1
Q
What are the requirements for a valid deed (s52)?
A
Transfer of a legal estate in land must be by deed (s52 LPA); therefore:
- Make it clear on its face that it is a deed
- Be signed by the parties
- Be delivered
- [do not have to seal the deed]
2
Q
What are the signature requirements for a transfer deed for a private individual?
A
- Signature + Signature witnessed by independent witness
- Counter potential allegation of undue influence
3
Q
What are the signing requirements for a company?
A
o Company seal (accordance with articles)
o Director + secretary; 2 directors [provided deed is expressed to be executed by company] - expressed as executed as deed in name of company acting by [director + sec OR two directors]
o Single Director + witness who attests signature
4
Q
who always executes the transfer deed to transfer the land?
A
The seller
5
Q
When will the buyer ALSO execute the transfer deed alongside the seller?
A
- Buyer will also do this if they are entering into an obligation or making a declaration in TR1 (eg. giving indemnity covenant or declaring beneficial interest under a trust)
6
Q
When is a deed presumed to be delivered?
A
- Document which is clear on its face that it is a deed = presumption of delivery at execution
a. Rebutted:
i. Contrary intention can rebut this
ii. If client has signed transfer but does not intend for it to come into force yet, solicitor needs to expressly say so in covering letter when sending the deed
7
Q
Which document for registration of freehold title ? (WHOLE)
A
- Form TR1 = deed used to transfer whole title
8
Q
Which document for registration of freehold title (TRANSFER OF PART)?
A
TP1
9
Q
Who undertakes the pre-completion searches?
A
Carried out by buyer’s solicitor.
Carried out as close to completion date as possible.
10
Q
What are the reasons for carrying out searches?
A
- Make sure seller has not further encumbered title since investigation of title
- Check financial circumstances of the borrower when acting for the lender [ie. buyer’s solvency]
- Gain priority for the buyer and the lender over anyone else making an application before the buyer applies to register the change of ownership at LR
- If seller is a company, to check that the company has not gone into liquidation before balance of purchase price paid over
11
Q
What is the reason for carrying out pre-completion search of title process for registered land?
A
- Checking title for further incumbrance – necessary because usually a significant period between title investigation and completion
- Possible for title to be further encumbered by the seller (eg. if they grant a new easement/mortgage)
12
Q
Form for registered land search of title? WHOLE
A
OS1
13
Q
Form for registered land search of title (in part)?
A
OS2 (If OS2, plan will need to accompany request for form [unless layout plan approved by LR; usually in new housing developments] )
14
Q
What is the result form for OS1 and OS2?
A
OS1R and OS2R
15
Q
What needs to be on the OS1/OS2 forms?
A
- Title number
- Address of property
- Names of RP
- Name of applicant
- Reason for search (ie. intention to purchase; lease; charge property)
16
Q
What is the effect of the registered land search results?
A
Confers “priority period” of 30 WORKING days from the date of the search result
- Priority period provides protection to the applicant against any subsequent entries which may be placed on the register after the date of the search but before the buyer is registered as proprietor
- Buyer will take free from any entries, provided they submit their application for registration by 12 noon on last day of priority period
- Ie. MUST SUBMIT REGISTRATION APPLICATION BY 12 NOON AFTER OS1R/OS2R FORM
17
Q
How long does the priority period last ?
A
Submit registration application by 12 noon after OS1R or OS2R form (30 working days- last day of the priority period)
18
Q
If the buyer is purchasing the property with the aid of a mortgage, which name should the LR search be in?
A
The name of the LENDER, not the BUYER
* Results will confer priority upon both buyer and lender since mortgage is deemed to take place slightly after the purchase by the buyer
* Search made on behalf of buyer will NOT protect lender
19
Q
For unregistered land, what form is used and what search ?
A
Land charges search (K15 form)
20
Q
What do you receive in response to K15 form?
A
K18 form
21
Q
What is the effect of receiving K18 form?
A
- K18 confers priority period of 15 working days from date of result
- Searcher will take property free of any entries made on the register between date of the search and date of completion
- Completion must take place within 15 days
22
Q
What form is the result form of OS1/OS2?
A
OS1R and OSR2
23
Q
What are the fees for K15?
A
Fee for each name searched against
23
Q
What are the fees for OS1 ?
A
Standard fee for each search
24
Do you have to repeat the process of searching against every name at this stage for unregistered land?
No - do not have to repeat this, would have already been done pre-contract and cannot enter under name as have parted with the property by this point
25
For individuals buying registered land, what is the form and search for checking buyer's solvency? [on behalf of lender]
* Solicitor to apply for land charges search against the name of buyer (in addition to previous search against title number)
* Special land charges search – K16
o ‘BANKRUPTCY ONLY” search K16
Form K16:
* Limits search to bankruptcy register at Land Charges Department
* Will not reveal any entries on other registers as these are not relevant
26
For individuals buying unregistered land, what is the bankruptcy search form and procedure?
* Solicitor already making land charges search against seller (FORM K15)
* Name of buyer added to names searched against in K15
o Against owners name for search of title ie. for incumbrances
o Here, include buyer’s name in K15 to check for solvency
27
If buyer is a company, what searches should be carried out ?
* [in addition to searches against title]
* Solicitor acting for buyer purchasing from a company should carry out company search prior to completion
* Company search:
o Whether company is in existence
o Whether company is solvent
o Whether company created any fixed/floating charges
* No priority period
o Should be carried out as close as possible to the day of completion so it reveals the latest information
HIGH VALUE:
* If transaction high value/concern about solvency of corporate seller/borrower, possible to do a telephone search at Registry of Winding Up Petitions at Companies Court on day of completion
28
Why do most conveyancing solicitors see it as not necessary to do a bankruptcy check on an individual seller ?
the Land Registration Act 2002 provides that where no notice or restriction relating to the
bankruptcy appears on the registered title, a buyer for value acting in good faith without
notice of the bankruptcy petition or adjudication will take good title from the bankrupt seller, even though legal title to the land has vested in the trustee in bankruptcy. However, the bankruptcy searches described at 5.4.2 can be done where the transaction is for a particularly high value or there is reason to be concerned about the solvency of the individual seller.
29
Which form is used for deciding the practical arrangements relating to completion?
* Buyer and seller need to agree the practicalities for completion and this is done using ‘completion information form’
* Buyer’s solicitor send this to seller’s solicitor for them to complete
* Form TA13 Completion information and undertakings
30
What kind of things are included on TA13?
* Asks seller to confirm important information relevant to completion, eg.:
o Arrangements for handing over keys
o Place and method of completion
o Documents to be handed over at completion
o Exact amount payable by buyer on completion
* Also contains undertaking the seller’s solicitor gives to redeem the mortgage out of the completion money on completion
* If there is an existing mortgage, seller’s solicitor unlikely to discharge mortgage immediately on completion because only just received completion money out of which mortgage will be repaid
o Buyer’s solicitor asks seller’s solicitor to undertake to discharge any outstanding mortgage and send evidence of discharge to buyer’s solicitor as soon as received by lender
* Form of undertaking = agreed between solicitors before the day of completion
31
What is the undertaking requirement on TA13?
* TA13 – asks seller’s solicitor to list mortgages and charges secured o the property and whether they ‘undertake to redeem or discharge the [mortgage/charge] on completion and to send to us Form DS1, DS3, the receipted charge(s) or confirmation that notice of release or discharge in electronic form has been given to LR as soon as you receive them?’ – reply Yes
32
What does a lender need to receive before releasing the mortgage advance to a buyer?
1. Certificate of title to confirm that property is adequate security for loan being advanced
2. Solvency search against borrowers
3. Clear OS1R in name of lender
4. Executed but not completed mortgage deed
33
What will the buyer's solicitor need if buyer has mortgage
* Financial Statement sent to client advising client of funds needed to complete
o Statement show amount to be forwarded by the buyer to its solicitor
o Include balance of purchase price
o SDLT/LTT due
o Registration fee
o Amount outstanding for any other disbursements (solicitor’s fees, any other amount owing eg. restrictive covenant policy premium)
* Ensure they have received mortgage advance from lender and balance of purchase price from buyer client
o Balance of purchase price sent to seller’s solicitor to the bank account specified in replies to Completion Information form
o Solicitor should notify seller’s solicitor that money is on its way
o Once money received, seller’s solicitor contact the solicitor acting for buyer and completion will take place
34
What will the buyer's seller do at completion?
* At completion, buyer’s solicitor will send balance of purchase price + release deposit paid on exchange to seller
* Usually sent electronically – SC and SCPC require completion money to be paid by direct transfer/electronic means in cleared funds from account held in name of conveyancer at clearing bank
o NB: MAY HAVE TO MAKE CHANGES TO LAW SOCIETY FORMULAS, SO CHECK THIS
35
What does the seller's solicitor do at completion?
* Complete transaction by dating TR1
* TR1 dated, lender’s solicitor will need to date mortgage deed
* NOTE: cannot be done until after TR1 has been dated – technically, buyer does not own property until then and so not in position to grant mortgage over it
36
What are the two methods of completion?
In person
By post
37
What do you have to follow if completing by post?
Law Society Code of Completion By Post
(ie.Seller's solicitor is acting as agent of buyer's solicitor for the purpose of carrying out the completion procedure; Seller's solicitor does this at no cost; Buyer's solicitor sets out in writing precisely what Seller's solicitor should do on their behalf; once completion money received, Seller's solicitor carries this out then contacts buyer's solicitor to inform them completion has taken place; DOCUMENTS PUT IN FIRST CLASS POST OR DX)
38
By using law Society Code for Completion, what is the impact on SEller's solicitor?
Under the Law Society Code for Completion by Post the seller’s solicitor gives an implied
undertaking to carry out the buyer’s solicitor’s instructions. This undertaking may be enforced through the courts
39
What is the effect of completion?
* UNREGISTERED = LEGAL TITLE PASSES TO BUYER
* REGISTERED = LEGAL TITLE DOES NOT PASS UNTIL BUYER IS REGISTERED AT LR AS PROPRIETOR
40
What are the post-completion steps ? [4]
1. Discharge of seller’s mortgage
2. SDLT/LTT
3. Registration of new charge at Companies House
4. Land Registry applications
41
Who pays for SDLT/LTT?
BUYER
* Seller’s solicitor send TR1 to buyer’s solicitor
* BUYER’S SOLICITOR TO ARRANGE FOR SDLT or LTT (WALES) TO BE PAID
42
How many days to pay SDLT? How many days for LTT?
SDLT to HMRC– 14 days
LTT to WRA– 30 days
43
Once SDLT / LTT form sent and paid, what do you get in response?
* HMRC produce SDLT5 form
* WRA produce WRA certificate
* = proof that tax has been paid on transaction
44
What is the consequence of the tax not being paid in time ?
If tax not paid in time, can lead to fines/penalties and application to LR will be rejected unless SDLT5/WRA accompanies application to LR
45
If the buyer is a company and has used a mortgage, what will the lender's solicitor have to do at CH
register charge at CH within 21 days of creation (ie. at completion)
* Ensure constructive notice of it is given to other creditors of company
* Time limit is absolute and cannot be extended without court order
46
What is the impact of late registration of mortgage charge?
Failure to register = charge void against liquidator or administrator of borrower and borrower’s other creditors – ie. prejudice lender’s security
47
Who submits the LR application ?
* BUYER’S SOLICITORS need to apply to have buyer registered as RP or land
48
What form is needed for registered land for buyer and lender to be registered ?
LR Form AP1
* If seller had mortgage which has been electronically discharged, entries in charges register protecting mortgage will be automatically removed
* If DS1 used, buyer’s solicitor must apply for mortgage to be discharged
* [All can take place on AP1 form]
Certified copy of transfer (NOT ORIGINAL) to be submitted with application + fee + SDLT/LTT certificate + DS1 (if used)
49
What is important to remember re the date for making applications for registered land?
Applications must be made before expiry of priority period of OS1; otherwise buyer + lender will lose benefit of priority period and would take subject to matters registered during period
50
What is the time period and formalities for transfer of unregistered?
Application for first registration must take place within 2 months of completion of transaction on Form FR1
Application form and fee accompanied by documents listed below sent to LR
Documents accompanying application must be listed in duplicate on form DL
One copy of DL will be returned to applicant’s solicitor – estimate of likely time the LR expect to deal with application
51
What is the default date for completion in the SC/SCPCs?
20 days after completion
52
What else do the SC/SCPCs stipulate?
o Money to be paid before 2pm on the day of completion
o If not, completion treated as taking place on the next working day as a result of buyer’s default
53
If parties cannot complete on time, is time of the essence in the SC/SCPCS?
* If one party is not ready to complete on time, SC and SCPC states that time is not of the essence unless a notice to complete has been served
o No immediate right for non-defaulting party to terminate or rescind the contract on contractual completion date
54
What is the contractual compensation under the SC?
* Both buyer and seller can be asked to pay compensation
55
What is the contractual compensation under the SCPC?
* Only buyer can be required to pay compensation
56
When calculating the contract rate, do you include the deposit in the calculations ?
TAKE OFF DEPOSIT IF THE DEFAULT WAS BY THE BUYER
Calculate at a daily rate
If non-paying party at fault for any of those days, disregard these
8.5% standard rate?
Calculate daily rate then multiply by number of days
57
What are the common law damages available for late completion?
* Failure to complete on contractual completion date is breach of contract
* Seller could claim for breach of contract under normal contractual principles
* Damages = Hadley v Baxendale (measure = putting the claimant in the position it would have been in had the contract been correctly performed)
* Damages=
o Losses naturally flowing from the breach
o Any reasonably foreseeable consequential loss (legal costs, furniture into storage, cost of renting another property, cost of bridging finance, rebooking/removal cost)
* NB: The fact the seller has received contractual compensation does not prevent the seller from claiming damages for extra losses for breach of contract in the normal way
* CONTRACTUAL COMPENSATION THE INNOCENT PARTY RECEIVED WILL BE DEDUCTED FROM THE CONTRACTUAL DAMAGES
ie. no double recovery
58
What is a notice to complete?
* If delay in completion is not likely to be resolved quickly, then either party can consider notice to complete
59
What is the impact of serving a notice to complete?
* Conditions:
o Only after contractual completion time on date [either modified or SC/SCPC default; note 2pm unless varied]
o Once served, notice to complete makes time of the essence and gives other party 10 days to complete
o If defaulting party does not complete, then party who served notice can RESCIND CONTRACT
o If recission and default was buyer, seller is able to forfeit the deposit
o If defaulting part = seller, then seller must repay deposit
o NB: NON-DEFAULTING PARTY CAN ALSO CLAIM DAMAGES FOR ANY LOSSES THEY SUFER AS A RESULT
60
What is the position re recission?
* SC/SCPC also provide for recission in specified circumstances
o Failed to comply with notice to complete
o Misrepresentation by seller in a plan or statement/negotiations
* NOTE: recission only allowed where the seller’s error or omission results from fraud or recklessness; OR
* Buyer would be obliged to accept a property differing substantially (QUANTITY, QUALITY, TENURE) from what the error/omission had led them to expect
* Less serious misrepresentations = only entitle buyer to damages
61
PLP
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Decks in class (7)
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