify title to the lender and register the security simultaneously, subject to the CML/UK Finance Handbook and conflict-of-interest rules.

7. What is a Certificate of Title given by a solicitor to a lender?

   A formal certificate (often in the form prescribed by the UK Finance / CML Lenders' Handbook) by which the solicitor confirms to the lender that the borrower will obtain a good and marketable title free of adverse matters and that a valid first-ranking standard security will be obtained. The lender relies on it and the solicitor is liable if it is inaccurate.

8. What is the UK Finance (formerly CML) Lenders' Handbook and why does it matter to a conveyancer?

   It sets out the lender's standard instructions and requirements that the solicitor acting for the lender must comply with (Part 1) together with lender-specific provisions (Part 2). Non-compliance can be negligence/breach of retainer and expose the solicitor to liability to the lender.

9. How is a standard security discharged once the loan is repaid?

   By a Discharge (Form of Discharge under Schedule 4 of the 1970 Act) granted by the creditor and registered in the Land Register, which removes the security from the Securities Section of the title sheet. On a sale, the seller's solicitor obtains and registers the discharge of the existing security so the buyer takes a clear title.

10. What is the 'ranking' of standard securities and how is it determined?

    Ranking determines the order in which secured creditors are paid from sale proceeds. Securities generally rank by date of registration (prior tempore potior jure), but ranking can be altered by a ranking agreement. A ranking clause/agreement is used where a second-ranking security is granted to fix priorities.

11. What is the effect of a creditor's sale under a standard security on the proceeds and other securities?

    The selling creditor must apply the proceeds in order: (1) expenses of sale, (2) prior-ranking and pari passu securities, (3) its own secured debt, then (4) any postponed securities, and the surplus to the debtor. The sale, exercised in good faith, gives the purchaser a title free of the security and postponed securities (1970 Act s.26).

12. Name three key differences between residential and commercial conveyancing in Scotland.

    (1) Commercial missives are bespoke and heavily negotiated (no standard clauses); (2) commercial deals involve detailed due diligence (title, leases, planning, environmental, VAT, replies to commercial property standard enquiries); and (3) commercial property often turns on income/leases and may involve VAT and corporate parties, with different LBTT rates.

13. What is the difference between an 'FRI lease' and a typical residential tenancy in Scotland?

    A commercial Full Repairing and Insuring (FRI) lease places the full burden of repair, maintenance and insurance costs on the tenant, with rent reviews and longer terms; a residential tenancy (e.g. a Private Residential Tenancy) imposes the repairing standard on the landlord and offers the tenant statutory security of tenure and rent regulation.

14. What is a rent review clause in a commercial lease and what is the common basis of review?

    A clause allowing the rent to be revised periodically (often every 5 years). The most common basis is 'upward-only open market rent review', where the rent is reviewed to the open market rental value but cannot fall below the passing rent. Other bases include index-linked (RPI/CPI) or turnover rent.

15. What is the Private Residential Tenancy (PRT) and which Act introduced it?

    The Private Residential Tenancy was introduced by the Private Housing (Tenancies) (Scotland) Act 2016. It is open-ended (no fixed end date), replaced assured/short assured tenancies for new lets from December 2017, and can be ended by the tenant on notice or by the landlord only on statutory eviction grounds via the First-tier Tribunal.

16. How can a landlord recover possession under a Private Residential Tenancy?

    Only by relying on one of the statutory eviction grounds in Schedule 3 of the 2016 Act (e.g. landlord intends to sell, landlord/family wants to live there, tenant rent arrears, breach), serving the prescribed Notice to Leave, and (if the tenant does not leave) applying to the First-tier Tribunal (Housing and Property Chamber) for an eviction order.

17. What planning consent and warrant are needed before development, and how do they differ?

    Planning permission (under the Town and Country Planning (Scotland) Act 1997) authorises the change of use or carrying out of 'development'; a building warrant (under the Building (Scotland) Act 2003) approves that the works comply with building standards. A conveyancer must check both are in place with completion/habitation certificates.

18. What is Land and Buildings Transaction Tax (LBTT) and what replaced?

    LBTT is the Scottish tax on land transactions, administered by Revenue Scotland under the Land and Buildings Transaction Tax (Scotland) Act 2013. It replaced UK Stamp Duty Land Tax in Scotland from 1 April 2015. It is charged on a progressive 'slice' basis across bands of the chargeable consideration.

19. How is LBTT calculated on the consideration, and what is the Additional Dwelling Supplement (ADS)?

    LBTT is progressive: each portion of the price within a band is taxed at that band's rate (a 'slice' system), so the total is the sum of band charges, e.g. $\text{LBTT} = \sum_i r_i \times (\text{portion of price in band } i)$. The Additional Dwelling Supplement is an extra percentage of the total price charged on purchases of second/additional residential dwellings above the threshold.

20. What is title insurance (indemnity insurance) and when is it used in conveyancing?

    A one-off insurance policy covering a specific identified title defect or risk (e.g. a missing right of access, a defective burden, lack of building warrant, or restrictive covenant breach). It is used where a defect cannot be cured in time or at proportionate cost; the policy compensates loss if the risk materialises but does not cure the defect.

21. What is a 'letter of obligation' in classic Scottish conveyancing and what was the 'classic' (clean) letter of obligation?

    A letter granted by the seller's solicitor at settlement undertaking certain obligations, classically to deliver a clear search/registration result showing nothing prejudicial appeared in the registration gap and to deliver the recorded discharge. The 'classic' clean letter covered the gap between settlement and registration; since the 2012 Act's Advance Notice regime, such gap-risk letters of obligation are largely obsolete.

22. What money laundering / fraud-prevention duties must a Scottish conveyancer fulfil before acting?

    Under the Money Laundering Regulations and Law Society of Scotland AML rules, the solicitor must carry out customer due diligence (verify client identity and address), establish source of funds and source of wealth, conduct risk assessment, and report suspicious activity (SAR) to the National Crime Agency, never tipping off the client.

23. What is 'Friday afternoon fraud' / conveyancing cyber-fraud and how is it mitigated?

    It is fraud where criminals intercept email communications and send fraudulent bank-account changes so funds (the price or loan) are paid to the fraudster. Mitigation: verify any change of bank details by independent telephone contact, use known/verified account details, warn clients not to act on emailed changes, and use secure channels.

24. What is the doctrine of 'accession' and why does it matter to the heritable/moveable distinction?

    Accession is the rule that when a moveable becomes permanently attached to heritable property it acceds to (becomes part of) the land and is owned by the landowner, e.g. fixtures. It matters because acceded items pass with the disposition of the heritage, while genuine moveables do not, affecting what the buyer acquires.

What this deck covers

PEAT 1: Conveyancing and Property Practice flashcards FAQ