Completion

Question 1

A TR1 is today being drafted for the purchase of the whole of a registered title. Which one of the following best describes what should be put in Panel 3 (date) when the TR1 is drafted?

(a) 
The date of the contract (which has been exchanged).

(b) 
Todays’ date.

(c) 
The completion date specified in the contract (which has been exchanged).

(d) 
Nothing. Panel 3 should be left blank until completion.


Answer 1

(d) 
Nothing. Panel 3 should be left blank until completion.


The date in panel 3 is the date the TR1 is completed. It will be filled in by hand when the solicitors complete the purchase.Panel 3 is only filled in by hand when the solicitors actually complete the purchase (when the completion monies are received). This should be on the completion date which was specified in the contract however may not be eg if completion is delayed. The date in panel 3 is the date the TR1 is completed and not the date of the contract, which is the date of exchange.

Question 2

The registered proprietors on the official copies of a property being sold are Mr and Mrs Smith. They are joint owners and hold as tenants in common. Mr Smith has died. Mrs Smith’s solicitor is acting as the second trustee and the appointment has been made in panel 11 of the TR1. The buyer of the property is a company which changed its name a year ago.
Which one of the following best describes the documents which will need to be sent to the Land Registry post-completion with the completed TR1?

(a) 
The separate deed of appointment of the second trustee and the change of name certificate.

(b) 
The change of name certificate.

(c) 
Mr Smith’s death certificate, the separate deed of appointment of the second trustee and the change of name certificate.

(d) 
Mr Smith’s death certificate.
(e) 
Mr Smith’s death certificate and the change of name certificate.

Answer 2

(d) 
Mr Smith’s death certificate.

There is no separate deed of appointment to send as the second trustee was appointed in the TR1.The buyer’s change of name certificate does not need to be sent as the Land Registry only need evidence if the name of the seller is different from the name of the registered proprietor they have on the register of title.


Question 3

A company is selling a property to two individuals who intend to hold the property as tenants in unequal shares. Which one of the following would be the correct execution clause(s) to insert in panel 12 of the TR1?

(a) 
Transferor:
 Executed as a deed by [name of company]
acting by [a director and its secretary] [two directors]
Signature of Director: ……………
Signature of [Director] [Secretary]: ……
Transferee:
Signed as a deed by [full name of individual]
[signature]
Transferee:
Signed as a deed by [full name of individual]
[signature]


(b) 
Transferor:
Executed as a deed by [name of company]
acting by [a director and its secretary] [two directors]
Signature of Director: ……………
Signature of [Director] [Secretary]: ……
Transferee:
Signed as a deed by [full name of individual]
[signature]
In the presence of:…………[signature of witness]
[print in block capitals the full name and address of the witness]
Transferee:
Signed as a deed by [full name of individual]
[signature]
In the presence of:…………[signature of witness]
[print in block capitals the full name and address of the witness]


(c) 
Transferor:
Signed as a deed by [full name of individual]
[signature]
In the presence of:…………[signature of witness]
[print in block capitals the full name and address of the witness]
Transferor:
Signed as a deed by [full name of individual]
[signature]
In the presence of:…………[signature of witness]
[print in block capitals the full name and address of the witness]
Transferee:
Executed as a deed by [name of company]
acting by [a director and its secretary] [two directors]
Signature of Director: ……………
Signature of [Director] [Secretary]: ……
.

(d) 
Transferor:
Signed as a deed by [full name of individual]
[signature]
In the presence of:…………[signature of witness]
[print in block capitals the full name and address of the witness]


(e) 
Transferor:
Executed as a deed by [name of company]
acting by [a director and its secretary] [two directors]
Signature of Director: ……………
Signature of [Director] [Secretary]: ……

Answer 3

(c) 
Transferor:
Signed as a deed by [full name of individual]
[signature]
In the presence of:…………[signature of witness]
[print in block capitals the full name and address of the witness]
Transferor:
Signed as a deed by [full name of individual]
[signature]
In the presence of:…………[signature of witness]
[print in block capitals the full name and address of the witness]
Transferee:
Executed as a deed by [name of company]
acting by [a director and its secretary] [two directors]
Signature of Director: ……………
Signature of [Director] [Secretary]: ……


Both the transferor (seller) and both of the transferees (buyers) must execute the TR1. The transferor must always execute the TR1 and the transferees must execute if panels 10 (a declaration of trust to be completed if there is more than one transferee) and/or 11 (additional provisions eg an indemnity covenant) of the TR1 have been completed. Here panel 10 would have been completed as there is more than one transferee. The execution clauses set out are the appropriate ones for a company transferor and individual transferees.

Question 4

Which one of the following is the correct form of transfer for the purchase of the whole of an unregistered freehold estate?

(a) 
Conveyance signed under hand.

(b) 
TP1 executed by deed.

(c) 
TR1 executed by deed.
(e) 
TR1 signed under hand.

Answer 4

(c) 
TR1 executed by deed.

Section 52 of the Law of Property Act 1925 states that to transfer the legal estate in land a transfer must be by deed. Although the land is unregistered, purchase will trigger compulsory first registration of the land and so the Land Registry’s Form TR1 will be used as the Transfer Deed. A TP1 is used when only part of a registered title is being purchased.
As s 52 of the Law of Property Act 1925 states that to transfer the legal estate in land a transfer must be by deed, it cannot be signed under hand but needs the formality of being executed as a deed.


Question 5

What is on the buyer’s solicitor’s checklist pre-completion of a contract?

Answer 5

1. Draft transfer deed for seller’s solicitor’s approval
2. Once approved by seller’s solicitor, arrange for buyer to sign if it contains indemnity covenants (or any other obligation on the part of the buyer)
3. Send requisitions on title to seller’s solicitor
4. Carry out relevant pre-completion searches
5. Send certificate of title to the lender, and request the loan advance in time for completion (usually to arrive the day before
6. Send the buyer a statement of money needed to complete the purchase
7. Stamp Duty Land Tax form approved by client

Question 6

What is on the seller’s solicitor’s checklist pre-completion of a contract?

Answer 6

1. Approve transfer deed drafted by buyer’s solicitor
2. Arrange for transfer to be executed by seller
3. Reply to requisitions on title
4. Request redemption statement from seller’s lender (if any)
5. In residential sale: ask seller or agent to take final meter readings

Question 7

What land registry forms are used for registered land?

Answer 7

1. TR1: most common, transfers whole of freehold or leasehold title
2. TP1: used for transfer of part only of registered title
3. TR5: used for transfer of portfolio of registered titles (and may include unregistered titles)

Question 8

What are a company’s options in executing the transfer deed?

Answer 8

1. Company seal attached, and signed by two directors, or one director and the company secretary
   2. No company seal, but signed by two directors or one director and the company secretary
   3. Signed by one company director and witnessed by an independent witness
   4. Signed by a senior employee (not a director or the company secretary) who is authorised under a power of attorney

Question 9

What is the procedure leading up to execution of the transfer deed?

Answer 9

1. Buyer’s solicitor drafts transfer deed
2. Seller’s solicitor either amends draft for buyer’s approval, or approves the transfer as drafted
3. 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)
4. The seller’s solicitor and, if appropriate, the buyer’s solicitor, hold the executed but undated transfer deed ready for completion

Question 10

Which one of the following is the correct priority period provided by an OS1 search?

(a) 
2 months from the OS1 search result.

(b) 
30 working days from the OS1 search result.
(c) 
15 working days from the OS1 search result.

(d) 
15 days from the OS1 search result.

(e) 
30 days from the OS1 search result.

Answer 10

(b) 
30 working days from the OS1 search result.

It is a common mistake to say the priority period of an OS1 is 30 days. It is actually 30 working days.
15 working days is the protection period given by a K15 Central Land Charges search.
2 months is the time period for first registration at the Land Registry (post completion of the purchase of unregistered land).


Question 11

An individual seller is selling the whole of a registered freehold residential property to an individual buyer, who is buying the Property with the aid of a mortgage. You act for the buyer and their lender. Which one of the following statements is correct on these facts?

(a) 
You need to carry out a Form K16 bankruptcy search in respect of the seller.

(b) 
You do not need to carry out a solvency search in respect of the buyer.

(c) 
Solvency searches are carried out at the Land Registry.

(d) 
You need to carry out a Form K16 bankruptcy search in respect of the buyer.

Answer 11

(d) 
You need to carry out a Form K16 bankruptcy search in respect of the buyer.

The lender’s solicitors carry out solvency searches against the buyer. On this scenario, you act for the buyer’s lender so you must carry the appropriate solvency search against the buyer pre-completion. As the buyer is an individual, the appropriate solvency search is a K16 bankruptcy search.
If the seller is bankrupt it will appear on the OS1 search result and so no bankruptcy search is required in respect of the seller.
Companies House searches (in respect of companies) are carried out at Companies House to check solvency pre-completion. K16 bankruptcy searches or K15 CLC searches which include bankruptcy are both carried out at the Central Land Charges Department. None of the solvency searches are carried out at the Land Registry.

Question 12

Two individuals are selling Unit 20, Crayford Business Park (“the Property”) to a company, which is buying the Property for cash (ie without the need for a mortgage). The Property is registered at the Land Registry. You act for the buyer. Which one of the following sets out the pre-completion searches you need to carry out?
(a) OS1 search only. As this is a registered property and your client is purchasing the whole of the title, a
(b) 
Company search on the buyer and OS1 search.

(c) 
Bankruptcy search K16 on the seller and OS1 search.

(d) 
Bankruptcy search K16 on the seller, Company search on the buyer and OS1 search.

(e) 
Central Land Charges search K15 on the buyer and OS1 search.

Answer 12

(a) OS1 search only. As this is a registered property and your client is purchasing the whole of the title, a

Form OS1 search will always be required.
A bankruptcy search is not required to be undertaken against any individual seller of registered land (any bankruptcy would appear on the register of title and therefore on the OS1 search result).
As this is not unregistered land, no Central Land Charges search (K15) is required either. Central Land Charges searches K15 are only relevant for unregistered land and would be carried out against the seller not the buyer to check for adverse entries and to give a protection period.
As no buyer’s lender is involved, there are no solvency searches needed against the buyer.


Question 13

What are the pre-completion searches required for registered land?

Answer 13

Buyer’s solicitor carries out 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 + confers a priority period of 30 working days in favour of the
person searching

Question 14

What are the pre-completion searches required for unregistered land?

Answer 14

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 + confers a priority period of 15 working days

Question 15

When are solvency searches pre-completion required?

Answer 15

When acting for buyer and lender, buyer’s solicitor must carry out bankruptcy search (Form K16) against buyer to protect lender - confers priority period of 15 working days

Not usual practice to carry out bankruptcy search against individual seller - buyer can and should rely on OS1 search for unregistered land

If buyer is co: lender will want co search carried out against buyer to check that there is no pending insolvency or crystallisation of floating charge - co search gives no priority period, so should be carried out as late as possible and updated if necessary

If seller is co: then buyer’s solicitor should carry out co search immediately before completion - checks that there are no pending insolvency or crystallisation of floating charge - no priority period

Question 16

If the seller has a mortgage over the whole of a registered property being sold, which one of the following is recommended form of undertaking for the seller’s solicitor to provide in respect of the mortgage?

(a) 
To undertake forthwith to pay the lender the money required to redeem the mortgage and to forward the receipted mortgage immediately to the buyer’s solicitor.

(b) 
To undertake to pay the completion monies to the lender and to forward Form DS1 to the buyer’s solicitor as soon as the seller’s solicitor receives it from the lender.

(c) 
To undertake to discharge the mortgage and to forward Form DS1 to the buyer’s solicitor as soon as the seller’s solicitor receives it from the lender.

(d) 
To undertake forthwith to pay the lender the money required to redeem the mortgage and to forward Form DS1 to the buyer’s solicitor as soon as the seller’s solicitor receives it from the lender.
(e) 
To undertake forthwith to pay the lender the money required to redeem the mortgage and to forward Form DS1 immediately to the buyer’s solicitor.

Answer 16

(d) 
To undertake forthwith to pay the lender the money required to redeem the mortgage and to forward Form DS1 to the buyer’s solicitor as soon as the seller’s solicitor receives it from the lender.

This is the Law Society’s recommended form of seller’s solicitor’s undertaking re: the seller’s mortgage / charge.
The seller’s solicitor is not able to discharge the mortgage as only the seller’s lender can do that.
The seller’s solicitor will need to pay the money required to redeem the mortgage to the seller’s lender. This is likely to be paid out of the completion monies but it is the redemption amount and not the amount of the completion monies that must be paid over.
In registered land the seller’s solicitor will receive a Form DS1 from the lender discharging the mortgage, a receipted mortgage is used in unregistered land to show a mortgage has been discharged.
The seller’s solicitor cannot forward the receipted mortgage or DS1 until they receive it from the seller’s solicitor so they cannot undertake to send it immediately.


Question 17

Which one of the following is the most accurate summary of pre-completion requisitions on title?
(a) 
They are questions on the entries in the registers of title of the property.

(b) They are enquiries sent to the Land Registry regarding the title being bought.

(c) They are undertakings which the seller’s solicitor has to provide before completion.

(d) 
They ask for key information regarding completion and deal with relevant undertakings required from the seller’s solicitor.

Answer 17

(e) 
They ask for key information regarding completion and deal with relevant undertakings required from the seller’s solicitor.

Questions on the registers of title are asked pre-exchange in the title investigation stage.

Whilst the pre-completion requisitions on title deal with undertakings they also ask for practical information regarding completion.
Requisitions on title are questions asked of the seller’s solicitor regarding practical information for completion and dealing with relevant undertakings required from the seller’s solicitor.

Question 18

Which one of the following is the most accurate statement regarding the Completion Information and Undertakings Form?

(a) 
The Completion Information and Undertakings Form is sent by the seller’s solicitor to the buyer’s solicitor.

(b) 
The Completion Information and Undertakings Form asks for details of the bank account to send the completion monies to.
(c) 
The seller completes and returns the Completion Information and Undertakings Form.

(d) 
The Law Society’s Form TA13 must be used as the Completion Information and Undertakings Form.

Answer 18

(b) 
The Completion Information and Undertakings Form asks for details of the bank account to send the completion monies to.

The Completion Information and Undertakings Form is sent by the buyer’s solicitor to the seller’s solicitor to obtain information about completion.
Form TA13 is one example of the Completion Information and Undertakings Form. Firms can use their own in house version.
The Completion Information and Undertakings Form is completed by the seller’s solicitor and signed by the seller’s solicitor. This is important as only a solicitor can give an enforceable undertaking and the Completion Information and Undertakings Form requests an undertaking in respect of the seller’s mortgage / charge.


Question 19

What are the contents of TA13?

Answer 19

1. Vacant possession
2. Deeds and docs
3. Completion
4. Money
5. Mortgages and charges

Question 20

What does a seller’s solicitor undertake to do on completion of exchange involving a mortgage?

Answer 20

• Seller’s solicitor undertakes in Law Society Code for Completion by Post to redeem mortgages against property which have already notified buyer’s solicitor
• Undertaking is not to discharge charge, bc this is not within solicitor’s power
• On loan being redeemed, lender should either discharge charge at Land Registry electronically (most common) or provide form DS1 which can be produced to Land Registry to discharge charged
• With large values transactions, buyer’s solicitor may insist that seller’s solicitor obtains executed but undated DS1 in advance of completion

Question 21

Which one of the following is correct regarding the Law Society’s Code for Completion by Post (the ‘Code’)?

(a) 
The Code cannot be used in commercial property purchase transactions.

(b) 
The Code is compulsory when completing by post.

(c) 
The Code enables the buyer’s solicitors to act as agent for the seller’s solicitors.

(d) 
The Code contains professional undertakings.

Answer 21

(d) 
The Code contains professional undertakings.

The Code is a voluntary procedure for postal completion. The Code can be used for the completion of both residential and commercial property purchases.
The Code enables the seller’s solicitors to act as agent for the buyer’s solicitors. Completion occurs at the seller’s solicitor’s office as they hold the executed TR1 and receive the completion monies.

Question 22

A solicitor acts for a buyer who is about to complete, having exchanged a week previously. The contract provides for the buyer to give an indemnity covenant. The seller has a mortgage, and the buyer is buying with the benefit of a 75% mortgage. The buyer has already approved the draft SDLT return. What documents does the solicitor need the buyer to execute or sign?

(a) 
The mortgage deed only.

(b) 
The transfer deed, the mortgage deed, and the discharge of the existing mortgage only.

(c) 
The transfer and mortgage deed only.
(d) 
The transfer only.

(e) 
The transfer deed, the mortgage deed, and written authority to complete only.

Answer 22

(c) 
The transfer and mortgage deed only.

The buyer will need to execute the transfer as they are giving an indemnity covenant, and the mortgage deed because they are buying with a mortgage.


Question 23

Which one of the following is a requirement of the Law Society’s Code for Completion by Post (the ‘Code’)?

(a) The seller’s solicitor is to confirm to their client in writing that completion has occurred immediately after it has occurred.

(b) 
The seller’s solicitor must send the DS1 to the Land Registry as soon as they receive it from the seller’s lender.

(c) 
Written confirmation of completion must be sent to the buyer’s solicitor as soon as possible after completion and in any event by the end of the working day following completion.
(d) 
The TR1 must be sent to the buyer’s solicitor by the end of the day of completion.

Answer 23

(c) 
Written confirmation of completion must be sent to the buyer’s solicitor as soon as possible after completion and in any event by the end of the working day following completion.

The Code says that the TR1 must be sent to the buyer’s solicitor as soon as possible after completion and in any event by the end of the working day following completion.

The Code also says that as soon as possible after completion the seller’s key holder is to be notified and authorised to make the keys available to the buyer immediately and the seller’s solicitor is to confirm the date and time completion took place to the buyer’s solicitor. The Code does not put a requirement on the seller’s solicitor to notify their client as it governs the process of completion between the two solicitors. The seller’s solicitor will of course let their client know completion has occurred as soon as possible as best practice.

The Code does not place a requirement re: the DS1 on the seller’s solicitor. The seller’s solicitor will fulfil the terms of their undertaking regarding any seller’s mortgage / charge but the usual form of undertaking will be to send the DS1 to the buyer’s solicitor. It will then be the buyer’s solicitor’s post-completion task to arrange for the mortgage to be removed at the Land Registry.


Question 24

When does a buyer have to execute a transfer deed?

Answer 24

Transferor must always execute TR1

Transferee(s) must execute TR1 if:
(a) If they are tenants in common or agree to hold property on trust for someone else in Panel 10
(b) They are providing indemnity covenant or any other obligation in Panel 11

Question 25

What is the procedure on completion of a transfer of land?

Answer 25

• Buyer’s solicitor has received (hopefully) mortgage advance and balance of money required from client, and sends required amount to seller’s solicitor by bank transfer
• Seller’s solicitor telephones buyer’s solicitor when the money arrives to confirm completion, and dates the transfer deed, calls seller to let them know, and estate agent to release keys to the buyer if appropriate
• Buyer’s solicitor calls buyer, who can now collect the keys and physically move into the property. If acting for the lender, the buyer’s solicitor dates the legal charge.
• Seller’s solicitor sends the transfer deed and any other agreed deeds and documents to the buyer’s solicitor, redeems the mortgage, and sends the balance of the money (less costs, Land Registry fees, etc) to the seller

Question 26

You are acting on behalf of the seller of a residential property. Contracts were exchanged two weeks ago, and the completion date in the contract is this coming Friday.
The buyer’s solicitor has just telephoned you to explain that the buyer’s money has been delayed and the money will not now be available until the Monday following the contractual completion date.
The contract has been exchanged using the Standard Conditions of Sale (SCS)
Which one of the following correctly sets out the advice that you would now give your seller client?

(a) 
Provided the buyer completes by 2pm on Monday your client is entitled to one day of compensation under the SCS.

(b) 
Time is of the essence. Your client may simply refuse to complete the sale to the buyer on Monday. The seller is entitled to keep the deposit paid by the buyer at exchange.

(c) 
Provided the buyer completes by 2pm on Monday your client is entitled to three days of compensation under the SCS.
(d) 
Provided the buyer completes by 2pm on Monday and your client serves a notice to complete under the SCS, your client is entitled to three days of compensation under the SCS.

Answer 26

(c) 
Provided the buyer completes by 2pm on Monday your client is entitled to three days of compensation under the SCS.

You correctly identified that the seller, who is not in default, would be able to claim compensation under the SCS for three days (Friday, Saturday and Sunday - the days of default). The compensation is payable for each day that the buyer does not complete by 2pm (the latest time for completion under the SCS), including the weekend.
Under the SCS, time is not of the essence until a notice to complete has been served. The seller would not be entitled to take the buyer’s deposit until the expiry of the notice to complete and rescission by the seller.
There is no need to serve a notice to complete in order to trigger the right to compensation, although it is common in practice for a non-defaulting party’s solicitor to serve the notice to complete to protect their client’s right to keep the deposit and rescind the contract after ten working days following the service of the notice (excluding the day the notice was given).


Question 27

Due to an issue with their related purchase, a seller cannot complete until five calendar days following the completion date. The contract incorporates the Standard Conditions of Sale with no amendment.
The buyer had already left their rented accommodation, and has had to pay hotel and storage costs totalling £750. Assume that the costs are reasonable.
The contractual compensation for the delay would work out at £200.
What is the most the the buyer can claim from the seller?

(a) 
£750.
(b) 
Nothing, as the compensation is fault-based, and the seller is not at fault, as the delay is due to its own seller.

(c) 
£200.

(d) 
£550.

Answer 27

(a) 
£750.

The contractual compensation of £200 and the hotel and storage costs of £750 less the £200 contractual compensation.


Question 28

It is the contractual completion date and the buyer of a residential property, where the contract incorporates the Standard Conditions of Sale (SCS), fails to complete. The seller is ready, able and willing to complete. Which one of the following statements regarding the seller’s remedies is most accurate?

(a) 
The seller is immediately entitled to rescind the contract and keep the buyer’s deposit because time will be of the essence as soon as the completion date has passed.

(b) 
If the seller serves a notice to complete, the buyer fails to complete in accordance with the notice and the seller rescinds the contract, the seller is no longer entitled to contractual compensation under the SCS.
(c) 
If the seller serves a notice to complete and the buyer fails to complete before the notice has expired, the contract will be deemed to be automatically rescinded immediately upon the expiry of the notice period.

(d) 
The seller is entitled to rescind the contract and forfeit the buyer’s deposit ten working days after the contractual completion date.


Answer 28

(b) 
If the seller serves a notice to complete, the buyer fails to complete in accordance with the notice and the seller rescinds the contract, the seller is no longer entitled to contractual compensation under the SCS.

The SCS compensation is for delayed completion. Completion has to actually occur for the compensation to be payable. If the contract is rescinded, completion cannot occur and there is no entitlement to contractual compensation although common law damages could be claimed for any loss suffered from the breach of contract.
Time is not of the essence under the SCS until a notice to complete is served. The notice needs to expire before the seller can rescind the contract and keep the buyer’s deposit.
The seller is not entitled to rescind the contract or keep the buyer’s deposit under the SCS until a notice to complete has been served and the notice period has expired.
The seller can rescind the contract once the notice to complete has expired but rescission is not automatically triggered by the expiry of the 10 working day notice period in the notice to complete.


Question 29

What are the buyer’s remedies if the seller defaults on completion?

Answer 29

Buyer may rescind contract and on doing so may also:
(a) Demand return of deposit with any interest accrued on it
(b) Claim contractual damages or even specific

Question 30

What are the seller’s remedies if the buyer defaults on completion?

Answer 30

Seller may rescind contract and on doing so may also:
(a) Forfeit deposit and any interest accrued on it
(b) Resell property and any contents included in it
(c) Claim contractual damages

Question 31

What is the effect of a notice to complete and who can serve it?

Answer 31

• If completion has not taken place by date and time stated in contract then either party if they are ready, able and willing to complete may give other notice to complete
• Parties must complete within 10 working days, first day being day after notice to complete has been served
• Party serving notice to complete is bound by notice as well, so they must make sure that they will continue to be ready to complete within 10 day working period
• Once served, notice to complete cannot be withdrawn unless both parties agree
• If either party fails to complete within 10 working day period, remedies available depend on whether non-defaulting party is seller or buyer

Question 32

What does failure to complete mean in terms of the buyer and the seller?

Answer 32

1. Seller’s failure to complete: Means that seller’s solicitor is unable to date executed transfer
   Examples:
   - Seller has not returned executed transfer
   - Seller has returned executed transfer but instructs solicitor not to date it
2. Buyer’s failure to complete: Means that seller’s solicitor has:
   - Not received money needed to complete from buyer’s solicitor or
   - Has received money, but buyer instructs buyer’s solicitor not to release it to seller’s solicitor eg if buyer changes their mind at last moment

Question 33

What happens if a party fails to complete under SCS?

Answer 33

• If either party fails to complete by time and date specified in contract, then they are obliged to pay interest for each day’s delay under SCS
• Calculated at interest rate specified in contract - if none specified then SCS 1.1.1(e) provides that Law Society interest rate applies (current rate published on website)
• If seller is late in completing, then seller pays interest on full purchase price
• If buyer is late in completing, then buyer pay interest on purchase price less any deposit paid

Question 34

A company buyer has completed the purchase of a commercial freehold registered property in England with the aid of a mortgage. The seller did not have a mortgage/charge over the property. Post-completion, which one of the following is the most accurate list of the documents which the buyer’s solicitor must send to the Land Registry with their application on Form AP1?

(a) 
The contract of sale, SDLT1, Buyer’s mortgage/charge and the Certificate of Registration of the Charge.

(b) 
TR1, a plan of the property, SDLT5 and Buyer’s mortgage/charge.

(c) 
TR1, SDLT5, Buyer’s mortgage/charge and the Certificate of Registration of the Charge.
(d) 
The contract of sale, a plan of the property, SDLT1 and buyer’s mortgage/charge.

(e) 
TR1, SDLT1, Buyer’s mortgage/charge and the Certificate of Registration of the Charge.

Answer 34

(c) 
TR1, SDLT5, Buyer’s mortgage/charge and the Certificate of Registration of the Charge.

The SDLT1 is the form sent to HMRC when SDLT is paid. HMRC will send back the SDLT5 acknowledgement of receipt which then needs to be sent with the Land Registry application.
The Land Registry do not need the contract of sale, they need the purchase deed (the transfer – TR1) to register the change in registered proprietor (owner) of the land.
The Land Registry do not need a plan of the property as it is already registered so they have a title plan already.
As the buyer is a company, their mortgage/charge needs to be registered at Companies House post-completion. Companies House will return a Certificate of Registration of Charge and this needs to be sent to the Land Registry as well as the buyer’s mortgage/charge so that it is registered against the title.


Question 35

Which one of the following is the correct deadline for the Land Registry application post-completion of the purchase of a registered freehold property?

(a) 
30 working days from the date of completion.

(b) 
30 days from the date of completion.

(c) 
30 days from the date contracts are exchanged.

(d) 
30 days from the date of the OS1 priority search.

(e) 
30 working days from the date of the OS1 priority search result.

Answer 35

(e) 
30 working days from the date of the OS1 priority search result.

It is 30 working days rather than 30 days. This is the priority period of the OS1 priority search and the application to the Land Registry must be made before the priority period ends.
The deadline runs from the date of the OS1 priority search result rather than completion as it is the OS1 search result which provides the priority period within which the Land Registry application must be made.
The deadline runs from the date of the OS1 priority search result made pre-completion rather than the date contracts are exchanged as it is the OS1 search result which provides the priority period within which the Land Registry application must be made.

Question 36

A company is buying a registered freehold property in Wales with the aid of a mortgage. Which one of the following most accurately identifies the steps the buyer’s solicitor will carry out post-completion of the purchase?

(a) 
1) Draft the TR1,

2) submit requisitions on title,

3) carry out an OS1 search and

4) obtain finance from the buyer and its lender.


(b) 
1) Send the SDLT1 and pay SDLT at HMRC and

2) apply to the Land Registry using Form AP1.


(c) 
1) carry out an OS1 search,

2) send the SDLT1 and pay SDLT at HMRC and

3) apply to the Land Registry using Form AP1.


(d) 
1) Register the buyer’s mortgage at Companies House,

2) send the SDLT1 and pay SDLT at HMRC and

3) apply to the Land Registry using Form AP1.


(e) 
1) Register the buyer’s mortgage at Companies House
,
2) send the LTT Return and pay LTT at WRA and

3) apply to the Land Registry using Form AP1.

Answer 36

(e) 
1) Register the buyer’s mortgage at Companies House
,
2) send the LTT Return and pay LTT at WRA and

3) apply to the Land Registry using Form AP1.

As the property is in Wales LTT is payable to the WRA rather than SDLT to HMRC. The buyer’s mortgage must also be registered at Companies House (or it will be void as against liquidators, administrators and any other creditors) as the buyer is a company. The Land Registry application is necessary as the transfer and the buyer’s mortgage need to be registered on the title to the property.

Question 37

Which one of the following is the most accurate summary of the consequences of failing to comply with the relevant post-completion step within its relevant deadline following the purchase of a registered freehold property with the aid of a mortgage?

(a) 
The consequence of failing to register a buyer’s mortgage at Companies House within the relevant deadline is a fine.

(b) 
The consequences of failing to apply to the Land Registry to register the transfer and the buyer’s mortgage within the relevant deadline are 1) that the transfer is voidable and 2) that the buyer would take the property subject to any third party interests that may have been registered subsequent to its OS1 search.

(c) 
The consequence of failing to apply to the Land Registry to register the transfer and the buyer’s mortgage within the relevant deadline is that the transfer is void.

(d) The consequence of failing to pay SDLT/LTT within the relevant deadline is that only the beneficial title and not the legal title passes to the buyer.

(e) 
The consequences of failing to pay SDLT/LTT within the relevant deadline are penalties and interest.

Answer 37

(e) 
The consequences of failing to pay SDLT/LTT within the relevant deadline are penalties and interest.

The consequences of failing to register a buyer’s mortgage at Companies House within the relevant deadline are that 1) the mortgage/charge is void against liquidators, administrators and other creditors; 2) the loan is repayable on demand; and 3) it could be construed as negligence on the part of the solicitor.
The consequences of failing to apply to the Land Registry to register the transfer and the buyer’s mortgage within the relevant deadline are that 1) the buyer would take the property subject to any third party interests that may have been registered subsequent to its OS1 search; and 2) the buyer will only have beneficial title (not legal title) to the property until they are registered as the registered proprietor of the title at the Land Registry.

Question 38

An individual buyer purchases a freehold residential registered property in England with the aid of a mortgage. The buyer did not occupy the property prior to completion. The seller did not have a mortgage over the property. Which one of the following most accurately sets out the relevant post-completion steps and their deadlines?

(a) 
1) Payment of SDLT at HMRC within 14 days of completion and

2) application to the Land Registry to register the transfer and the buyer’s mortgage within 30 working days of the OS1 priority search result.

(b) 
1) Registration of the buyer’s mortgage at Companies House within 21 days starting on the day after the date of completion,

2) payment of SDLT at HMRC within 14 days of completion and

3) application to the Land Registry to register the transfer and the buyer’s mortgage within 30 working days of the OS1 priority search result.


(c) 
1) Registration of the buyer’s mortgage at Companies House within 21 days from completion,

2) payment of LTT at WRA within 30 days from the day after completion and

3) application to the Land Registry to register the transfer and the buyer’s mortgage within 30 days of completion.


(d) 
1) Payment of SDLT at HMRC within 14 days of completion and

2) application to the Land Registry to register the transfer within 30 days of completion.


(e) 
1) Registration of the buyer’s mortgage at Companies House within 21 days starting on the day after the date of completion,
2) payment of LTT at WRA within 30 days from the day after completion and
3) application to the Land Registry to register the transfer and the buyer’s mortgage within 30 working days of the OS1 priority search result.

Answer 38

(a) 
1) Payment of SDLT at HMRC within 14 days of completion and

2) application to the Land Registry to register the transfer and the buyer’s mortgage within 30 working days of the OS1 priority search result.

SDLT rather than LTT is relevant as the property is in England and, as there was no early occupation by the buyer, the effective date which the 14 day deadline runs from is completion.
The buyer’s mortgage does not need to be registered at Companies House because the buyer is an individual not a company.
The deadline for the Land Registry application is 30 working days from the OS1 priority search result and, as well as registering the transfer, the application to the Land Registry would include applying to register the buyer’s mortgage at the Land Registry.


Question 39

What do you have to send with form AP1 for registered land?

Answer 39

1. Transfer deed (TR1)
2. SDLT5 or WRA certificate to prove payment of SDLT or LTT
   3. Form DS1 to discharge the seller’s mortgage if appropriate (this can be sent on later if not yet available)
   4. Mortgage deed in favour of the buyer’s lender
   5. If appropriate, certificate of registration of charge at Companies House
   6. Other documents as appropriate (eg, death certificate for deceased joint proprietor if the seller is a sole surviving beneficial joint tenant

Question 40

What do you have to send with form FR1 for unregistered land>

Answer 40

1. Transfer deed (TR1)
2. SDLT5 or WRA certificate to prove payment of SDLT or LTT
   3. Form DS1 to discharge the seller’s mortgage if appropriate (this can be sent on later if not yet available)
   4. Mortgage deed in favour of the buyer’s lender
   5. If appropriate, certificate of registration of charge at Companies House
   6. Other documents as appropriate (eg, death certificate for deceased joint proprietor if the seller is a sole surviving beneficial joint tenant
3. Epitome of title and deeds and docs referred to in it
4. Land charges searches for seller and previous owners in chain of title

Question 41

How is the land registry application submitted?

Answer 41

• Most solicitors have account on LR online portal, enabling registration applications to be submitted online - however, this is not possible for first registration
• Application is instead made by post or doc exchange (DX) and this is possible for transfer of registered land if solicitor does not have access to online portal
• If this is case, best to send certified copies of transfer and mortgage deed, because Registry do not return paper docs

Question 42

You act for a lottery winner, who has decided to sell their existing house and buy a new house for £1 million. They will own no other property after completing the purchase.
At the time of completion, the SDLT rates for residential property are as follows:
- Up to £250,000: 0%
- £250,000 to 925,000: 5%
- £925,000 to £1.5 million: 10%
- Over £1.5 million: 12%
How much will you advise the buyer they will have to pay in SDLT on the new property?

(a) 
Nil as they no own other property.

(b) 
£50,000

(c) 
£100,000

(d) 
41,250
(e) 
£48,000

Answer 42

(d) 
41,250

There is no SDLT on the first £250,000, 5% of the next slice £250,000 up to £925,000 = £33,750, and 10% of the final slice £925,000 to £1 million = £7,500. £33,750 + £7,500 = £41,250


Question 43

You act for the buyer of a farm for a purchase price of £800,000.
At the time of completion, the SDLT rates for non-residential property are as follows:
· Up to £150,000: 0%
· £150,000 to £250,000: 2%
· Over £250,000: 5%
How much SDLT will the buyer pay?

(a) 
£16,000

(b) 
£29,500
(c) 
£27,500

(d) 
£32,500

(e) 
£40,000

Answer 43

(b) 
£29,500

There is no SDLT on the first £150,000, 2% on the next £100,000 up to £250,000 = £2,000, and 5% on the remaining £550,000 = £27,500. £2,000 + £27,500 = £29,500.


Question 44

You act for a first-time buyer buying a house in Wales for £275,000.
At the time of completion, the relevant LTT rates for residential property are as follows:
· Up to £225,000: 0%
· £225,000 to £400,000: 6%
How much LTT will the buyer pay?

(a) 
£6,000.

(b) 
£14,250

(c) £3,000 

(d) 
Nil

(e) 
£16,500

Answer 44

(c) £3,000

Remember there is no relief for first time buyers in Wales 


Question 45

You act for a first-time buyer buying an apartment in London for £500,000. The buyer is also paying a fair market value of £5,000 for some designer furniture that the seller has agreed to leave in the apartment.
At the proposed date for completion, the SDLT rates for residential property will be as follows:
* Up to £250,000, there is no SDLT payable.
* Over £250,000 up to £925,000, SDLT of 5% is payable
* Over £925,000 up to £1.5 million, SDLT of 10% is payable
* Over £1.5 million, SDLT of 12% is payable
First time buyer rates are 0% for the first £425,000, and 5% from £425,000 to £600,000.
How much SDLT should the buyer pay?

(a) 
£0

(b) 
£3,750
(c) 
£15,000

(d) 
£4,000

(e) 
£15,250

Answer 45

(b) 
£3,750

The value allocated to contents (provided it is an honest and reasonable valuation) can be excluded from the calculation. The SDLT is calculated on £500,000 and first time buyer rates apply, so it is 0% on the first £425,000 and 5% of the remaining £75,000 = £3,750.


Question 46

Which of the following statements about the basis of charge to Capital Gains Tax (CGT) is correct?


(a) CGT is a tax imposed on the transferee on the transfer of property.

(b) 
CGT is payable on the sale price of the property.

(c) 
The amount of CGT depends on the rate of income tax an individual pays.

Answer 46

(c) 
The amount of CGT depends on the rate of income tax an individual pays.

If CGT is payable the rate depends whether the individual paying is a basic rate or higher rate taxpayer.
SDLT/LTT are the taxes payable by a purchaser (ie, the transferee) on the transfer of property to them. CGT is a tax imposed on an individual who disposes an asset (the transferor) and makes a chargeable gain.
CGT is payable on the chargeable gain made when an asset is disposed of. The chargeable gain is calculated by taking the sale price and subtracting the purchase price, any allowable expenses and the annual exemption.

Question 47

In which one of the following situations is CGT payable?

(a) 
A sale at a profit on an individual’s UK holiday home used by them for two months of the year and let out for the rest of the year.
(b) 
A sale at a profit of an individual’s only main home which they have occupied since buying it, being 400 square metres including the garden. One room was occupied by a lodger for some of the time.

(c) 
A gift of a property to a spouse.

(d) 
A sale at a profit of an individual’s only home which they have occupied since buying it, being 400 square metres including the garden.

Answer 47

(a) 
A sale at a profit on an individual’s UK holiday home used by them for two months of the year and let out for the rest of the year.

This would not fall under Private Residence Relief (for detail refer back to the element) and CGT would be payable.


Question 48

Two people each own a house which they were living in when they met. They then enter into a civil partnership, and share their time between both houses.
They sell their houses to buy a larger house together.
What is the CGT position on the sale of the two houses?

(a) 
They can only claim Private Residence Relief on one of the houses.
(b) 
They can claim Private Residence Relief on both houses as their ownership pre-dated the marriage.

(c) 
They cannot claim Private Residence Relief on either house.

(d) 
They can claim Private Residence Relief on both houses, but at a reduced rate.

Answer 48

(a) 
They can only claim Private Residence Relief on one of the houses.

For a married couple or civil partnership, only one of the houses will be eligible for PPR.


Question 49

When does CGT arise?

Answer 49

CGT arises when:
1. There is chargeable disposal
2. Of chargeable asset
3. By chargeable person
4. Which gives rise to chargeable gain

Question 50

What is a chargeable gain?

Answer 50

Chargeable gain looks at the increase in value of the asset

In calculating chargeable gain, taxpayer can take into account allowable expenditure - in property, this may include:
1. Costs incurred in acquiring asset (eg conveyancers’ fees for purchase)
2. Costs incurred that contribute to value of asset (eg cost of building extension but not costs of maintenance or repair)
3. Costs incurred in disposing of asset (eg conveyancers’ fees for sale and estate agents’ commission)

Question 51

When does Private Residential Relief apply?

Answer 51

PRR applies so that person does not pay CGT if they sell or dispose of their home, provided following conditions are met:
- It has been person’s main home for all time that they lived in it
- They have not let it out (other than taking lodger)
- It has not been used for business purposes (using room as temporary office is ok)
- Grounds including all buildings are less than 5,000 square miles
- It was not bought just to make gain