3. Completion (Stage 5); Post-Completition (Stage 6); Remedies for Delay; and Commercial Security of Tenure

Question 1

Stage 5 (Completion):

Stage 5 (Completion):

What are the three methods by which completion can take place, and what should these not be confused with?

Answer 1

Personal attendance
Agent
Post (most common)
Not to be confused with the three Ps by which exchange can occur: person, post, phone.

Question 2

What does merger on completion mean and what does it mean for the buyer?

Answer 2

On completion, the contract merges with the purchase deed, meaning the buyer can no longer sue on contract terms (unless the contract provides it will not merge on completion)

Question 3

On to Stage 6 (Post-Completion):

Within what time of completion must the buyer’s solicitor send the Stamp Duty Land Tax Form and pay tax?

Answer 3

Within 14 days of completion, even if no tax is payable

Question 4

Within what time must buyer’s solicitor register the title for (1) registered and (2) unregistered property

Answer 4

Registered: Within 30 days of the official search
Unregistered: Within two months of completion

Question 5

What is the effect of first registration on the title deeds?

Answer 5

They no longer have legal effect

Question 6

Finished with the stages, and on to Delayed Completion and Remedies:

What is the only circumstance where delay will give the innocent party the right to cancel the contract outright?

Answer 6

Only where time was of the essence

Question 7

Under the Standard Conditions, what is required for time to be of the essence in a residential context?

Answer 7

It must be specified in the contract

Question 8

Even if time is not of the essence, what does any delay in completion, however minimal, give rise to?

Answer 8

Damages in the form of an interest penalty

Question 9

Damages in the form of an interest penalty

Answer 9

The proceeds outstanding, i.e. purchase price minus deposit

Question 10

As long as they notify the delaying party, what other option is available to an innocent buyer where there is a tenant in situ in the property?

Answer 10

They can elect to take the rental income instead of the interest

Question 11

Where completion is delayed and time is not of the essence, what must the innocent party serve on the breaching party if they want to set the ball in motion toward being able to cancel the contract, and what is the effect of this?

Answer 11

A notice to complete, which makes time of the essence

Question 12

From what point can a notice to complete be served, and what three things must be true of the party serving?

Answer 12

Any time after completion was due but not after it has taken place, and innocent party must be ready, able, and willing to complete

Question 13

What trap should we look out for on the exam regarding a notice to complete?

Answer 13

The innocent party trying to serve a notice to complete in order to cancel the contract in a situation where completion has occurred, albeit late. A notice to complete can only be served if completion has not yet occurred.

Question 14

After service of a notice to complete, how long does the delaying party have to complete?

Answer 14

10 days

Question 15

Upon receiving a notice to complete, what must the buyer do if they have negotiated and paid a deposit lower than 10% to the seller?

Answer 15

Advance enough funds such that 10% of the purchase price has been paid over

Question 16

What are the seller’s options when the buyer does not comply with a notice to complete?

Answer 16

Rescind the contract

Retain deposit

Claim damages

Resell property

Question 17

What are the buyer’s options when the seller does not comply with a notice to complete?

Answer 17

Rescind the contract

Reclaim deposit with interest at the contract rate

Claim damages

Question 18

What remedies are available for other pre-completion breaches, depending on the breach?

Answer 18

Specific performance

Damages

Rescission

Question 19

Pre-completion, where a seller is claiming damages from a buyer, what is the limit on what can be claimed, and what is the effect of this?

Answer 19

Difference in value between contract price and value on resale, so if the resale value is higher, a claim for damages against the original buyer will not be available

Question 20

Under the Standard Conditions, in what two situations is rescission available pre-completion?

Answer 20

Misrepresentation because of an error or omission

Landlord’s consent to assignment is not forthcoming

Question 21

One of what two conditions must be met to rescind a contract for misrepresentation under the Standard Conditions pre-completion?

Answer 21

Element of fraud or recklessness, or
Property is substantially different from what the innocent party expected to take, to their detriment

Question 22

What is misdescription?

Answer 22

An error in the property particulars of the contract, e.g. the estate held, or the size of the property

Question 23

What must be true of the misdescription to allow damages or rescission pre-completion?

Answer 23

It must be significant

Question 24

/Finished with Delayed Completion and Remedies, and on to Security of Tenure for Commercial Tenants/:

What is the statutory protection given to commercial tenants under the Landlord and Tenant Act 1954?

Answer 24

Tenant does not have to vacate their property at the end of a contractual lease, unless the landlord uses one of the statutory methods of terminating the lease

Question 25

What are the four ways a tenancy protected by the 1954 Act can be terminated

Answer 25

Forfeiture by the landlord

Surrender by both parties

Landlord serves a valid section 25 notice (to terminate lease or suggest new lease), or

Tenant serves a valid section 26 notice (to request a new lease)

Question 26

What are three types of tenancy to which the 1954 Act does not apply?

Answer 26

Fixed term tenancy not exceeding six months
Employee in property of employer
Contracted out tenancy

Question 27

What are the three statutory requirements for a landlord to contract out of the 1954 Act?

Answer 27

Health warning from landlord
Declaration from tenant
Reference in the lease

Question 28

If the landlord wishes to contract out of the 1954 Act, how long before the tenant completes the lease should the health warning explaining what security of tenure is, that the tenant will be giving up these rights, and that they should seek professional advice be sent?

Answer 28

14 days

Question 29

What is required for the tenant to waive the 14 day period?

Answer 29

Tenant signs a formal statutory declaration in front of an independent solicitor waiving the period

Question 30

Regarding the tenant’s declaration in response to the health warning (not the one waiving the 14 day period), what two things must it confirm?

Answer 30

Tenant confirms they:

Have received the health warning

Agree to contracting out and to the consequences

Question 31

Does the tenant’s declaration in response to the health warning (not the one waiving the 14 day period) need to be signed in front of a solicitor?

Answer 31

No

Question 32

What three things must the reference in the lease contain?

Answer 32

Reference to:

Health warning

Tenant’s declaration and/or statutory declaration

The agreement to contract out

Question 33

What is a section 25 notice, and when must it be served?

Answer 33

A notice sent by the landlord informing the tenant that they require the premises back at the end of the term, or that they wish to enter into a new lease with the tenant, served between six and twelve months before they wish the tenancy to end

Question 34

What are the seven statutory grounds (three of which concern tenant fault and four of which do not), one of which must be contained in a section 25 notice?

Answer 34

Discretionary:
Tenant fault:

Failure to repair
Persistent delay in paying rent
Substantial breaches of other obligations

No tenant fault:

Landlord requires whole premises (if tenant only rents part)

Not discretionary:

Has suitable alternative premises for the tenant

Intends to demolish or reconstruct premises which cannot be done with tenant in occupation

Intends to occupy premises himself

Question 35

Which grounds are discretionary, meaning even where they are advanced and proved, the court can still order a new tenancy?

Answer 35

All three where the tenant is at fault, and the one concerning the landlord needing the whole of the property where the tenant only rents part

Question 36

Which grounds are mandatory, meaning once advanced, the court cannot interfere, and what are these also known as?

Answer 36

Alternative premises, demolish/reconstruct, intent to occupy.

Also known as no-fault grounds

Question 37

What is a section 26 notice, and when must it be served?

Answer 37

A notice sent by the tenant requesting a new lease, served between six and twelve months before they wish the new tenancy to begin

Question 38

After receiving this notice, how long does the landlord have to inform the tenant if they intend to oppose the request?

Answer 38

Two months

Question 39

What must a landlord do in response to a section 26 notice if they are unwilling to agree to a new lease?

Answer 39

Justify their refusal by reference to one of the seven statutory grounds they would be able to use for their own section 25 notice

Question 40

What is a tenant entitled to if a landlord quits the lease using a no-fault ground?

Answer 40

Compensation, on the basis that they have not done anything wrong

Question 41

Why is the tenant not entitled to compensation where there is alternative premises?

Answer 41

Because they will not have suffered any loss

Question 42

What determines how compensation is computed when a tenant is entitled upon to termination due to a no-fault ground?

Answer 42

Whether the tenant has been in occupation for 14 years or less

Question 43

How is compensation calculated when the tenant has been in occupation for less than 14 years?

Answer 43

The ratable value of the premises, i.e. one year’s rent

Question 44

How is compensation calculated when the tenant has been in occupation for at least 14 years, or took over the business from someone and their combined tenancy is at least 14 years?

Answer 44

Twice the ratable value of the premises

Question 45

In a section 25 or 26 situation, what is the maximum length a court will order the new lease to be where the lease itself is silent as to term?

Answer 45

15 years