Monday 5 January 2026
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
Happy new year everyone! Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
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This Week’s Question: A solicitor in a regulated firm receives £15,000 from a client on account of costs for an ongoing matter. Before any bill is delivered, the solicitor transfers £5,000 of that money from the client account to the firm’s office account to cover work already carried out. The solicitor intends to send a bill later once the matter is completed. The client later complains to the firm and the SRA investigates. Which statement best reflects the solicitor’s position under the SRA Accounts Rules?
A. The transfer was permitted because the solicitor had already carried out work of equivalent value.
B. The transfer was permitted because the money belonged beneficially to the firm once work was done.
C. The transfer breached the SRA Accounts Rules because client money cannot be withdrawn without a bill or written notification of costs.
D. The transfer was permitted provided the client was informed within a reasonable time.
E. The transfer was permitted because the money was held on account of costs rather than for a specific disbursement.
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Last Week’s Question: A woman is the registered proprietor of a freehold house. In 2019, she grants a legal charge to Bank A, which is properly registered. In 2022, she grants a second legal charge to Bank B, which is also registered. In 2023, she grants an equitable charge to a friend to secure a personal loan, but the friend does not enter any notice on the register. The woman later defaults on all loans, and the property is sold.
How will the sale proceeds be distributed?
A. Bank B will be paid first, followed by Bank A, then the friend.
B. Bank A will be paid first, followed by Bank B, then the friend.
C. The friend will be paid first because the equitable charge was created last in time.
D. Bank A and Bank B will share the proceeds equally, followed by the friend.
E. The friend’s interest binds the purchaser as an overriding interest and must be paid first.
✅ Correct Answer: B Bank A will be paid first, followed by Bank B, then the friend. Feedback: In registered land, the priority of legal mortgages is determined by the order of registration, not the order of creation (Land Registration Act 2002, s.29). Bank A’s charge was registered first, so it has first priority, followed by Bank B. The friend’s equitable charge is a minor interest and must be protected by a notice on the register to bind purchasers (LRA 2002, s.32). Because no notice was entered, the equitable charge is postponed and does not bind the purchaser.
Why the other options are wrong:
- A is wrong: later registered charges do not outrank earlier ones.
- C is wrong: “last in time” does not give priority in registered land.
- D is wrong: priority is not shared unless expressly agreed.
- E is wrong: equitable charges are not overriding interests.
This question tests FLK2: Land Law, specifically priority rules for mortgages in registered land, an area where SQE1 candidates often confuse legal vs equitable interests and registration vs creation.
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All the best
Dr Ioannis (Yannis) Glinavos
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