🏡Property: Completion

Question 1

4

Pre completion steps

Answer 1

1. Prepare transfer deed
2. Pre completion searches
3. Make practical arrangements
4. Ensure finances in order

Question 2

Formalities for valid deed for transfer of land

Answer 2

1. Clear it’s a deed
2. Signed by parties
   * individual: witnessed by independent witness
   * company:
   a. Co. seal in acc with articles
   b. Signed by Dir and Sec OR 2 Dirs provided deed is expressed to be executed by the Co
   c. Signed by 1 Dir in presence of witness who attests signature
3. Delivered

Question 3

Who executes the transfer deed?

Answer 3

• Seller-always
• Buyer- if entering into an obligation (eg. Indemnity cov) or making declaration (as to beneficial ownership) in TR1

Question 4

What transfer deed should be used?

Answer 4

• Registered: Land Registry Form TR1
• Unregistered: Best use TR1 not conveyance as will be subject to compulsory first registration

Question 5

Who prepares the transfer deed?

Answer 5

Conventionally buyers sol
Simple residential transactions-sellers sol and sent to buyer in pre contract package

Question 6

What should the transfer deed reflect

Answer 6

Terms of contract/title deeds

Question 7

How should the purchase price be written in the deed?

Answer 7

Figures AND words
Possible add VAT

Question 8

What pre completion searches could be done if relevant?

Answer 8

1. OS1/K15
2. If acting for lender: check buyers solvency
3. If seller, co: company search
4. If seller individual: bankruptcy search

Question 9

Who carries out pre completion searches

Answer 9

buyers solicitor

Question 10

When should pre completion searches be done?

Answer 10

As close to completion as possible

Question 11

Why are pre completion searches done?

Answer 11

1. Check seller hasn’t further encumbered title since investigation took place
2. Check financial circumstances of borrower (when acting for lender)
3. Gain priority for buyer and lender, over anyone else making app before the buyer applies to register the change of ownership at the Land Registry
4. If sellers a Co, to check it hasn’t gone into liquidation before the balance of the purchase price is paid over on completion.

Question 12

How to do pre completion searches in registered land?

Answer 12

Land Registry search against title number to see if new entries made since ‘search from’ date (date official copies produced)
Using:
* form OS1-sale of whole
* formOS2-sale of part (normally also a plan)

Question 13

How to do pre completion searches in unregistered land

Answer 13

Land charges search on form K15

Question 14

What form do the results come back on for pre completion searches

Answer 14

Registered: OS1R/OS2R
Unregistered: K18

Question 15

5

What will the OS1 include details of?

Answer 15

1. Title number
2. Address
3. Names of registered proprietors
4. Name of applicant
5. Reasons for search

Question 16

What priority period is conferred as a result of an OS1/2 or K15 pre completion search?

Answer 16

OS1/OS2: 30 working days from date of search result
K15:15 working days from result

Question 17

Effect of the priority period conferred by pre completion searches in registered land

Answer 17

Buyer will take free from such entries if submit application for registration by 12pm on last day of priority period

Question 18

For registered land, whos name should the search be done in and why

Answer 18

Buyer
UNLESS have mortgage then use name of lender, will confer priority period on buyer and lender

Question 19

Effect of priority period in unregistered land

Answer 19

Searcher will take free of entries on register between search date/completion date if completion takes place during 15d period

Question 20

How to check buyers solvency on behalf of lender?

Answer 20

INDIVIDUAL BUYER =apply for land charges search against buyer
* Registered: is a Bankruptcy only search on from K16
* Unregistered: will already be making land charges search against seller so ask name of buyer to be searched against on K15

CO BUYER-Co search (not possible to do bankruptcy land charges search)

Question 21

Why do a company search against a seller company?

Answer 21

To check seller…
1. Still in existence
2. Solvent
3. Has created any fixed/floating charges

Question 22

When (in time) should you do a company search and why

Answer 22

As close to completion date as possible as no priority period
On completion day: do phone search at Registry of Winding Up Petitions at Co Court

Question 23

How/when to do a bankruptcy search against an individual seller?

Answer 23

Unregistered-K15 search
Registered-mostly not considered necessary but can do for high value/if concerned

Question 24

Why is a bankruptcy search against an individual seller mostly not considered necessary for registered land?

Answer 24

s86(5) LRA 2002 provides where no notice/restriction relating to bankruptcy appears on registered title, a buyer acting in good faith without notice of bankruptcy petition/adjudication will take good title from bankrupt seller even though legal title vested in trustee in bankruptcy

Question 25

For residential property, how are practical arrangements for completion made?

Answer 25

Form **TA13** Completion info and undertakings: □ Arrangements for handing over keys □ Place/method of completion □ Docs to be handed over at completion □ Exact amount payable on completion □ Contains undertaking by sellers sol to redeem mortgage out of completion money on completion (and send buyers sol evidence of discharge as soon as received from lender)

Question 26

# 4 What will a lender expect to receive before releasing the mortgage advance?

Answer 26

1. Certif of title to confirm prop is adequate security 2. Solvency search against borrowers 3. Clear OS1R in name of lender 4. Executed but not completed mortgage deed

Question 27

What does the buyers solicitor need to do in relation to ensuring finances are in order?

Answer 27

1. send client **Financial Statement** advising of funds needed to complete 2. Ensure received **mortgage advance** from lender and **balance of purchase price** from client 3. Once money received, sellers sol will contact buyers sol and completion will take place

Question 28

# 6 What may be included in a Financial Statement to a client (info on funds needed to complete)

Answer 28

1. Purchase price 2. SDLT/LTT 3. Registration fee 4. Outstanding amount for other disbursements 5. Sol fees 6. Other amounts

Question 29

What happens on completion

Answer 29

* Buyers sol will send balance of purchase price and release deposit paid on exchange to seller * On receiving, sellers sol will complete by dating TR1 (then will need to date mortgage deed)

Question 30

SC/SCPC on how completion money should be paid

Answer 30

Via direct transfer/electronically in cleared funds from an acc held in name of conveyancer at clearing bank

Question 31

What are the 2 most common ways to complete?

Answer 31

1. In Person (Buyers sol usually attends sellers sol office) 2. Post

Question 32

What do the buyers/sellers solicitor do if completing in person?

Answer 32

Buyers sol: 1. arranges for completion money to be sent electronically 2. checks any title docs against evidence previously sent to them Sellers sol: 1. In return for receiving money, hands over title docs/other docs relating to prop 2. Arranges for release of keys

Question 33

Downsides of completing by post?

Answer 33

Takes time and can be unreliable but Law Soc Code for Completion by Post includes undertakings to make it less unreliable

Question 34

What do the seller and buyers sol do if using the Law Society Code for Completion by Post?

Answer 34

Sellers sol: 1. Acts as agent of buyers sol at no cost to buyer 2. On receiving money, carries out buyers sols instructions and contacts buyers sol to inform completion has taken place 3. Hands over docs by 1st class post/doc exchange Buyers sol: 1. Sets out in writing what sellers sol should do ie. Whatever they would have done if they'd attended office in person

Question 35

When does legal title pass?

Answer 35

Unregistered: on completion Registered: when buyer registered at Land Registry as a proprietor of the land

Question 36

When should completion occur

Answer 36

20 working days from exchange at 2pm

Question 37

# 4 Post completion steps

Answer 37

1. Seller discharge mortgage 2. Buyer pay SDLT/LTT 3. LR apps to register buyer as new proprietor (AP1/FR1) 4. Register new charge at CH (if buyer co who used mortgage)

Question 38

How does the buyer know the seller will discharge their mortgage

Answer 38

Buyer usually relies on undertaking from sellers sol

Question 39

Can the sellers sol ask the buyer to sent the amount direct to the lender with only balance being sent to sellers sol?

Answer 39

Yes

Question 40

# 3 Once the lender has received the money, how may they discharge the sellers mortgage

Answer 40

a. **LR form DS1** and send to sellers sol to forward to buyers sol b. **E-DS1 electronic discharge** via Land Registry portal (sellers sol needs to send notice of discharge to buyers sol) c. **Electronic Discharge system**, sending message to Land Registry which automatically removes charge from register (sellers sol needs to send notice of discharge to buyers sol)

Question 41

How/when to pay SDLT/LTT?

Answer 41

SDLT: 14d completion with tax return SDLT1 LTT: 30d completion with tax return Land Transaction Return

Question 42

Effect of paying SDLT/LTT

Answer 42

SDLT: HMRC will produce SDLT5 as proof LTT: WRA will produce WRA certificate as proof App to register buyer as new registered proprietor will be rejected unless SDLT5/WRA certif accompanies app

Question 43

Effect of not paying SDLT/LTT

Answer 43

1. Buyer wont be registered as new proprietor 2. Fines/penalties

Question 44

Forms to file at LR post completion

Answer 44

* Registered: AP1 * Unregistered: FR1 (apply for first registration)

Question 45

# 5 What should be filed with AP1

Answer 45

1. Certified copy of transfer 2. Fee 3. SDLT/LTT certif 4. DS1 (if used)(discharge existing mortgage) 5. Form DI setting out overriding interests (will be entered and cease to be overriding)

Question 46

What should also be filed with AP1 if the buyer created a mortgage?

Answer 46

* Certified copy of mortgage deed * Buyer co-certified copy of certif of registration issued by CH AND sol/lenders written confirmation that the enclosed certified copy mortgage deed is the same as the one filed at CH an to chich the certif of registration relates

Question 47

Must the buyer apply to discharge the sellers mortgage?

Answer 47

* If discharged electronically, entries on charges register automatically removed * If DS1 used, buyer must apply for discharge (also on AP1)

Question 48

Deadline for applying to be registered as new proprietor of registered land?

Answer 48

Before expiry of priority period of OS1 search or will take subject to entries during that period

Question 49

Deadline for applying for first registration

Answer 49

2 months of completion

Question 50

# 11 What should be filed with FR1?

Answer 50

1. Fee 2. all docs which formed the evidence of title supplied by the seller’s solicitor 3. all the buyer’s pre- contract searches and enquiries relating to the title with their replies 4. the contract 5. requisitions on title with their replies 6. all pre- completion search certificates 7. transfer deed 8. seller’s mortgage, duly receipted 9. SDLT/ LTT certificate 10. Form DI setting out overriding interests (will be registered and cease to be overriding) 11. If new mortgage-original mortgage deed

Question 51

Do you need to include details of the conveyancer/parties identity on AP1/FR1?

Answer 51

YES if property over £5k

Question 52

Where should documents accompanying FR1 also be listed and what happens?

Answer 52

* List in duplicate on form DL * 1 copy of form DL will be returned to app sol giving estimate of time LR expects to deal with app ( Bc Registrar needs to investigate title to decide which class of title to allocate)

Question 53

Once the LR have processed a FR1 and entered the buyer as new proprietor, what will the buyer be sent?

Answer 53

Title Information Document (TID)-official copy of entries on register to buyers sol NOT doc of tile but IS evidence of new owner

Question 54

What should be done by the buyers solicior on receipt of the TID

Answer 54

* Check to see if mortgage/transfer correctly registered * Sort safe custody of TID/other papers, ask lender if wish to retain

Question 55

Deadline to register new charge at CH if the buyer is a company with a mortgage?

Answer 55

21d of the charges creation

Question 56

Can the deadline for registering a charge at CH be extended?

Answer 56

No

Question 57

Effect off failing to register a charge at CH

Answer 57

Renders charge void against liquidator/administrator of borrower

Question 58

SC/SCPC on delayed completion

Answer 58

Time not of the essence unless a notice to complete served (=no automatic right to rescind/terminate)

Question 59

Remedies for delayed completion

Answer 59

1. Contractual compensation (payable regardless of loss) 2. Common law damages (bc failure to complete is breach of contract) 3. Notice to complete 4. Recession

Question 60

SC/SCPC on who pays contractural compensation for delayed completion?

Answer 60

SC-buyer AND seller can be required to pay SCPC-ONLY buyer can be required to pay

Question 61

If payable, WHEN is contractural compensation for delayed completion paid?

Answer 61

On completion

Question 62

How is contractural compensation for delayed completion calculated?

Answer 62

Calculated at contract rate (9%) on balance of purchase price (LESS deposit if defaulting party buyer) for period between contractual and actual completion date =Calculate daily rate (amount /356) Times by number of days delayed (LESS days non paying party is in default)

Question 63

How are common law damages for delayed completion calculated?

Answer 63

* Seller entitled to be put in position they would have been if contract had been performed * Hadley v Baxendale: For losses flowing naturally from breach AND any reasonable foreseeable consequential loss LESS contractual compensation if received

Question 64

When/why could a notice to complete be served and what is the effect of it?

Answer 64

Where delay wont be resolved quickly, either party can serve AFTER contractual completion time on contractual completion date Makes time of essence and gives other party 10 working days to complete or can rescind contract □ If buyer in default, seller can retain deposit and interest □ If seller in default they must repay deposit to buyer

Question 65

SC/SCPC on recission of contract

Answer 65

provide for recission in certain circumstances eg: 1. Failure to comply with notice to complete 2. Misrep by seller in a plan, statement, contract or negotiations leading up to contract (Only allowed where sellers error/omission results from fraud/recklessness OR buyer would be obliged to accept a prop differing substantially from what lead to expect)