Chapter 6: Completion Flashcards
1 Preparing for completion and the transfer deed
1.1 Preparing for completion
Exchange can be a tense time for solicitors, as it ends the last chance for the parties to pull out if
anything looks wrong. Completion, on the other hand, often tends to be more relaxed, and perhaps anti-climactic, especially when a lengthy or complex transaction reaches completion. However, it still important to be prepared to avoid the risk of failing to complete and, again, checklists may help.
1.1.1 Buyer’s solicitor’s 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) - 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
1.1.2 Seller’s solicitor’s 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
1.1.3 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).
However, in recent years, it has become quite 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.
1.2 Form of the transfer
A transfer of land must be in the form of a deed (s52, Law of Property Act 1925)
Registered land
Land Registry forms must be used:
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.
1.3 Completing panels in the TR1
Panel 1 – title number
(Registered property) Enter the title number or numbers.
(Unregistered property) Leave this panel blank.
Panel 2 – property
Enter a brief description of the property. For most properties this will be the address which can be found in the official copies or root of title.
Panel 3 – date
The date is handwritten in on completion, which has the effect of completing the deed, so it should be left blank until completion.
Panel 4 – the transferor(s)
This will usually be the registered proprietor(s) of the property.
If the seller’s name is different than it was when they bought the property (eg, due to marriage or civil partnership), the marriage
certificate should 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 as well.
If the transferor is a company, the company’s registered number should be provided.
Panel 5 – the transferee(s)
Insert the buyer’s full name. A maximum of four people or companies can be named.
Panel 6 – address for service
Insert the buyer’s address here. Unlike the contract, where the parties’ addresses are their addresses before completion, here a
residential buyer will put the address of the property. An email address can also be provided. The Land Registry will use the address for service to direct any notices relating to the property
Panel 7 – the transfer wording
This panel contains the wording ‘The
transferor transfers the property to the transferee’ which operates to transfer title. It cannot be amended.
Panel 8 – consideration
There are three tick box options which are
roughly in order of how often they are used (common first)
(a) The transferee is paying a sum of money for the property – the figure is inserted
(b) The transferee is giving no monetary consideration or anything that has a monetary value – for example, a gift, or from existing trustees to new trustees
(c) Other receipts – less frequently used. Examples might be where parties swap properties (this used to have stamp duty saving advantages) or where the property is being transferred to pay off a debt.
Panel 9 – title guarantee
There are tick boxes for full title guarantee and limited title guarantee. This choice will
generally be governed by the contract (see Week 4). If the transferor is giving neither title
guarantee, the tick boxes are left blank
Panel 10 – declaration of trust
If both legal and beneficial title are being transferred to a sole transferee, then you can
skip this panel. There are tick boxes for the transferees to hold as beneficial joint tenants or tenants in
common. The third option covers all other possibilities, which may be tenants in common in unequal
shares, or may be to hold the property on trust for a third party.
Panel 11 – additional provisions
Anything that is not relevant to panels 1 to 10 but needs to be included in the transfer deed
is included in this panel.
This could be an indemnity covenant for positive covenants, or new covenants and easements (although these are more common in transfers of part). If the transferor is a sole surviving tenant in common, the appointment of a second trustee
would appear here.
Panel 12 – execution
Provides space for the attestation clauses that allow the parties to execute the TR1 as a deed.
These will depend on the parties and
circumstances. The transferor must always execute the TR1.
The transferee(s) must execute the TR1 if:
* if they are tenants in common or agree to hold the property on trust for someone else
in Panel 10
* they are providing an indemnity covenant, or any other obligation in Panel 11
1.4 Other transfers – TP1 and TR5
TP1 – transfer of part
The TP1 is used for a transfer of part of the transferor’s title. Usually the part is identified by a plan attached to the TP1, and Panel 3 refers to the plan. The ‘additional provisions’ panel, Panel 12 (similar to Panel 11 in the TR1) provides headings likely to
be appropriate, such as ‘Rights granted for the benefit of the property’ and ‘Rights reserved for
the benefit of other land’.
TR5 – transfer of portfolio of titles
The main difference is that Panel 1 contains a table where a number of properties and their title numbers (if registered) can be set out.
Example
Nicholson Hotels Limited want to transfer 50 hotels to a property holding company. The TR5
would be used, and the description and title number of each hotel included in Panel 1.
1.5 Executing the transfer deed – 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)
Considered delivered
The transfer is considered delivered (ie, comes into effect) when it is dated, usually by the transferor’s solicitor.
1.6 Executing the transfer deed - 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, and signed by two directors, or one director and the company secretary
- 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
1.8 Summary
- Preparing for completion is less involved than preparing for exchange of contracts, but it is still important to make sure everything is ready
- 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
1.8 Summary
- 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
2 Pre-completion searches
2.1 Purpose of pre-completion searches
We have looked previously at pre-exchange searches, which form part of the investigation of the property, may be numerous, and may reveal all sorts of matters that may or may not deter a buyer from proceeding to exchange.
By contrast, pre-completion 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
2.1 Purpose of pre-completion searches
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
2.2 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.
2.2.1 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.
2.2.1 Unregistered land
If the buyer’s solicitor registers the transfer with the Land Registry within the priority period conferred by the search, then the buyer’s transfer will take priority over any other applications, even if they were lodged before the buyer’s transfer.
2.3 Search from date and priority period
- 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.
Example
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.
2.4 Priority in operation
Under 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. However, a buyer’s solicitor should never rely on this, and should always ensure that registration is protected by priority at the Land Registry.
2.4 Priority in operation
If the search were not carried out, then it is likely to cost time and money to put right any entry (at
best correspondence with the seller’s solicitor, and at worst litigation against a seller who is unable
to pay damages). This would be a clear case of professional negligence on the part of the conveyancing solicitor. It is easy for a busy solicitor to forget the OS1 search, particularly if there is a delay to completion
– in the majority of cases, the search result would be clear anyway, but it is not worth the risk!
Example
Continuing the previous example, where the buyer’s solicitor carried out an OS1 search on 1 June,
completion takes place as scheduled on 5 June. In the meantime, however, the seller has dishonestly applied to remortgage the property with a
new lender.
Example
If the new lender’s solicitor applies to register a charge against the property on 7 June, the Land Registry will advise that there is a prior application, ie, the buyer’s transfer. Only if the buyer fails to register within the priority period will the lender’s solicitor be able to register the charge. In practice, the lender’s solicitor would take out their own OS1 search before completing the
mortgage, which would show there is an intended sale, and the lender’s solicitor would refuse to complete the mortgage.
Example
If the buyer’s solicitor had not carried out the priority search, then the new lender’s charge would take priority, and the buyer would not be able to register the transfer.
2.5 Land charges search
Similarly, the land charges search gives priority (although only 15 working days) . Any entry against the landowner during the priority period, does not affect the ability of the buyer to register the transfer .
2.5 Land charges search
In the chapter dealing with investigation of unregistered title, we discussed how the land charges
search is carried out against all owners in the chain of title . For the purposes of priority, however,
it is unnecessary to update land charges searches against previous owners, as any entries that may affect them after their period of ownership are not relevant to the property.
2.5 Land charges search
The land charges search against the seller, however, should be carried out just before completion to give a sufficient priority period to lodge the application for first registration
2.6 Solvency searches
When acting for buyer and lender, the buyer’s solicitor must carry out a bankruptcy search (Form K16) against the buyer to protect the lender. Like a land charges search, it confers a priority period of 15 working days.
It is not usual practice to carry out a bankruptcy search against an individual seller. The buyer can (and should) rely on the OS1 search for registered land. For unregistered land, bankruptcy is covered by the land charges search.
2.6 Solvency searches
If the buyer is a company, then a lender will want a company search carried out against the buyer to check that there is no pending insolvency or crystallisation of a floating charge.
A company search gives no priority period, so should be carried out as late as possible and updated if necessary. If the seller is a company, then the buyer’s solicitor should carry out a company search immediately before completion.
2.6 Solvency searches
This checks that there is no pending insolvency or crystallisation of a floating charge. Again, there is no priority period.
2.7 Summary
- 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.
2.7 Summary
- 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.
3 Requisitions on title
In the last section, we looked at pre-completion searches, which are much simpler than preexchange searches.
Requisitions on title are similar to pre-exchange enquiries, and again, they are much simpler and just cover the information necessary for completion
3.1 Form and purpose of requisitions on title
- Historically, ‘requisitions on title’ were the specific questions that the buyer’s solicitor raised about the title after reviewing the title deeds.
- However, they are now used more generally to refer to the questions that the buyer’s solicitor needs answering before completion.
3.1 Form and purpose of requisitions on title
- Requisitions on title for residential transactions are usually in the form of Law Society TA13. The form is also headed ‘Completion information and undertakings’ which is a more accurate description than ‘requisitions on title’.
- 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)
3.1 Form and purpose of requisitions on title
- The forms are similar in content, if not in form, so we will just look at TA13 (Completion information and undertakings)
3.2 Content of TA13 (completion information and undertakings)
1 Vacant possession
Asks about arrangements for collecting the keys; for example, whether they are left with
the agents. If there is a rent-paying tenant, then asks for an authority for the tenant to pay the rent to the buyer following completion.
2 Deeds and documents
For unregistered property, asks for a list of deeds and documents to be sent on completion
3 Completion
Asks for confirmation that completion will take place according to the Law Society’s Code for Completion by Post. Similar to Law Society Formula B for exchange, the Code for Completion by Post sets out expectations and undertakings of the solicitors on completion.
4 Money
Asks for the seller’s solicitor’s client account details (to send the money), and for the exact amount payable on completion.
5 Mortgages and charges
Asks the seller’s solicitor to list any mortgages secured on the property and confirm their undertaking to redeem them on completion
3.3 Seller’s solicitor’s undertaking to redeem mortgage
The buyer’s solicitor wants to ensure that the mortgage is cleared from the property promptly after completion so that the buyer’s transfer can be registered.Ideally, this would be done before completion, but this is usually not possible, as the seller will rely on the sale proceeds to pay off the mortgage.
3.3 Seller’s solicitor’s undertaking to redeem mortgage
The seller’s solicitor undertakes in the Law Society Code for Completion by Post to redeem the mortgages (ie, pay in full) against the property which it will have already notified to the buyer’s solicitor. Note that the undertaking is not to discharge the charge, as this is not within the solicitor’s power.
3.3 Seller’s solicitor’s undertaking to redeem mortgage
On the loan being redeemed, the lender should either discharge the charge at the Land Registry
electronically (most common) or provide a form DS1 which can be produced to the Land Registry
to discharge the charge.The seller’s solicitor’s undertaking will be to forward the appropriate form
of discharge to the buyer’s solicitor once received by the seller’s solicitor.
With large value transactions, the buyer’s solicitor may insist that the seller’s solicitor obtains an executed but undated DS1 in advance of completion.
3.4 Summary
- 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.
3.4 Summary
- 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
