Completion Flashcards
Pre-completion steps
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
When does completion usually happen?
2 weeks after exchange
Pre-completion searches - Why make them
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
Pre-completion search of title
There are two types of pre-completion search depending on whether title to the property is registered or unregistered
Pre-completion search of title - Registered title
A Land Registry search should be made against the title number
to see if any new entries have been made since the ‘search from’ date. OS1 if it is whole and OS2 for part, both give you a priority period of 30 days.
Pre-completion search of title - Registered title - Buying with a mortgage
The application for a Land Registry search should be in the name of the lender and not the
buyer.
Pre-completion search of title - Unregistered land
A land charges search is made on a form K15.
Checking for buy’er solvency on behalf of the lender - Registered
Land charges search against the name of the buyer
Checking for buy’er solvency on behalf of the lender - Unregistered
The solicitor will already be making a land charges
search against the seller so the name of the buyer will be added to the
name to be searched against on form K15.
Company search
The solicitor acting
for a buyer purchasing from a company should carry out a further company search prior to
completion. A company search will reveal whether the seller is still in existence, whether it
is solvent, and whether it has created any fixed or floating charges.
Practical arrangements for completion
Need to agree:
- 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
Ensuring the finances are in order for completion - If the buyer is financing the purchase with the aid of a mortgage
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 OS1 in the name of the lender
4) An executed but not completed mortgage deed
What happens at completion?
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
Ways to complete a property sale and purchase transaction
2 ways:
1) Completion in person
2) Completion by post
Completion in person
Requires one solicitor – usually buyer’s solicitor – to attend the office of the other solicitor. 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
Completion by post
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.
Post-completion steps - Discharge of the seller’s mortgage
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.
Post-completion steps - Stamp duty land tax and LTT
SDLT must be paid within 14 days of completion and LTT must be paid within 30 days.
Remedies for delayed completion - General completion date
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
Post-completion steps - Registration of the new charge at companies house
Only if the buyer is a company. Will have to register within 21 days of its creation.
Remedies for delayed completion - Compensation
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.
Remedies for delayed completion - Damages
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.
Remedies for delayed completion - Notice to complete
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.
