5 - Completion Flashcards
What steps must the seller and buyer take from pre-completion to completion?
Seller: – Draft/approve Transfer Deed (TR1) – Rely to Completion Information – Prepare for completion – COMPLETION
Buyer: - Draft/approve Transfer Deed (TR1) – Requestion Completion Information – Pre-Completion Searches – Prepare for Completion - COMPLETION
What is on the buyer’s solicitors checklist before completion?
- Draft the transfer deed for the seller’s solicitor’s approval
- Once approved by the seller’s solicitor, arrange for the buyer to sign if it contains indemnity covenants (or any other obligation on the part of the buyer)
- If the buyer is taking a mortgage loan, arrange for the buyer to execute the legal charge
- Send requisitions on title to the seller’s solicitor
- Carry out relevant pre-completion searches
- Send certificate of title to the lender, and request the loan advance in time for completion (usually to arrive the day before)
- Send the buyer a statement of money needed to complete the purchase
- Stamp Duty Land Tax form approved by client
What is on the seller’s solicitors checklist before completion?
- Approve the transfer deed drafted by the buyer’s solicitor
- Arrange for the transfer to be executed by the seller
- Reply to requisitions on title
- Request a redemption statement from the seller’s lender (if any)
- In a residential sale, ask the seller or agent to take final meter readings
Who drafts the transfer deed?
Traditionally, the seller’s solicitor drafted the contract, and the buyer’s solicitor drafted the transfer deed.
This is still the default position taken in the Standard Conditions of Sale (SCS) and Standard Commercial Property Conditions (SCPC).
In recent years, it has become common for the seller’s solicitor to draft the transfer at the same time as the contract, and for the draft transfer to be annexed to the contract in approved form.
What form must be transfer of unregistered and registered land be in?
Must be in the form of a deed (s52, Law of Property Act 1925).
Registered Land:
Land registry forms must be used, including:
- TR1 – the most common, this transfers the whole of a freehold or leasehold title
- TP1 – this is used for the transfer of part only of a registered title
- TR5 – this is used for the transfer of a portfolio of registered titles (and may include unregistered titles
Unregistered land:
Unregistered title may still be transferred in the form of a conveyance, and could even be written in copperplate on parchment.
In practice, it is usual to use the Land Registry form TR1, which can be used for unregistered land as well. Purchase will trigger first compulsary registration of the land.
How do you complete Panels 1 to 12 of the TR1 form?
Panel 1 – Title number:
For registered property, enter the title number(s).
For unregistered property, leave this panel blank.
Panel 2 – Property:
Provide a brief description of the property (usually the address found in official copies or root of title).
Panel 3 – Date:
Leave this blank until completion as it is handwritten on completion to finalise the deed.
Panel 4 – Transferor(s):
Typically the registered proprietor(s).
If the seller’s name has changed (e.g., marriage), the marriage certificate must be provided. The buyer’s solicitor will need this proof for the Land Registry application.
If a second trustee is appointed for a sole surviving tenant in common, their details go here.
If the transferor is a company, include the company’s registered number.
(If the second trustee is not appointed in the TR1, a separate deed of appointment is needed to send to the Land Registry post-completion of the TR1.)
Panel 5 – Transferee(s):
Insert the buyer’s full name (maximum of four people or companies).
Panel 6 – Address for service:
Insert the buyer’s address (usually the property’s address for residential buyers).
An email address can also be provided for notices related to the property.
Panel 7 – Transfer wording:
The pre-set wording ‘The transferor transfers the property to the transferee’ is included and cannot be amended.
Panel 8 – Consideration:
Tick the appropriate box based on:
- The transferee paying a sum of money (enter the figure).
- No monetary consideration (e.g., a gift).
- Other receipts (e.g., swapping properties or paying off a debt).
Panel 9 – Title guarantee:
Tick either full title guarantee or limited title guarantee, usually based on the contract.
Panel 10 – Declaration of trust:
Skip if both legal and beneficial title are being transferred to a sole transferee.
Choose between beneficial joint tenants, tenants in common, or other arrangements (e.g., tenants in common with unequal shares).
Panel 11 – Additional provisions:
Include anything not covered in Panels 1 to 10, such as indemnity covenants or the appointment of a second trustee for a sole surviving tenant in common.
Panel 12 – Execution:
Provides space for attestation clauses to execute the TR1 as a deed.
The transferor must always execute the TR1, and the transferee(s) must execute if:
- They are tenants in common or holding the property on trust.
- They are providing an indemnity covenant or any other obligation.
How do you complete other transfers, such as the TP1 and TR5 forms?
TP1 – Transfer of part:
Used for transferring part of the transferor’s title.
A plan typically identifies the part being transferred, referred to in Panel 3.
Panel 12 (similar to Panel 11 of TR1) contains additional provisions such as:
- Rights granted for the benefit of the property.
- Rights reserved for the benefit of other land.
TR5 – Transfer of portfolio of titles:
Used when transferring multiple properties.
Panel 1 includes a table for listing multiple properties and their title numbers (if registered).
Example: Nicholson Hotels Limited transferring 50 hotels to a property holding company, with each hotel’s description and title number included in Panel 1.
How is the transfer deed executed by an individual?
An individual signs the transfer in the presence of an independent witness who also signs and prints their full name and address (s1(3)(a)(i), Law of Property (Miscellaneous Provisions) Act 1989).
The transfer is considered delivered (comes into effect) when it is dated, usually by the transferor’s solicitor.
Example: Ravi executes a transfer. His witness is his next door neighbour Jason. He signs in the presence of Jason for the transfer deed to be properly executed.
How is the transfer deed executed by a company?
There are different options for a company executing a deed (s44, Companies Act 2006)
It is best to check if the company has a policy on executing deeds, so that you know which attestation clause is appropriate
Options include:
- Company seal attached in accordance with the company’s articles of association, eg, a signature by one or two authorised signatories
- No company seal, but signed by two directors or one director and the company secretary
- Signed by one company director and witnessed by an independent witness
- Signed by a senior employee (not a director or the company secretary) who is authorised under a power of attorney
What are the steps taken by the buyer’s and seller’s solicitors when agreeing and executing the deed?
- Buyer’s solicitor drafts transfer deed
- Seller’s solicitor either amends draft for buyer’s approval, or approves the transfer as drafted
- Once agreed, seller’s solicitor sends the engrossment (final) transfer deed to the seller for execution (buyer’s solicitor does likewise only if the buyer needs to execute)
- The seller’s solicitor and, if appropriate, the buyer’s solicitor, hold the executed but undated transfer deed ready for completion
Provide a summary of the transfer deed.
- One important step is agreeing and arranging the execution of the transfer deed
- The TR1 is used for most transactions, registered or unregistered
- Drafting the TR1 involves completing the relevant panels – mostly these will follow the contract, and there is not a lot of discretion
- The Land Registry has other transfer forms for other specific circumstances
- Companies have more options for executing deeds than individuals, so the attestation clause may depend on the company’s policy
- The transfer deed is agreed by the parties’ solicitors, and then executed, and then held by the relevant solicitor undated ready for completion
What is the purpose of pre-completion searches and what are they concerned with?
Pre-compeltion searches are mainly to check and protect the buyer’s (and lender’s if appropriate) ability to obtain title to the property as per the contract.
While some issues that might arise would be a breach of contract, it is better to identify these before completion rather than rely on the ability to sue afterwards.
Pre-completion searches are concerned with (1) the property (2) the parties.
What pre-completion searches are carried out on registered land?
The buyer’s solicitor carries out a** search with priority** (form OS1 or OS2 for part of land) at the Land Registry against the title number:
- This updates the official copies that were initially provided, and identifies any changes that have been made.
- It also confers a priority period of 30 working days in favour of the person searching.
- If the buyer’s solicitor submits the application to register the transfer within that priority period, the buyer’s transfer will take priority over any other application, even if lodged before the buyer’s application.
Example: If a buyer’s solicitor carries out an OS1 search on 1 June, and completion takes place on 5 June, but the seller dishonestly remortgages the property, the priority search protects the buyer’s application. The buyer’s transfer will take precedence over the lender’s charge, provided the buyer registers within the priority period.
What pre-completion searches are carried out on unregistered land?
The buyer’s solicitor carries out a land charges search of the Land Charges Registry (Form K15).
This identifies any incumbrances or other adverse matters registered against the owner/seller of the unregistered land.
It confers a priority period of 15 working days.
Unlike with the OS1 search, it is only necessary to complete the purchase (not submit the registration application) within the priority period.
What is meant by the ‘priority period’ in relation to pre-completion searches.
The priority period for pre-completion searches refers to a specific time window during which the results of a priority search give the applicant protection against third-party dealings with the property.
- During this time, no other party can register a competing interest in the property, ensuring that the buyer’s or lender’s transaction takes precedence in the Land Registry.
- The search effectively “freezes” the register, meaning the applicant’s interest has priority over any subsequent applications to alter the register that are submitted within this period.
- This process is crucial to secure the buyer or lender’s interest before completion of the transaction.
From which date are pre-completion searches run from?
- As the OS1 search updates the official copies that the buyer’s solicitor has seen, the buyer’s solicitor provides the Land Registry with their date, and this is the date from which the search is run.
- If nothing has changed since that date, then the search will come back clear; otherwise updated official copies will be sent to the searcher.
Example: The buyer’s solicitor is lodging an OS1 search on 1 June, ready for a completion date of 5 June.
The buyer’s solicitors official copies are dated 10 February, so the buyer’s solicitor will use this as the ‘search from’ date for the search.
The search comes back clear (ie, with no changes since that date) and priority of 30 working days from 1 June. As long as the buyer’s solicitor applies for registration within this period, the buyer’s transfer takes priority over any intervening applications.
What is the significance of conducting a priority search under the SCS or SCPC?
Under the SCS or SCPC, the seller should disclose any adverse issues that may have resulted in changes to the official copies originally provided.
If the seller does not, the buyer may have a claim for:
- Damages for breach of contract and/or misrepresentation, or even to rescind the contract.
A buyer’s solicitor must always ensure that the buyer’s registration is protected by priority at the Land Registry.
What are the consequences if the buyer’s solicitor fails to conduct a priority land search under the SCS or SCPC?
Failure to carry out a priority search can result in significant consequences, such as:
- Delays and costs associated with correcting any adverse entry (e.g., correspondence with the seller’s solicitor or litigation).
- Professional negligence on the part of the conveyancing solicitor.
How does the priority period work for land charges searches?
Land Charges Search:
- The priority period is 15 working days.
- Priority is obtained by completing the transaction within the period, not by applying for registration.
- Land charges search should be carried out just before completion against the seller to ensure a sufficient priority period to complete the purchase.
How does the priority period work for solvency searches/searches against a company?
- A bankruptcy search (Form K16) should be carried out against the buyer to protect the lender.
- If the buyer is a company, a company search should be carried out to check for pending insolvency or the crystallisation of a floating charge.
- No priority period exists for company searches, so they should be carried out as late as possible and updated if necessary.
- If the seller is a company, a company search should be conducted immediately before completion to check for insolvency or crystallisation of a floating charge.
Provide a summary of pre-completion searches.
- Pre-completion searches are much more limited than pre-exchange searches, and are to check and protect the buyer’s and lender’s ability to register their transfer and legal charge.
- With registered land, an OS1 search with priority should be carried out.
- With unregistered land, an updated land charges search against the seller should be carried out.
- A solvency search will be needed against the buyer if the buyer is relying on a mortgage.
- A solvency search against the seller is not recommended for registered land, and is included in a land charges search for unregistered land.
- A companies search is recommended for a seller and/or a buyer that is a company.
What are requisitions on title?
Historically, ‘requisitions on title’ were specific questions that the buyer’s solicitors raised about the title after reviewing the deeds.
They are now used more generally to refer to the questions that the buyer’s solicitor needs answering before completion. They deal with relevant undertakings required from the seller’s solicitor.
What form do requisitions on title take for residential and commercial transactions?
Residential transactions:
Requisitions on title for residential transactions are usually in the form of Law Society TA13. Firms can also use their own in-house version. The form is also headed ‘Completion information and undertakings’ which is a more accurate description than ‘requisitions on title’.
Commercial transactions:
Requisitions on title for commercial transactions may be in the firm’s own precedent form, or the Commercial Property Standard Enquiries (CPSE) form SCR (Solicitor’s completion requirements).
The forms are simialr in content and form.
What is the content of TA13 and what key completion information and undertakings does it include?
Vacant possession: Inquires about arrangements for collecting keys, such as whether they are left with agents. If there is a rent-paying tenant, it asks for authority for the tenant to pay rent to the buyer after completion.
Deeds and documents: For unregistered property, requests a list of deeds and documents to be sent on completion.
Completion: Confirms that completion will take place according to the Law Society’s Code for Completion by Post, which sets out expectations and undertakings of the solicitors.
Money: Requests the seller’s solicitor’s client account details to transfer the completion funds, and the exact amount payable on completion.
Mortgages and charges: Asks the seller’s solicitor to list any mortgages on the property and confirm their undertaking to redeem them on completion.
What is the significance of the seller’s solicitor’s undertaking to redeem the mortgage on completion?
The buyer’s solicitor seeks assurance that the mortgage will be cleared from the property promptly after completion so the buyer’s transfer can be registered.
Ideally, the mortgage would be redeemed before completion, but this is often not possible as the seller relies on sale proceeds to pay it off.
The seller’s solicitor undertakes, under the Law Society Code for Completion by Post, to redeem any mortgages notified to the buyer’s solicitor.
The undertaking is not to discharge the charge, as this is beyond the solicitor’s power.
Once the loan is redeemed, the lender should either discharge the charge electronically at the Land Registry (most common) or provide a form DS1 to discharge the charge.
For large transactions, the buyer’s solicitor may insist the seller’s solicitor obtains an executed but undated DS1 before completion.
Provide a summary on requisitions on title.
- Requisitions on title are simple questions to elicit certain information that the buyer’s solicitor needs to complete.
- In residential transactions, Law Society Form TA13 should be used.
- In commercial transactions, CPSE SCR or the firm’s own precedent may be used.
- The replies are generally straightforward, but care must be taken as they contain undertakings, and both solicitors should be familiar with the Law Society Code for Completion by Post.
- An important part of the replies is the seller’s solicitor’s undertaking to redeem mortgages against the seller’s title, as this is necessary for the buyer’s solicitor to be able to register the buyer’s transfer.
What does the process of completion involve?
Traditionally, solicitors would visit each other’s offices to complete the transaction in person, generally reserving Friday for this purpose.
Completion now almost always happens by post, which is facilitated by the Law Society Code for Completion by Post. It is a voluntary procedure.
Although completion can take place on any working day, most residential transactions still take place on Friday.
This gives a buyer the weekend to settle in, and the seller the weekend to spend some of the sale proceeds.
What is the purpose of the Law Society Code for Completion by Post, and what are the seller’s solicitor’s undertakings under the Code?
The Law Society Code for Completion by Post allows solicitors to complete a transaction without physically attending each other’s offices by treating the seller’s solicitor as an agent for the buyer’s solicitor.
The seller’s solicitor provides undertakings under the Code that assure the buyer’s solicitor that, once the necessary funds are transferred, completion will occur, or the funds will be returned if not.
After completion, the seller’s solicitor holds the transfer deed and any other documents on behalf of the buyer’s solicitor.
The seller’s solicitor undertakes to send the transfer deed and other documents to the buyer’s solicitor as soon as possible, and no later than the end of the working day after completion.
How does a typical completion work under the Law Society Code for Completion by Post?
Day before completion: The buyer’s solicitor ensures funds are collected from the buyer and the mortgage lender, in compliance with paragraph 5 of the Code.
The seller’s solicitor confirms the seller is ready to complete and obtains a redemption statement from the mortgage lender. The seller’s solicitor holds the executed but undated transfer deed.
Completion day (morning): The buyer’s solicitor sends the balance of the purchase price to the seller’s solicitor’s client account via telegraphic transfer (TT).
The seller’s solicitor confirms receipt of the funds and dates the transfer deed, which completes the transaction. The buyer’s solicitor dates the legal charge if acting for the lender.
Completion day (lunchtime): The seller’s solicitor informs the estate agent to release the keys to the buyer and arranges for the mortgage to be redeemed. The buyer’s solicitor informs the buyer that completion has occurred, allowing the buyer to collect the keys.
Completion day (after lunch): The seller’s solicitor undertakes to send written confirmation of completion, along with the executed transfer deed and other documents, to the buyer’s solicitor by the end of the following working day. The seller’s solicitor also sends the sale proceeds (minus any costs) to the seller.
