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FLK 2 - Property Practice > 4. Completion > Flashcards

4. Completion Flashcards

1
Q

What are the main tasks of the solicitors in the pre-completion stage?

A
  • Preparation of the transfer deed
  • Pre-completion searches
  • Making practical arrangements for completion
  • Ensuring the finances are in order for completion
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2
Q

Who prepares the transfer of deed document and when is it sent?

A

Who: buyer’s solicitor (unless seller’s solicitor included draft in contract bundle)

When: sent to seller at least 12 working days before the completion date

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3
Q

Who replies with enquiries to transfer of deed document and when?

A

Who: seller’s solicitor
When: within 4 working days of receiving

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4
Q

What are the requirements of a transfer being a deed?

A

To be a valid deed, it must:
- state it’s a deed
- be signed by parties
- be delivered
in order to transfer a legal estate in land.

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5
Q

What are the requirements of a deed transfer in registered land?

A

must comply with HMLR requirements and Form TR1

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6
Q

What are the requirements of a deed transfer in unregistered land?

A
  • No prescribed conveyance exists.
  • buyer and seller will agree wording to reflect the terms of the contract.
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7
Q

What are the requirements on a valid deed being signed by parties?

A
  • Seller must always sign the transfer.
  • Buyer signs where it contains a covenant or declaration on the buyer’s behalf.

The seller aiways needs to sign the transtet, but the buyer only needs to sign in certin sitations.

Therelevant reasons why the buyers need to sign on this occasion is that they will make a declaration of trust (as they will be co-owners) and give an indemnity covenant in the transfer (to continue the chain of indemnities).

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8
Q

Where are plans attached in a form of transfer of deed?

A

Any plans should be attached to the transfer or conveyance and must be signed.

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9
Q

What are the formalities for an individual to validly execute a deed?

A

Instrument must be:
- signed by the individual
- in the presence of a witness who attests signature
- be delivered as a deed.

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10
Q

What are the formalities for companies to validly execute a deed?

A

Execute a document (including a deed) by:
- affixing its common seal
- by signatures of: two authorised signatories OR one director and witness.

two directors sign, or a director and the company secretary sign

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11
Q

What are the formalities for witness requirements to validly execute a deed?

A
  • party to the deed cannot witness
  • no prohibition on spouse, co-habitee, or civil partner witnessing.
  • independent witnessing to avoid bias
  • only individuals can witness, not companies.
  • employee or director can witness
  • solicitor or any advisor on the matter can witness
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12
Q

When must pre-completion searches be conducted?

A

When: as close as possible to completion date
Why: to ensure that 1) info from pre-exchange searches is still correct and identify any changes + 2) no further encumbrances to title by seller.

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13
Q

Why must pre-completion searches be conducted?

A

To ensure:
1) info from pre-exchange searches is still correct and identify any changes
2) no further encumbrances to title by seller
3) financial circumstances of borrower when acting for lender
4) no liquidation if seller is a company.

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14
Q

What are pre-completion searches for unregistered land and the priority period?

A

Land charges department search - form K15 results on K18
Priority period: 15 working days from K18

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15
Q

Who is a land charges department search made against and what is the fee?

A

Search against: owner’s names (seller) for period of ownership
Fee: one for each name stated.

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16
Q

What are pre-completion searches for registered land and the priority period?

A

Land registry: OS1 (sale of whole) OR OS2 (sale of part) - results on OSR1 or OSR2
Priority period: 30 working days from date of result

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17
Q

Who is a land charges department search made against and what is the fee?

A

Search against: title number
Fee: standard fee for each search

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18
Q

What is the procedure for checking for buyer’s solvency on behalf of lender in Registered Land?

A

Bankruptcy only searched K16 carried out against the name of the buyer.

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19
Q

What are the limitations to checking for buyer’s solvency on behalf of lender?

A

K16 limits the search to the bankruptcy register at the Land Charges Department, no access to other registers.

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20
Q

What is the procedure for checking for buyer’s solvency on behalf of lender in Unregistered Land?

A

A Land Charges department search would have already been made, name of the buyer will be added to K15 for an extra fee.

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21
Q

What pre-completion searches are conducted if the buyer/seller is a company the priority period?

A

A company search at companies house to reveal:
* solvency status
* any fixed or floating charges created

NO priority period, carred out as close as posisble to completion to reveal latest information.

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22
Q

What additional pre-completion searches can conducted if the buyer/seller is a company and the transaction is of high value or there is reason for concern of solvency?

A

A telephon search at the Registry of Winding Up Petitions at Companies Court

When: on the day of completion

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23
Q

When will a local search to need to be repeated pre-completion and what is the priority period?

A

If more than three months have pissed since exchange

There is no priority period.

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24
Q

What is the effect of conferring a priority period in pre-completion searches ?

A

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.

Provided that the application is submitted for registration by 12 noon on the last day of the priority period.

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25
Q

How is an OS1/OS2 search affected if the buyer is financing with aid of mortgage?

A

Application for a Land Registry search should be in the name of the lender - if made on behalf of buyer lender will not be protected.

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26
Q

What should a solicitor do if a pre-completion search shows an adverse entry?

A

Ascertain what it relates to + seek undertaking from seller’s solicitor to remove before completion.

27
Q

What examples of practical arrangements for completion?

A
  • handing over keys
  • place and method of completion
  • document to be handed over at completion
  • exact amount payable by the buyer on completion
28
Q

What will the lender expect to receive, before releasing mortgage advance, if the buyer is financing with aid of mortgage?

A
  • a certificate of title
  • a solvency search against the borrows
  • a clear OS1R in the name of the lender
  • an executed but not completed mortgage deed.
29
Q

What does the buyer’s solicitor send to their client to advise on funds needed to complete.

A

Financial (completion) statement

30
Q

What financial documents must the buyer’s solicitor receive prior to completion?

A

Mortgage advance from lender
Balance of purchase price from buyer

31
Q

What are the pre-completion steps that the buyer’s solicitor is responsible for?

A
  • Pre-completion searches
  • Completion statement: document that summarizes the financial details of a property purchase or sale
  • Raise requisitions on title
  • Draft Transfer
  • Execution of new mortgage deed (if any)
  • Undertakings
32
Q

What are the pre-completion steps that the seller’s solicitor is responsible for?

A
  • Redemption statement : need to pay off mortgage fully on certain date
  • Completion statement
  • Reply to requisition on title
  • Approve draft transfer
  • Discharge existing mortgage deed
  • Undertakings
33
Q

What are the two methods of completion?

A

In person + by post

34
Q

Where is the place of completion in person?

A

Usually at the seller’s solicitors’ office

35
Q

What is the method for completion in person?

Note: buyer/seller solicitor have different tasks

A

Buyer’s solicitor: arrange completion monies electronic transfer + if UrL, check title documents against previous title disclosure.

Seller’s solicitor: holds transfer deeds, form DS1, other docs, and keys + release themon receipt of completion monies.

36
Q

What are the requirements ofr completion by post?

A
  • parties musrt expressly agree to adopt Law Society Code for completion by post
  • seller’s solicitor acts as agent and gives udnertakings to buyer WITHOUT A FEE
37
Q

What is the method for completion by post?

Note: buyer/seller solicitor have different tasks

A

Buyer’s solicitor: funds sent on completion day or day before + instructions on documents to be examined, memoranda to be endorsed, and undertaking to be given by seller’s solicitor.

Seller’s solicitor: in receipt of monies will complete transaction + give undertakings + notify buyer’s solicitor that completion has occured +send documents by 1st class post or DX to buyer’s solicitor.

38
Q

What is the effect of completion on Registered land?

A

legal title will pass to buyer once registered at HMLR. Registration of buyer as new proprietor must be during 30 day priority period.

39
Q

What is the effect of completion on Unregistered land?

A

legal title passes on completion

40
Q

What are the post-completion steps for SDLT?

A

Buyer to pay SDLT within 14 days (England) or LTT in 30 days (Wales)

41
Q

What are the post-completion steps for Registered Land?

A

Complete within 30 days priority period HMLR Form AP1 to have:
* buyer registered as proprietor
* lender registered as holder of new mortgage, if any
* apply for seller’s mortgage to be removes if DS1 form done, and not electronic discharge.
* Send relevant documents with Form AP1

42
Q

What are the post-completion steps for Unregistered Land?

A

Complete within two months of completion of transaction:
* HMLR form FR1 for first registration of title
* Form DI - list of documents accompanying FR1

43
Q

What does the Form DI for post-completion of Unregistered land entail?

A
  • all documents forming evidence of title
  • any new mortgage documents or overriding interests that burden the title which can then be entered on the register and cease to be overriding.
44
Q

What are the post-completion steps for a buyer company?

A

mortgage, if any, must be registered at Companies House within 21 days of creation.

45
Q

What are the requirements for common law damages for delayed completion?

A
  • failing to complete
  • innocent party cannot unilaterally terminate unless time for completion is of the essence
  • damages for breach - assed under Hadley v Baxendale
  • SC and SCPC, credit towards damages must be given for any contractual compensation payable for delayed completion.
46
Q

What are the requirements for contractual compensations for delayed completion?

A
  • SC: either party may be held liable for compensation
  • SCPC: only buyer may be held liable for compensation
  • Compensation is calculated at the contract rate specified in contract.
47
Q

What is equation for contract rate for contractual compensations?

A
  1. Purchase price
  2. MINUS deposit paid
  3. MULTIPLY by the contract rate = annual rate
  4. Annual rate DIVIDED by 365 days = Daily rate
  5. Daily rate x no. of days delayed = Compensation payable
48
Q

What is the rule for counting days delayed for the purposes of calculating contractual compensation?

A

Day 1 - day completion was supposed to take place
Last day - day before actual completion by 2 pm

49
Q

What is a notice to complete?

A

As soon as completion is delayed, ready party may serve notice to complete on defaulting party.

50
Q

What is the effect of serving a notice to complete?

A

Makes time of the essence and completion must be in 10 working days. Starting counting the day after the service.

51
Q

What are the consequences of failing to comply with a notice to complete served?

A

If 10 working day dealing not met, if defaulting party is the:
* buyer, seller can rescind contract and keep deposit
* seller, they must return the deposit and buyer can claim damages for any loss suffered.

52
Q

What is the right to recind available for?

A
  • Misrepresentation
  • where a license is not forthcoming (leashold)
  • where either party has failed to comply with notice to complete
53
Q

What is the effect of recission?

A
  • Return of the depsoit paid (+ interest accrued)
  • Return of all docs
  • Cancellation of any registration of the contract.
54
Q

What is a completion information form TA13?

A

This is more of an enquiry than a search, in which the seller tells you important information about completion.

55
Q

Is an individual buyer obliged to execute the deed?

A

General rule: No

56
Q

When will an individual buyer be obliged to execute the deed?

A

If there is an indemnity covenant that will bind them - they must agree and sign to execute the deed.

57
Q

What are the circumstances where a buyer will always be required to sign TR1 and execute deed?

A
  1. Two or more buyers
  2. If there is a chain of indemnity as they will be bound by the covenant
58
Q

What is the correct order of post-completion steps as the buyer’s solicitor?

A
  • Arrange for TR1 to be executed
  • Pay balance of purchase price to seller’s solicitor
  • Agree date of TR1
  • Date mortgage deed
  • Pay stamp duty land tax
  • Register transfer of title at Land Registry
  • Check Title Information Document when received back from Land Registry
  • Deal with safe custody of Title Information Document and other papers
  • Close file
59
Q

Does K16 bankruptcy search give priority period?

A

K16 bankruptcy search does not afford a priority period in which to complete the transaction and the search should be undertaken as close as possible to the date of completion.

ITS THE K15 search result does provide a 15 working day priority period in which to complete the transaction.

60
Q

If completion date passes can seller directly claim for common law damages?

A

No

The seller might be able to make a claim for damages for breach of contract but the seller will have to wait to see what its losses are before deciding to sue. The seller may have no loss to sue for if they are covered by contractual compensation and forfeiture of the deposit or, indeed, if the buyer does complete with only minimal delay.

61
Q

Undertaking

A

Read what an undertaking says about sending evidence of discharge

62
Q

Completion account

A

For seller- includes apportionment of insurance if buyer taking over seller insurance policy//// amount payable to furnitire

Buyer- costs related to them like SDLT

63
Q

When TR1 dated

A

On completion day

64
Q

Buyer liability // seller liability

A

Notice to complete if ur ready// once launch cannot withdraw

SCPC 10.3 only requires the buyer to pay compensation to the seller in the event of late completion and there is no corresponding requirement for the seller to pay.

FLK 2 - Property Practice (7 decks)

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