SQE1 Property Law 2 — Questions and Answers
Question 1: What is the distinction between legal and equitable interests in land under English law?
- Legal interests bind all the world; equitable interests bind only those with notice of them (subject to overreaching and registration rules) (Correct answer)
- Equitable interests are stronger than legal interests in all circumstances
- Legal interests only exist in registered land; equitable interests only in unregistered land
- There is no practical distinction in modern land law
Correct answer: Legal interests bind all the world; equitable interests bind only those with notice of them (subject to overreaching and registration rules)
Legal interests in land bind the whole world (e.g., legal easements, mortgages). Equitable interests traditionally bind all except a bona fide purchaser of a legal estate for value without notice. In registered land, the Land Registration Act 2002 and system of overriding interests modify this significantly.
Question 2: Under the Landlord and Tenant (Covenants) Act 1995, what is the position of an original tenant who assigns a commercial lease?
- The original tenant remains liable for the entire lease term regardless of assignment
- On assignment, the original tenant is automatically released from future obligations under the lease (Correct answer)
- The original tenant is only released if the landlord expressly agrees to release them
- Liability continues but only for rent obligations, not repair covenants
Correct answer: On assignment, the original tenant is automatically released from future obligations under the lease
Under the Landlord and Tenant (Covenants) Act 1995, when a tenant lawfully assigns a new tenancy (post-1996), the assigning tenant is automatically released from future covenant liability. This contrasts with the old law (pre-1996) where original tenants retained privity of contract liability.
Question 3: What is the role of 'requisitions on title' in a conveyancing transaction?
- The seller's formal offer to sell at a set price
- The buyer's solicitor's written enquiries to the seller's solicitor about title and other matters arising from deduction of title (Correct answer)
- The Land Registry's questions about the application for registration
- Planning authority queries about proposed use of the property
Correct answer: The buyer's solicitor's written enquiries to the seller's solicitor about title and other matters arising from deduction of title
Requisitions on title are written questions raised by the buyer's solicitor to the seller's solicitor following review of the title documentation, seeking clarification or resolution of queries about the title before exchange of contracts.
Question 4: What does 'adverse possession' allow under English land law?
- A landlord to take back possession from a tenant in breach
- A squatter to acquire title to land after being in factual possession for the requisite period without the owner's consent (Correct answer)
- The Land Registry to remove a proprietor's title for non-payment of fees
- A mortgagee to take possession on default
Correct answer: A squatter to acquire title to land after being in factual possession for the requisite period without the owner's consent
Adverse possession allows a person in factual possession of land (without the owner's permission) to acquire title after a qualifying period. Under the Land Registration Act 2002, the squatter must apply after 10 years' adverse possession; the registered proprietor has an opportunity to object.
Question 5: In registered land, which interests automatically override a registered disposition without appearing on the register (under Schedule 3, LRA 2002)?
- All equitable interests including beneficial interests under a trust
- Legal leases not exceeding 7 years, legal easements qualifying under s.29(2)(a)(ii), and rights of persons in actual occupation (Correct answer)
- All mortgages and charges registered at Companies House
- Interests of registered proprietors only
Correct answer: Legal leases not exceeding 7 years, legal easements qualifying under s.29(2)(a)(ii), and rights of persons in actual occupation
Schedule 3 of the LRA 2002 lists overriding interests that bind registered proprietors without registration, including: legal leases not exceeding 7 years, qualifying legal easements, and interests of persons in actual occupation (if discoverable on reasonable inspection or known to the disponee).
Question 6: What is the purpose of a 'completion statement' in a conveyancing transaction?
- A statement by the court confirming the sale is complete
- A financial statement prepared by the solicitors showing the balance of funds to be paid by the buyer on completion, taking into account all adjustments (Correct answer)
- A statement confirming planning permission has been obtained
- A statutory declaration by the seller confirming vacant possession
Correct answer: A financial statement prepared by the solicitors showing the balance of funds to be paid by the buyer on completion, taking into account all adjustments
A completion statement sets out all the financial adjustments required on completion (purchase price, deposit paid, apportionments of outgoings, SDLT, Land Registry fees) and shows the net amount the buyer's solicitor must transfer to the seller's solicitor on completion day.
SQE1 Property Law 2
What is the distinction between legal and equitable interests in land under English law?