Completion

Question 1

Pre-completion steps

Answer 1

After exchange the solicitors must tell their client that exchange has taken place and comply with any undertakings given in the course of any telephone exchange. Main tasks of solicitors in pre-completion stage:
1) Preparation of the transfer deed
2) Pre-completion searches
3) Making practical arrangements for completion
4) Ensuring the finances are in order for completion

Question 2

When does completion usually happen?

Answer 2

2 weeks after exchange

Question 3

Pre-completion steps - Form of transfer deed and formalities for execution

Answer 3

Transfer of a legal estate must be by deed. To be valid a deed must:
1) Make it clear that it is a deed
2) Be signed by the parties
3) Be delivered

Question 4

Pre-completion steps - Form of transfer deed and formalities for execution - How can a company execute a deed?

Answer 4

They can execute a deed in one of three ways:
1) Using the company seal in accordance with the articles of association
2) Having it signed by a director and the secretary or by two directors of the company provided that the deed is expressed to be executed by the company
3) Having it signed by a single director in the presence of a witness who then attests that signature

Question 5

Pre-completion stage - Pre-completion searches - Why make them

Answer 5

Carried out for 4 reasons:
1) To make sure that the seller has not further encumbered the title since investigation of title took place
2) To check the financial circumstances of the borrower when acting for the lender
3) To gain priority for the buyer and the lender over anyone else making an application before the buyer applies to register the change of ownership at the land registry
4) If the seller is a company to check that the company has not gone into liquidation before the balance of the purchase price is paid over on completion

Question 6

Pre-completion stage - Pre-completion search - Types of search

Answer 6

There are two types of pre-completion search depending on whether title to the property is registered or unregistered

Question 7

Pre-completion - which form to do a search of the register for registered title?

Answer 7

OS1

Question 8

Pre-completion - which form to do a search of the register for unregistered title?

Answer 8

K15

Question 9

Pre-completion - which form to do a bankruptcy search?

Answer 9

K16

Question 10

Pre-completion stage - Pre-completion search - Types of search - Registered land - priority period

Answer 10

land registry search should be made against the title number to see if any new entries have been made since the search from date that is the date on which the official copies were produced. 30 working day priority period the buyer will take free from any such entries, provided that they submit their application for registration by 12 noon on the last day of the priority period

Question 11

Pre-completion stage - Pre-completion searches - Types of search - Unregistered land - priority period

Answer 11

confers a priority period of 15 working days from the date of the result, during which time the searcher will take free of any entries made on the register between the date of the search and the date of completion, provided that completion takes place during the 15 working day period

Question 12

Pre-completion stage - Practical arrangements for completion - Completion information form (TA13)

Answer 12

The buyer and seller need to agree the practicalities for completion and this is done using a completion information form. It asks the seller to confirm important information including:
- Arrangements for handing over the keys
- The place and method of completion
- The documents to be handed over at completion
- The exact amount payable by the buyer on completion

Question 13

Pre-completion stage - Ensuring the finances are in order for completion - If the buyer is financing the purchase with the aid of a mortgage

Answer 13

Before releasing the mortgage advance a lender will expect to receive:
1) A certificate of title to confirm that the property is adequate security for the loan being advanced
2) A solvency search against the borrowers
3) A clear OS1R in the name of the lender
4) An executed but not completed mortgage deed

Question 14

Pre-completion stage - Ensuring the finances are in order for completion - Financial statement

Answer 14

The solicitor for the buyer will need to send a Financial Statement to the client advising the client of the funds needed to complete. This will show the amount to be forwarded by the buyer to its solicitor and will include the balance of the purchase price, any SDLT/LTT due, the registration fee, the amount outstanding for any other disbursements, usually the solicitor’s fees and any other amount owing, eg a restrictive covenant insurance policy premium

Question 15

Methods and effect of completion - What happens at completion?

Answer 15

At completion the buyer’s solicitor will send the balance of the purchase price and release the deposit paid on exchange to the seller. On receipt of the completion money, the seller’s solicitor will complete the transaction by dating the TR1. Once the TR1 has been dated, the lender’s solicitor will need to date the mortgage deed

Question 16

Methods and effect of completion - Ways to complete a property sale and purchase transaction

Answer 16

2 ways:
1) Completion in person
2) Completion by post

Question 17

Methods and effect of completion - Ways to complete a property sale and purchase transaction - Completion in person

Answer 17

Requires one solicitor – usually buyer’s solicitor – to attend the office of the other solicitor. At the completion meeting the Buyer’s solicitor will check any title documents against the evidence of title previously sent to them, which is only of real significance in unregistered land. In return for receiving the completion money, the Seller’s solicitor will hand over title documents and other documents relating to the property, such as planning permissions, and guarantees or insurance policies. The Seller’s solicitor will then arrange for the release of the keys to the property by whoever is holding them

Question 18

Methods and effect of completion - Ways to complete a property sale and purchase transaction - Completion by post

Answer 18

Involves the seller’s solicitor acting as the agent of the buyer’s solicitor for the purpose of carrying out the completion procedure. It is important for the buyer’s solicitor to set out in writing precisely what the seller’s solicitor is to do on their behalf. The buyer’s solicitor is asking the seller’s solicitor to do whatever it is that they would have done if they could have attended the completion in person. On receiving the completion money, the seller’s solicitor will then carry out the instructions and complete the transaction. The seller’s solicitor should then contact the buyer’s solicitor to inform them that completion has taken place. The documents which would have been handed over to the buyer’s solicitor are instead sent by first-class post or document exchange

Question 19

Post-completion steps - Discharge of the seller’s mortgage

Answer 19

In many cases the buyer will have agreed to allow the seller’s solicitor to discharge the mortgage after completion using the money received at completion. Alternatively the seller’s solicitor may ask the buyer’s solicitor to send the amount required to redeem the mortgage direct to the lender on the day of completion.

Question 20

Post-completion steps - Stamp duty land tax and LTT

Answer 20

The seller’s solicitor will send the TR1 to the buyer’s solicitor who must then arrange for any SDLT or LTT to be paid. SDLT must be paid within 14 days of completion and LTT must be paid within 30 days.

Question 20

Remedies for delayed completion - General completion date

Answer 20

If the exchanged contracts don’t contain the date for completion then SC and SCPC provide that the completion date is 20 working days after the date of the contract. The money due must be paid before 2pm on the day of completion and if it is not, completion is to be treated as taking place on the next working day as a result of the buyer’s default

Question 21

Post-completion steps - Registration of the new charge at companies house

Answer 21

Only if the buyer is a company. Will have to register within 21 days of its creation.

Question 21

Remedies for delayed completion - Compensation

Answer 21

Compensation is calculated at the contract rate specified in the contract on the balance of the purchase price less any deposit paid for the period between the contractual completion date and the date of the actual completion.

Question 22

Remedies for delayed completion - Damages

Answer 22

Failure to complete on the contractual completion date is a breach of contract and the seller could make a claim for breach of contract under normal contractual principles. Can also claim for additional losses.

Question 23

Remedies for delayed completion - Notice to complete

Answer 23

If the delay is not likely to be resolved quickly either party may consider serving a notice to complete. This can only be served after the contractual completion time on the contractual completion date. Once served it gives the other party 10 working days to complete, if they fail to do this then the party who served notice can rescind the contract.

Question 24

What form is used ti release part of the land which is subject to a registered charge

Answer 24

DS3