Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

prop > 4. Completion and Remedies > Flashcards

4. Completion and Remedies Flashcards

1
Q

3-step process of completion

A

(1) preparation
(2) actual completion
(3) post-completion matters

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what do we need to know?

A
  1. what STEPS are required
  2. what FORM should you use/docs to send
  3. how LONG do you have to carry out each step?
  4. CONSEQUENCES for failing to meet time limits
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Buyer’s solicitor’s pre-completion steps

A
  1. Draft TR1 for approval (and once approved prepare engrossments and send one to S and 1 executed by client)
  2. Submit a Completion Information and Undertakings Form (e.g. TA13) to the seller’s solicitor (and check responses)
  3. Obtain finance (from B and B’s lender)
  4. Carry out pre-completion searches
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

TR1 - BASIC INFO

A
  • drafted by B after exchange of contracts
  • sent to S for approval
  • form of a deed (s.52 LPA 1925)
  • no prescribed form but most usual for B’s solicitor to use TR1
TR1 = transfer of the whole 
TP1 = transfer of part 
TR5 = transfer of portfolio of registered titles
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Completion Information and Undertakings Form (e.g. TA13 or its equivalent)

  • purpose
A

obtain PRACTICAL INFORMATION about the completion arrangements so completion runs smoothly and according to plan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Completion Information and Undertakings Form (e.g. TA13 or its equivalent)

  • contents
A
  1. (If S has a mortgage) – an UNDERTAKING confirming that any outstanding mortgages will be repaid prior to completion
    - not essential, some S provide required undertakings in response to this request, others send it in a letter shortly before completion (as long as before completion = fine)
  2. S’s COMPLETION CERTIFICATE (sets out balance funds required from B to complete)
  3. BANK DETAILS OF S’S SOLICITOR (so B’s solicitor knows where to send money)
  4. INFO ABOUT where KEYS can be collected and how TITLE DEEDS will be sent to B’s solicitor
  5. CHANGES SINCE EXCHANGE in info given prior to exchange (not on TA13 anymore but would be in in-house form or additional Q to TA13) - NB. even if not asked, B has contractual remedy if S doesn’t reveal (even if not asked directly - SCPC 4.1.3)
  6. other information
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

S’s undertakings IN RELATION to the mortgage

A
  1. to send required monies to S’s lender to redeem charge
  2. to send receipt from bank (DS1) to B’s solicitor upon Seller’s receipt of it

SHOULD NOT undertake to ‘discharge the mortgage’ (S cannot do this)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Completion Information and Undertakings Form (e.g. TA13 or its equivalent)

  • contents (other info on TA13)
A
  • Where completion will take place
  • List of deeds/documents that are to be handed over/remitted to B’s solicitor on completion
  • List of mortgages/charges
  • Undertakings to redeem mortgages/charges – do NOT tick this if S’s solicitor, just undertake to send required money to bank (so bank can discharge) and send DS1 to B’s solicitor upon receipt
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

FINANCE - B’s solicitor

A

ONE - B’s solicitors financial statement and legal fees bill (sent to B)

TWO - Certificate of title (sent draft to lender before exchange of contracts) + contact lender to ensure money will arrive in good time for day of completion (final certificate of title sent at completion)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

SELLER’S SOLICITOR’S COMPLETION STATEMENT (what is it?)

A

Shows amount S requires from B to complete

  • price of prop
  • plus price of chattels
  • minus deposit
  • less or plus any ‘apportionments’

apportionments –> e.g. insurance premiums where B takes over S’s policy, rent

IF ONLY BALANCE OF PURCHASE PRICE PAYABLE - this may be confirmed without formal completion datement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Source of B’s funds

A

might be many sources

Solicitor must give notice to:
- B = get its funds to solicitor in time for completion (internal procedure)

  • lender (to release loan monies)

Solicitor should:
- discuss source of funds with client in advance of completion (logistical and timing issues taken into account)

  • make sure funds cleared through B’s solicitor’s accounts by day of completion (so it can be sent to S’s solicitor)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

B’s solicitors financial statement and legal fees bill (sent to B)

A
  • total sum due from B to enable B’s solicitor to complete purchase
  • how sum is calculated
  • shows TOTAL cost of transaction for B (incl. SDLT, reg. fees, disbursements) - so different to S’s solicitor’s completion statement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Certificate of title

A

draft sent exchange

before completion - contact lender to ensure money will arrive in good time for day of completion

final signed COT sent at completion

standard COT used in most commercial transactions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

B’S PRE-COMPLETION SEARCHES

A
  1. OS1
  2. Solvency search on buyer (if acting for buyer and lender)
  3. Solvency search on seller (if corporate seller)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

OS1 search - function

A

ONE - check if any further entries have been made since ‘search from date’

  • e.g. mortgages, new covenants, new easements, deed of variations
  • usually mortgage, solution = undertakings cover all outstanding charges (not just ones on original official copies)
  • NB. B has remedy (SCPC 4.1.3) but better to not have to pursue that in the 1st place

TWO - provide searcher with priority period of 30 working days starting from search

  • if using loan, make search in name of lender
  • freezes register
  • after 30 days, any applications made by 3P during priority period = valid and B buys subject to that
  • cannot extend priority period with another search, but can make new OS1 search with new priority protecting from any new entries
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

SOLVENCY SEARCHES ON BUYER

A

NECESSARY WHEN: B’s solicitor is acting for buyer and lender re: purchase of the property

Company = company search at CH (check solvency and if B in existence)

Individual = bankruptcy search at CLC department (form K16)

If B and lender separately represented - lender’s solicitor undertakes these searches

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

SOLVENCY SEARCHES ON SELLER IF CORPORATE SELLER

A

WHEN NECESSARY: In practice –> ALWAYS. B’s solicitor will do company search against corporate seller (regardless of whether lender involved or not)

Why:
- Land Reg title doesn’t reveal floating charges or pending insolvency (can lead to complications, be pragmatic and make search before completion before remitting funds)

  • company search done pre-exchange has no priority period, so update morning of completion

(if individual - no need, if S is bankrupt, this would be apparent on OS1 search)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

B’s pre-completion searches - if unreg land

A

bankruptcy of individual seller - revealed in CLC search

company search - if S is a company

CLC search on form K15 carried out against seller and all previous owners when investigating title
- CLC search = 15 working day protection period from date of search

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

seller’s solicitor’s pre-completion tasks

A
  1. Reply to Completion Information and Undertakings Form
  2. Prepare a completion statement for the B’s solicitor
  3. Request a redemption statement from seller’s lender(s) if any
  4. Agree the form of Transfer (receive ‘engrossment’ of agreed version from B’s solicitor) and arrange for it to be executed by the seller
20
Q

reply to completion information and undertakins form

A

reply to ‘written requisitions’ within 4 working days after receiving it from B’s solicitor

SCPC 7.3.1

21
Q

FINANCE - S’s solicitor

A
  1. Send completion statement to B (showing total amount due from B on completion + how calculated)
  2. Request REDEMPTION STATEMENT from S’s lenders
  3. Send financial statement and bill of costs to seller (amount due on completion to seller, and amount owed to solicitor)
22
Q

redemption statement from S’s lenders

A

includes redemption figure (amount required by lender to pay off (redeem) S’s mortgage)

  • S must give undertaking relating to dicharge
  • check whether redemption figure is less than sale proceeds
  • if yes ( S is in ‘negative equity’) - cannot honour undertaking so must acquire additional sufficient funds from S prior to completion to ensure mortgage can be redeemed on completion

(if not redeemed and removed from Charges Register, B will buy subject to charge)

23
Q

Financial statement from S’s solicitor to seller

A
  • Sale price
  • Apportionments of outgoings (more common in leasehold transactions)
  • Money payable for chattels
  • Mortgage redemption figure
  • Legal fees and disbursements
  • Estate agent’s fees
24
Q

who executes the transfer?

A

ALWAYS: SELLER

SOMETIMES: B 
If:
- entering RC/PC
- Giving S indemnity
- declaring a trust (e.g. joint purchasers declare whether or not they will hold property as TC or JT)

deal with execution well before completion (can take longer to execute than expected, bc of internal procedures like BR)

25
Q

EXECUTION by individuals

AFTER 31 JULY 1990

A

S.1(3) LP(MP)A

“Signed as a deed and delivered by [name] ……………………

In the presence of:
Signature of Witness:  .....................................
name: 
address:
occupation:
26
Q

execution by companies

s.44(1), (2) CA

TWO AUTHORISED SIGNATORIES

A

Executed as a deed by [comp Limited] acting by a director and its secretary/two directors

Signature: ……………………………..
Signature: ……………………………..

27
Q

execution by companies

s.44(1), (2) CA

one director and independent witness

A

Executed as a deed by [comp Limited] acting by a director in the presence of:

……………………………..

Signature of witness: ……………………
name:
address:
occupation:

28
Q

execution by LLP

A

Executed as a deed by [name of LLP] acting by two members

Signature: ……………………………..
Signature: ……………………………..

29
Q

methods of completion

A
  1. personal attendance by B’s solicitor (now very unusual)

2. by post (regulated by Law Society’s Code for Completion by Post) - telephone annd then post

30
Q

just before completion - B’s solicitor’s steps

A
  1. Completion Information = satisfactory (undertakings given by S’s solicitor, satisfactory answers to CIUF)
  2. TR1 signed by S (and B if appropriate), obtain confirmation that S is holding the TR1
  3. Check necessary funds received from B and S’s solicitor will hold monies to order until completion - send by telegraphic transfer to S’s solicitors client account
31
Q

just before completion - S’s solicitor’s steps

A
  1. Obtain confirmation from accounts department of receipt of completion monies
  2. assemble documents to hand to B’s solicitor
    - TR1 executed
    - title or other deeds
    - originals of PP/BR approvals/guarentees
    - receipts for payment of apportionments
32
Q

Patel v Daybells

A

technically B buys property subject to S’s mortgage

  • BUT B’s solicitor not negligent for accepting S’s undertakings to send redemption monies and forward DS1
33
Q

post-completion steps - seller

A

ON DAY:

  1. report to client of successful completion
  2. date transfer
  3. arrange for lender’s charge to be discharged (send redemption funds to lender ASAP - usually same day)
  4. send client balance of remaining sale proceeds (deduct mortgage redemption and seller’s solicitor’s bill of costs)

AFTER:

  1. prepare notices to 3P (e.g. tenants of the freehold property)
  2. Forward DS1 to B’s solicitor
34
Q

post-completion steps - buyer

A

on day:

  1. Report to client
  2. Date legal charge (mortgage)

after:
3. Register charge/debenture (MR01)

  1. Pay SDLT and file SDLT1/Land Transaction Return (SDLT1)
  2. Register: discharge of S’s charge (ds1), transfer, debenture/charge to B’s lender
35
Q

B’s post completion step: Register

debenture/charge

A

MR01 –> CH

  • cheque for fee (£23/£15 if online)
  • certified copy of debenture/charge

Within 21 days from day after date of creation of charge

consequence if not;

  • security void against liquidator, administrator, creditor
  • loan repayable on demand
  • cannot register transfer at LR without Certificate of Registration from CH
36
Q

B’s post completion step: Pay SDLT and file SDLT1/Land Transaction Return

A

SDLT 1 or online SDLT e-submission form
–> HMRC

Cheque for SDLT if not sent by TT or online

Within 30 days of “effective date” (usually completion)

consequence if not:

  • penalty for late submission
  • possible interest liability for late payment
  • cannot register transfer at LR without SDLT5 acknowledment
37
Q

B’s post completion step:
Register:
1. Discharge of S’s charge (DS1) – important to remove existing charge first

  1. Transfer (TR1)
  2. Debenture /Charge to B’s lender
A

AP1 –> Land Registry

documents needed:
Certified copies of
- DS1
- TR1
-  Debenture/charge
- Certificate of registration of debenture/charge
- SDLT5

+ LR FEE
+ (POSSIBLY) change of name certificate, death certificate, deed of appointment of 2nd trustee

Within priority period of OS1 search (i.e. 30 working days from date of search result)

consequence if not:
- 3P interest may obtain priority even if created after completion (if reg. in meantime)

  • B not legal owner until reg. is complete
38
Q

other steps by B’s solicitor post-completion

A
  1. check title documents
  2. check title information doc
  3. obtain custody of title docs
39
Q

if no completion date specified

A

(very rare)

SCPC 9.1.1 - fall back, 20 days after date of exchange

40
Q

compensation - structure

A
  1. contract incorporates SCPC
  2. SCPC 10.3.2 - B is liable to pay compensation at contract rate (calculate) for amount left to be paid
  3. SCPC 9.1.2 - If completion after 2pm, counts as day late
  4. calculate compensation
  5. if compensation payable in accordance with SCPC 10.3 is insufficient, S can…
    - take court action for additional losses (10.3.3) and any compensation already paid will be deduced from award for additional loss
41
Q

calculating compensation for delay under SCPC 10

A
  1. ANNUAL COMPENSATION (contract rate x balance of purchase price)
  2. DAILY COMPENSATION
    (annual interest/365)
  3. TOTAL COMPENSATION
    (daily rate x each day of delay) = total compensation
  • did completion occur before 2pm? if yes, don’t count that day, if no, completed next working day
42
Q

rescission?

A

can only rescind if time is of the essence. This happens if:

  • specific contractual provision (very unusual)
  • by implication from surrounding circumstances (e.g. sale of a business as a going concern where delay can have material and adverse effect on business) or
  • after correct service of notice to complete

SCPC 9.1.1 - time not of notice until notice to complete is served

if time not of essence, breach is only breach of warranty, actionable in CL damages and no rescission

43
Q

options if 1 side fails to complete

A

SERVE NOTICE TO COMPLETE (SCPC 9.8)

  • CREATES final date for completion
  • makes time of the essence in respect of this date
  • requires parties to complete within 10 working days of service of notice (excl. day of service - SCPC 9.8.2)
  • ALSO requires B to pay shortfall where deposit on exchange was less than 10% (SCPC 9.8.3)

ONCE 10 FULL WORKING DAYS EXPIRES, party serving notice has RIGHT to rescind (doesn’t have to though)

  • contractual compensation continues to be payable until transaction actually completes but is not payable if contract is actually rescinded (if rescinded, CL claim for damages)
44
Q

serving a notice to complete

A

any time after latest time for completion (SCPC 9.8.1)

SCPC 1.3 - can be by post (or fax, or email if authorised by contract)

SCPC 1.3.5 - if received after 4pm on working day, treated as received next working day

SCPC 1.3.7 - governs times of service

45
Q

failiure to comply with notice

A

SCPC 10.5/10.6

S may rescind the contract and

  • forfeit deposit and accrued interest
  • resell prop and any contents incl. in contract
  • claim damages for breach of contract at CL
  • retain rights/remedies under CL (e.g. SP)

B may rescind (if it was B who served) and:

  • demand repayment of deposit
  • and accrued interest
  • B retains rights/remedies under CL

NEITHER ENTITLED TO CONTRACTUAL COMPENSATION UNDER 10.3 - losses must be pursued via court action

46
Q

misrepresentation

A

if there are misrepresentations that B thinks merits reduction in price/compensation, it might not want to proceed

if S misrepresented, S may be liable for breach of contract under SCPC 10

  • material diff: damages
  • can rescind and damages if error/ommisison is made by S as a result of fraud, recklessness, substantial diff in quality, quantity or tenure between actual prop and that represented by S

(wouldn’t need to serve notice to complete - just notice to rescind and contract immediately rescinded)

47
Q

deposits

A

SCPC 3.2.2 - S’s solicitor holds it as stakeholder (and pays seller accrued interest at completion)

(deposit not released to S until completion or contract is rescinded)

alternative: S’s solicitor holds as agent for S (available to S from moment of exchange - this means B might find it hard to recover if rescind) (normal client account rules applies)

prop (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions