What is the main document to effect completion?
The transfer deed (TR1).
* Must be a valid deed (deed on its face, signed, dated and witnessed)
How should the transfer deed be executed by an individual transferor?
- Always
- Signs deed in presence of independent witness
- Witness also signs and prints full name and address
How should a company transferor execute the transfer deed?
- Company seal + 2 directors
- Company seal + director + secretary
- 2 directors + company secretary
- 1 director + witnessed independently
- Senior employee authorised by POA
In which circumstances should the transferee sign?
- Where the transferee is holding the property on trust for someone else
- Where the transferee has any other obligation under the deed (i.e indemnity covenant)
- where the transferee is a tenant in common
What is the buyer solicitor’s completion checklist?
- Obtain clear funds for purchase price balance;
- Raise pre-completion searches;
- Arrange for transfer deed to be executed by buyer if required;
- Send requisitions on title to seller’s solicitor
- Send certificate of title to lender and request loan advance in time for completion
- SDLT form approved by client
What is the seller’s solicitor’s completion checklist?
- Approve transfer deed
- Respond to requisitions on title
- Obtain signature for transfer deed
- Request redemption statement from seller’s lender if any
What is an OS1 / 2 search and when should it be carried out?
- A search with priority on the Land Register against the title number for registered land which is being transferred. It creates a priority period of 30 working days within which another charge or transfer cannot take priority to the buyer’s when registered.
If registration takes place outside priority period, 3rd party registrations can take priority.
What is a Land Charges Search (K15) and when is it used?
A Land Charges search is a search of the land charges registry conferring 15 working days priority on the buyer. If they register the transfer within the priority period, the buyer’s transfer takes priority over other transfers registered within the priority period.
What is a bankruptcy search (K16) and when should it be used?
- By the lender’s solicitor against the buyers where also acting for buyers.
- For bankruptcy of seller, can rely on OS1 or land charges search (K15).
- Confers priority of 15 working days.
When should a company search be used?
For a company seller to check whether any floating charges or insolvency has been registered against the company. No priority period so this should be done as close as possible to completion.
What are requisitions on title?
Questions that must be asked by the buyer’s solicitor before completion.
For residential: use TA13
For commercial: use CPSEs
Which requisitions on title does TA 13 include?
- Vacant possession - check for how keys should be collected.
- Deeds and documents = check that these will be sent over to buyer on completion where property unregistered
- Completion = confirm that Law Society Code for Completion by Post being used
- Money = ask for seller solicitor’s client account details so buyer’s solicitor can send money on completion
- Mortgages and Charges = seller’s solicitor should list any mortgages and charges and confirm undertaking to redeem them on completion.
How is the mortgage redeemed on completion?
Seller’s solicitor undertakes to redeem the mortgage (pay in full, not discharge it) on completion, usually using the proceeds of sale. On doing this, the lender should discharge the charge at the land registry or provide form (DS1). Seller’s solicitor should undertake to forward the discharge to the buyer’s solicitor once received.
What 2 things happen on completion?
- Pay balance of the purchase price
- Buyer gets legal title to the property
Which undertakings are given on completion?
Seller’s Solicitor
* Undertakes to complete once the purchase balance is sent (acting as agent for buyer’s solicitor);
* Hold transfer deed and other deeds t buyer’s solicitor’s order.
* Asap and no later than the end of the working day after completion, the seller’s solicitor must send the transfer deed and other deeds / documents to the buyer’s solicitor.
If undertakings not complied with, money returned immediately.
What are the consequences of delay / failure to complete?
Delay = interest and damages
* at rate of interest specified in contract or by Law Society for each calendar day of delay.
* Seller fails = pay interest on full purchase price
* Buyer fails = pay interest on full purchase price less interest
Failure to Complete = damages
* Damages for breach of contract less interest.
What is the formula to find daily rate of interest?
(Purchase Price - Interest) x (interest rate / 100) x (1/365)
What is the effect of serving notice to complete?
Makes time of the essence. As a result, parties must complete within 10 working days beginning day after serving notice and if not, non-defaulting party can rescind the contract.
Seller
* rescind
* forfeit deposit and interest accrued
* resell property and contents
* claim damages if no completion
Buyer
* rescind
* demand return of deposit and interest
* claim reasonable expenses
* claim damages or specific performance forcing completion.
