Completion Flashcards
Summary of completion
What must a buyer’s solicitor do before completion?
- Draft transfer deed for seller’s solicitor’s approval and then arrange for buyer to sign it if it contains indemnity covenants (or any other obligation on part of buyer)
- Send requisitions on title to seller’s solicitor
- Carry out relevant pre-completion searches
- Send certificate of title to lender and request loan advance in time for completion
- Send buyer statement of money needed to complete purchase
- SDLT form approved by client
What must a seller’s solicitor do before completion?
- Approve transfer deed drafted by buyer’s solicitor
- Arrange for transfer to be executed by seller
- Reply to requisitions on title
- Request redemption statement from seller’s lender (if any)
- In residential sale, ask seller/agent to take final meter readings
Who drafts the transfer deed?
- Default position in SCS and SCPC = seller’s solicitor drafts contract and buyer’s solicitor drafts transfer deed
- More common for seller’s solicitor to draft both at same time
buyer drafts transfer deed (backwards letter)
What must the form of the transfer of land take?
Deed
What is the most common LR form to be used? Must it be different for unregistered land?
LR forms must be used for registered land
TR1 to transfer whole of freehold or leasehold title - can be used for both reg and unreg land
When would a TP1 or TR5 be used?
- TP1 = transfer of only part of reg title
- TR5 = transfer of portfolio of reg (and maybe unreg) titles
TP1 = Part
TR5 = 5 looks like S = plural = multiple titles = portfolio
Why would a conveyance be used?
Where only part of the property is being sold
Can unregistered title still be transferred in the form of conveyance?
Ues - but in practice will use TR1
What are the 12 panels in the TR1?
- Title number
- Property
- Date
- Transferor(s)
- Transferee(s)
- Address for service
- Transfer wording
- Consideration
- Title guarantee
- Declaration of trust
- Additional provisions
- Execution
What is put in the title number panel for unregistered proprerty?
Nothing - left blank
What information is included in the ‘property’ panel?
Brief description - for most will be addresses from official copies or root of title
What is the effect of entering the date on the TR1?
Will complete the deed; so left blank until then
Will be handwritten on completion
When completing the ‘transferor(s)’ panel, what is the case for…
1. Seller’s name different from when they bought the property (e.g. marriage)
2. Second T appointed for a sole surviving tenant in common
3. Transferor is a company
- Marriage certificate provided
- Their details (and death certificate for deceased)
- Registered number
What is the maximum amount of names for the ‘transferee(s)’ section?
4 people/companies
In the ‘address for service’ panel, what is used for the buyer’s address?
The address of the bought property, not the pre-completion address like in contract!
Can the wording in the ‘transfer wording’ tile be amended?
No - it operates to transfer title
What are the 3 tick boxes under the ‘consideration’ panel?
- Sum of money
- No monetary considration (gift, existing Ts to new Ts)
- Other receipts (swapping properties, paying off debt)
Must the ‘declaration of trust’ panel always be filled out?
Can be skipped if both legal and beneficial title being transferred to a sole transferee
Otherwise used to indicate whether transferees hold as beneficial joint tenants or tenants in common (or holding on unequal shares, etc.)
What might be included in the ‘additional provisions’ panel?
- Indemnity covenant for positive covenants
- New covenants and easements (more common for transfers of part)
- Appointment of second T (where transferor is a sole surviving tenant in common)
What clause is included in the ‘execution’ panel and what does it do?
Attestation clause(s) - allow parties to execute TR1 as a deed
In what circumstances will transferees execute the TR1?
Transferor always will
If transferees…
- are tenants in common or
- agree to hold property on trust for someone else, or
- are providing an indemnity covenant or other obligation (e.g. easement, restrictive covenant etc.)
Where a TP1 - transfer of part of transferor’s title - is used, how is the part identified?
With a plan (panel 3) attached to the TR1
‘Additional provisions’ panel 12 (like panel 11 in TR1) provides appropriate headings like “Rights granted for the benefit of the property” and “Rights reserved for the benefit of other land”.
Where a TR5 - transfer of portfolio titles - is used, what is the main difference?
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.
How does an individual execute a transfer deed? When will it be considered delivered (come into effect)?
- Signs transfer in presence of independent witness who also signs (and prints full name and address)
- Transfer considered delivered when it is dated (usually by transferor’s solicitor)
NB this covers ‘signed’ and ‘delivered’ requirements for a deed, ‘intended to be a deed’ is covered by the TR1 itself
What are the different options a company has in executing the transfer deed?
- Company seal attached and signed by two directors/one director and the company secretary
- No company seal but signed by two directors/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/company secretary) who is authorised under a power of attorney
Agreeing and executing transfer deed summary
What is the difference between pre-exchange and pre-completion searches?
- Pre-exchange = part of investigation of property and seek matters that may deter buyer from exchange
- Pre-completion = to check and protect buyer’s (and lender’s) ability to obtain title to property as per contract
Would issues arising from pre-completion searchs not just be breaches of contract anyway?
Yes - but still better to identify these at pre-completion than rely on ability to sue after
For registered and unregistered land, what pre-completion search form will be used against what and what will this do?
- Registered = OS1 (OS2 for part of land) at LR against title number - updates official copies initially provided and identifies any changes that have been made
- Unregistered = K15 Land Charges search - identifies any encumbrances or other adverse matters registered against owner/seller of unregistered land
NB ‘part’ can mean a leasehold flat/a house as part of a development
What priority period will a pre-completion search on registered and unregistered land confer from when and what is the benefit of registering a transfer with the Land Registry within this period?
- Reg = 30 working days from search result, unreg = 15 working days from search result
- Benefit = buyer’s transfer will take priority over any other applications even if lodged before buyer’s transfer
When using an OS1 search, what date is provided by buyer’s solicitor to LR?
The date which the official copies are dated - it is from this date that the search is run
If nothing changed = search comes back clear (otherwise updated official copies are sent to searcher)
- buyer’s solicitor is lodging an OS1 search on 1 June, ready for a completion date of 5 June.
- 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.
- 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 does the SCS/SCPC provide for changes to the official copies originally provided?
The seller should disclose any adverse issues that may have resulted in changes to official copies - if they do not the buyer may have a claim for breach of contract/misrepresentation
Why can’t buyer’s solicitor rely on the misrepresentation/breach of contract claim?
After seller has not disclosed changes to official copies
If registration not protected by LR, will cost time/money to put any entry right and would be clear professional negligence on conveyancing solicitor
Majority of cases search clear, but not worth risk
- 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.
- 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.
Would a lender’s solicitor take out their own OS1 search?
Yes, and where that shows that there is an intended sale, the lender’s solicitor would refuse to complete the mortgage (but if buyer had not carried out priority search, new lender’s charge would take priority and buyer would not be able to register transfer!)
As in title investigation of unregistered land, where land charge search is carried out against all owners in a chain of title, must the land charge searches be updated against the previous owners?
Recall chain of title = root of title + subsequent deeds (only previous if they contain covenants/easements referred to in root of title)
No - entries that may affect them after their priod of ownership are not relevant to the property
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
When must a solicitor carry out a bankruptcy search (Form K16) against the buyer and what priority period does this confer?
- When acting for buyer and lender (to protect lender)
- Confers period of 15 working days
When will a company search be carried out and for whom (and why)? What priority period does this confer?
- Where buyer is a company to check no pending insolvency or crystallisation of a floating charge (for the lender)
- No priority period - so carry out as late as possible and updated as necessary
If the seller is a company, who should carry out a company search and when? Is there a priority period here?
- The buyer’s solicitor immediately before completion
- No priority period here
What are requisitions on title?
Questions the buyer’s solicitor needs answering before completion
Basically just ironing out some final things
(Like pre-completion searches are much simpler than pre-exchange searches) Requisitions on title are similar but much simpler than pre-exchange enquiries
What are the forms for residential and commercial requisitions on title?
- Residential - Law Society TA13 (‘Completion information and undertakings’)
- Commercial - firm’s precedent form or CSPE form SCR (solicitor’s completion requirements)
TA13 - unlucky because you have to answer even more questions
When must replies to the buyer’s solicitor from the seller’s solicitor to the TA13 be provided?
At least 5 working days before completion
This is part of the Law Society Code for Completion by Post
What are the 5 parts of a TA13?
- Vacant possession
- Deeds and documents
- Completion
- Money
- Mortgages and charges
TA13 similar in content to commercial one
In a TA13, what will be asked regarding vacant possession?
- Arrangement for collecting keys
- Authority for tenant to pay rent to buyer after completion (where a rent-paying tenant)
What will be asked about deeds and documents in a TA13?
Will ask for list of deeds and documents to be sent on completion for unregistered property
What will be asked about completion in a TA13?
If it will take place according to Law Society’s Code for Completion by Post
Where a transaction is being dealt with under the Law Society Conveyancing Protocol, will the Completion by Post automatically apply?
Yes
What is the Code for Completion by Post?
Sets expectations/undertakings of solicitor on completion (like Formula B for exchange)
What will be asked about money in a TA13?
For seller’s solicitors client account details and exact amount payable on completion
What will be asked about mortgages and charges in a TA13?
Asks seller to list any mortgages secured on property and confirm their undertaking to redeem them
Why can mortgage not be cleared from property until after completion (so that buyer’s transfer can be registered)?
Seller relies on proceeds of sale to pay off mortgage so must be post-completion
In the Code for Completion by Post, will the seller’s solicitor undertake to discharge the charge?
No, this is not in the solicitor’s power. They will undertake to redeem mortgage against the property (which they will have notified to the buyer’s solicitor)
“To undertake forthwith to pay the lender the money required (not all completion monies) 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 (cannot undertake to do it immediately).”
What are the 2 things a lender should do to discharge the charge once the loan is redeemed?
- Discharge charge electronically at LR;or
- Provide a form DS1 which can be produced to LR
Where is a DS3 appropriate for discharging a mortgage?
Where part of a registered charge, not the whole of it, is being discharged
What might buyer’s solicitor insist the seller’s solicitor obtains in advance of completion for large value transactions?
Executed but undated DS1
By what medium does completion happen and what is it facilitated by?
Almost always by post, facilitated by the Law Society Code for Completion by Post
Can take place any working day but most residential transactions take place on Friday (gives buyer weekend to settle in and seller the weekend to spend some of the sale proceeds)
How does the Code for Completion by Post treat the seller’s solicitor and what does this mean?
As an agent for the buyer’s solicitor; seller’s solicitor provides various undertakings which buyer’s solicitor can rely on to know completion will take place if money is sent (otherwise seller’s solicitor will return money)
What does the seller’s solicitor undertake with regards to when they will complete?
Will complete upon becoming aware of the receipt of completion monies (after reporting to buyer’s solicitor that funds have been received)
I.e. will let buyer’s solicitor know they have received money, they will agree completion has taken place, then seller’s solicitor wil hand write date on to TR1 and this will operate as the delivery and the deed is completed
What does seller’s solicitor undertake to do with the transfer deed immediately after completion?
Send transfer deed and other deeds/documents to buyer’s solicitor
Immediately after completion: seller’s solicitor holds transfer deed and other deeds/documents to buyer’s solicitor’s order (= buyer’s solicitor can direct what happens to them)
When must seller’s solicitor send transfer deed/any other deeds or documents to buyer’s solicitor?
ASAP and no later than end of working day after completion
Completion day Friday = can be sent by EOD Monday
Cf:
- Exchange - Law Society Formula B - must be delivery/1st class post by EOD (Before ed of day)
- Completion - Law Society Code for Completion by Post - ASAP and no later than end of working day after completion (Can be day after)
What will the buyer’s solicitor have undertaken re the funds?
That they will use reasonable endeavours to ensure enough funds are collected from buyer/any mortgage lender in good time to transmit to seller’s solicitor on or behalf the completion date
Overview of completion
- Buyer’s solicitor receives mortgage in advance and balance of money required from client - sends required amount to seller’s solicitor by bank transfer
- Seller’s solicitor telephones buyer’s solicitor when money arrives to confirm completion and dates transfer deed, calls seller to let them know (and estate agents to release keys)
- Buyer’s solicitor calls buyer who can now collect keys and physically move into property
- If acting for lender, buyer’s solicitor dates legal charge
- Seller’s solicitor sends transfer deed and any other agreed deeds/documents to buyer’s solicitor, redeems mortgage and sends balance of money to seller
When will a seller and buyer failed to have complete?
- Seller = unable to date executed transfer (e.g. has not returned it)
- Buyer = seller’s solicitor has not received money needed to complete or has received it but buyer has instructed buyer’s solicitor not to release it (changes mind last minute)
What is the obligation under SCS re paying interest where either party fails to complete by time and date specified in contract? What interest rate is used?
- Party is obliged to pay interest for each day’s (inc weekends) delay
- Unless specified in contract, the Law Society interest rate will apply
Where the contractual completion time is missed, when is completion deemed to take place?
The next working day
If a party is paying interest, what price is the interest based on?
Seller late = interest on full purchase price
* full purchase price x interest rate/100 x 1/365
Buyer late = interest on purchase price less deposit paid
* (full purchase price - deposit) x interest rate/100 x 1/365
Are interests likely to compensate a buyer’s losses?
Removal company, hotel, additional solicitor’s fees
Unless a large transaction/long delay, interest will be relatively low
Can common law damages be claimed where a party defaults?
Yes can claim common law damages for losses - but not always practical cost effective
When would damages not be an appropriate remedy?
Where no losses e.g. seller has no related purchase and has vacated the property
If successful in a common law damages claim, what is deducted from the sum?
Interest received under SCS
Is rescission available automatically to a non-defaulting party?
= contract set aside, parties returned to original positions
No - under standard contract time is not of the essence
How can a non-defaulting party make time of the essence and what does this force the other party to do?
Where completion has not taken place by date and time stated in contract (2pm under standard conditions)
- By serving a notice to complete
- Must then complete within ten working days (day after notice given is day 1)
Where the buyer is the defaulting party, what must they make up immediately without delay?
Deposit up to 10%, unless they have done so already
Can a notice to complete be withdrawn after service?
Not unless both parties agree
NB non-defaulting party also bound by notice - must make sure they will continue to be ready to complete!
Where either party fails to complete within the 10 working day period, what remedies are available to a seller or buyer (on top of rescission)?
- Seller can forfeit deposit and interest accrued, resell property/contents, claim contractual damages
- Buyer can demand return of deposit with any interest accrued and claim contractual damages/specific performance (forcing seller to complete)
Does contractual compensation (interest) also apply where there is no completion at all?
No, where there is no completion the remedy is damages
Contractual compensation only applies to delayed compensation
What must buyer’s solicitor do at post-completion?
Settle SDLT and register buyer’s title at LR
When must an SLDT return be submitted/tax paid to avoid penalties?
Within 14 days of completion
4 letters in SDLT = 14 days
When must an LLT return be submitted/tax paid to avoid penalties?
Within 30 days of completion
3 letters in LTT = 30 days
How can a return be prepared and submitted for SDLT and LTT?
- SDLT = online using HMRC portal
- LTT = online using WRA (Welsh Revenue Authority) portal
What will the buyer’s solicitor receive on submitting SDLT/LTT return?
- SDLT = SDLT5 certificate
- LTT = WRA certificate
When must a charge be registered at CH and what happens if this is not done?
- Within 21 days of the creation of the charge
- If not = void against any liquidator/administrator and lender is not protected
Must a charge be registered at CH and LReg?
Yes!
- CH re creditors/liquidators
- LReg to be legally enforceable
Do CH have discretion to extend deadline for registering a charge? When may it continue to run?
- No discretion; deadline is strict
- Will continue to run if application is submitted with a problem
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If the deadline for registering a charge is missed, what should be applied for? Who covers the expense of this?
- A court order allowing filing out of time
- Expense covered by solicitor’s firm
If an individual gives a charge, does the 21 day obligation apply?
No
For registering a registered title, what form is used to set out details of application and what documents are provided?
Form AP1 - will incude…
- The transfer deed (eg TR1)
- SDLT5 or WRA certificate to prove payment of SDLT or LTT
- Form DS1 to discharge the seller’s mortgage if appropriate
- Mortgage deed in favour of the buyer’s lender
- If appropriate, certificate of registration of charge at Companies House
- Other documents as appropriate (eg, death certificate for deceased joint proprietor if the seller is a sole surviving beneficial joint tenant)
For registering an unregistered title (i.e. first registration), what form is used to set out details of application and what documents are provided?
Form FR1 - will incude same documents as registered, but additionally…
1. Epitome of title and deeds and documents referred to in it
2. Land charge searches for seller and previous owners in chain of title
AP1 = already registered! :)
FR1 = fuck registration! >:)
Where form DS1 (to discharge seller’s mortgage) is not yet available, does this delay the application for registration?
No - this can be sent later on
What must the buyer’s conveyancer do if there are overriding interests?
For both registered and unregistered
Complete a Form DI
Otherwise tick AP1/FR1 to denote no overriding interests
A buyer buys a shop with a tenant in the flat above who is on a 5 year lease. The buyer’s solicitor should disclose the tenant’s occupational tenancy on Form DI
Rationale behind disclosure of overriding interests = to expand the scope of entries that are on the register.
Is the LR online portal available for a first registration?
Online portal allows registration applications to be submitted online
No - application can instead be made by post or DX
Both reg and unreg
Why should you send certified copies of transfer and mortgage deed?
LR do not return paper documents
Where do the original mortgage deed and original transfer deed go?
- Original mortgage deed = sent to lender
- Original transfer deed = kept if it has covenants
When will a document be a certified copy and how will it be treated?
- Copy stamped and signed by solicitor to confirm it is a true copy of original
- Treated as equivalent to original document for evidential purposes
Why should LR application still be submitted ASAP even though it is less pressing than SDLT/CH registration?
Risk losing the 30 working day priority from OS1 search result
Can the original OS1 search be extended?
No - new OS1 search can be submitted but this starts a new priority period and does not extend existing one
Example: The buyer’s solicitor submits an OS1 search and completes 10 working days later. The solicitor has still not sent the Land Registry application 20 working days later, when the priority period expires. The solicitor submits a new OS1 search, which shows that a notice has been entered against the register. The new search (and therefore the Land Registry application) does not take priority against this notice.
What are the LR deadlines for registered and unregistered land?
- Registered = no deadline (other than time limit for priority under OS1; 30 working days of search result)
- Unregistered = two months from completion
Does the transfer to the buyer take effect at law upon completion or registration?
At registration for registered land (until then it operates only in equity), on completion for unregistered land
Where a long period has elapsed between completion of registered land transfer and registration, what should it be accompanied by?
An explanation
Example: A solicitor finds an old file that has slipped down the side of the desk. It contains an executed transfer of a piece of garden (registered) from one property to a neighbouring property, and fortunately the original neighbours are still there. The transfer is dated 10 years ago. The solicitor submits a Land Registry application with a note of apology that the delay is due to an oversight. The solicitor sends the updated official copies to the client and makes a mental note to improve filing procedures.
What happens if the deadline for unregistered land is missed?
The transaction is void and an application must be made to Land Registrar to extend period
When will LR process a transfer of land?
- Registered = within a couple of weeks
- Unregistered = several months
What 2 things will LR issue once application is completed?
- New official copies showing buyer as registered proprietor and lender (if any) as proprietor of legal charge
- Title information document (TID)
Sending these to client is usually the end of the transaction
What is capital gains tax?
Tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value
What are the 4 elements that must be satisfied to give rise to CGT?
- Chargeable disposal (sale/lifetime gift of asset; not death)
- of a chargeable asset (basically anything but cars)
- by a chargeable person (UK taxpayer, but not companies and charities usually exempt)
- which gives rise to a chargeable gain (increase in value of asset)
Tatiana buys a freehold shop for £100,000. Two years later, she gives it to her friend James as a present. At the time of the gift the shop is worth £120,000. Tatiana has realised a chargeable gain of £20,00
Will all real property (land) assets be chargeable assets?
Except main home where and insofar as it qualifies for private residence relief
What allowable expenditure is taken into account when calculating the chargeable gain?
In case of property
Costs incurred…
* In acquiring asset
* That contribute to value of asset
* In disposing of asset
- Akeyo buys a restaurant for £140,000 in good condition. He pays conveyancing fees of £1,000.
- He spends £6,000 in adding a conservatory to extend the dining area.
- Unfortunately, the roof of the main building is damaged by a storm, and due to a problem with the insurance, he spends £2,000 in repairing it.
Akeyo sells the restaurant in September 2022 for £180,000 and incurs conveyancing fees and agent’s commission totalling £3,000.
The chargeable gain is calculated as follows:
* Disposal value: £180,000
* less the acquisition value: (£140,000)
* less allowable expenditure: (£1,000 + £6,000 + £3,000 = £10,000)
Chargeable gain: £30,000
Akeyo cannot count the £2,000 spent on the roof as part of his allowable expenditure, as this is a repair, not an improvement.
Are the costs of maintenance and repair included in allowable expenditure?
No1!!
What can be offset against the gains made and what is the available annual exemption?
- Losses on assets made during tax year can be offset against gains made
- Available annual exemption is £6,000
Akeyo in the same tax year as selling the restaurant, separately sells a painting that was hanging in the restaurant. The painting was bought for £20,000 but the artist has fallen out of fashion, and the painting is now worth only £17,000. Akeyo can offset his loss of £3,000 against his gains, to reduce them from £30,000 to £27,000.
The first £6,000 is tax-free as it comes within Akeyo’s annual exemption, so it is the remaining £21,000 that is taxed.
What is the effect of private residence relief?
A person does not pay CGT if they sell/dispose of their home
What are the conditions for private residence relief to apply?
- Has been person’s main home for all time they have lived in it
- They have not let it out
- It has not been used for business purposes
- The grounds including all buildings are less than 5000 square metres 0.5 hectares)
- It was not bought just to make a gain
Can apply to Listed Properties
If any of these conditions are not met = Private Residence Relief may be reduced or not available at all.
Will married couples have PRR each?
No - can only treat one property as their ‘main home’ between them
Will taking a lodger or using a room as a temporary office mean PRR is unavailable?
No - these are okay
For GCT purposes, when is disposal ‘completed’?
At the exchange of contracts
What are the CGT rates for property?
Basic = 18%
Higher/additional = 28%
Must a charge over company property be registered at Land Reg or Companies House?
Both!
- Companies House to ensure binding on company
- LR to ensure charge takes effect at law
How is SDLT calculated on residential transactions?
Different % rates apply to slices of total purchase price
How is the SDLT calculation different for 1. first-time buyers and 2. second properties?
- If under £625,000 and all buyers are first time owners, no SDLT up to £425,000, then 5% after this (up to £625,000)
- Additional 3% on top of whole purchase price
