Completion Flashcards
Buyers checklist before completion?
- Draft the transfer deed for the seller’s solicitor’s approval
- Once approved by seller’s solicitor arrange for the buyer to sign it if it contains indemnity covenants
- Send requisitions on title to sellers’ solicitor
- Carry out relevant pre-completion searches
- Send certificate of title to lender, request loan advance in time for completion
- Send the buyer a statement of money needed to complete purchase
- SDLT approved by client
Seller’s solicitor?
- Approve transfer deed drafted by buyer’s solicitor
- Arrange for the transfer to be executed by the seller
- Reply to requisitions on title
- Request a redemption statement from sellers’ lender
- In a residential sale ask the seller or agent to take final meter readings
Transfer form?
Traditionally done by buyers’ solicitor as the seller’s solicitor drafts the contract however now common for seller’s solicitor to draft the transfer at the same time as the contract.
Form of the transfer: TRANSFER DEED
- ONCE approved, seller WILL ALWAYS need to execute
- Buyer will need to execute if agreeing to other obligations.
3 Y – most common, transfers whole of a freehold or leasehold title
TP1 – used for part only of a registered title
TR5 – used for transfer of a portfolio in the form of registered titles.
For a TR1
Panel 1
- Title number
- Registered property enter title no otherwise leave blank for unregistered
Panel 2 –
- Property
- A brief description of the property
Panel 3 –
- Date, written on completion
Panel 4 –
- The transferor(S)
- The registered proprietors of property, or if sellers name is different to when they bought property.
- If a second trustee is appointed for a sole surviving tenant in common, their details go here as well. If the transferor is a company, the company’s registered number should be provided.
Panel 5 –
- The transferees – buyers full name
Panel 6 –
- address for service – insert buyers address, put address of this property
Panel 7 –
- the transfer wording – cannot be amended
Panel 8
- consideration
- transferee is paying a sum of money for property – figure
- transfer is giving no monetary consideration
- other receipts
Panel 9 –
- title guarantee
- Full title guarantees or limited title guarantee
Panel 10 –
- Declaration of trust
- If both legal and beneficial title are being transferred to sole transferee then this can be skipped otherwise:
- Joint tenants or tenants in common
Panel 11
- Additional provisions
- Indemnity covenants or new covenants or if transferor is a sole surviving tenant in common the appointment of second trustee would appear here.
Panel 12 – execution
- Transferor must ALWAYS execute TR1
- Transferee must execute if they are tenants in common or hold on trust for someone.
Other transfers – TP1 AND TR 5
Tp1 – the part is identified in panel 3
TR 5 – in panel 1 – it contains a table with a no of properties and title no’s.
Executing the transfer deed?
An individual signs in the presence of an independent witness who also signs and gives full address
Then considered delivered by transferors’ solicitor
By a company s44 companies act
- Company seal attached and signed by two directors or one director and company secretary
- No company seal
- Signed by one company director and witnessed by an independent witness
- Signed by a senior employee authorised under a power of attorney
Pre-completion searches?
Registered land – buyers solicitor carries out a search with priority form os1 or os2 – for part of land)
- This updates official copies that were initially provided
- Search against title.
- Conferred a priority period of 30 WORKING days in favour of person searching – provided buyers application for registration in that time, priority will be given.
Unregistered
- Buyers’ solicitor carries out a central land charges search – Form k15
- This identified any incumbrances or other adverse matters registered against the owner/seller of land
- Confers a priority of 15 WORKING DAYS
Priority in operation
- Under SCS or SCPC – seller should disclose any adverse issues that may have resulted in changes to the official copies originally provided. If seller does not, buyer may have a claim for damages
- Buyers’ solicitor should however not rely on this – always ensure that registration is protected by priority at land registry.
Land searches and solvency searches?
- Land charges search gives 15 working days. Any entry against landowner during the priority period does not affect the ability of the buyer to register the transfer.
Solvency searches – buyers’ solicitor must carry out K16 (bankruptcy search) to protect lender. It confers a priority of 15 WORKING DAYS
- If buyers solicitor also acts for lender need to carry this out.
Company search should be carried out on companies. No priority period.
Requisitions on title?
- Usually in the form of law society TA13 for residential transactions – also called ‘completion info and undertakings’
- For commercial transactions – use firms own precent form
Contents of TA13 –
1. Vacant possession – asks about arrangements for collecting keys
2. Deeds and documents – for unregistered property asks for a list of deeds and documents to be sent on completion
3. Completion – asks for confirmation that completion will take place according to law society’s code for completion by post.
4. Money – asks for seller’s solicitors client account details and for exact amount payable on completion
5. Mortgage and charges – ask the sellers solicitor to list any mortgages secured on property and confirm their undertakings and redeem them on completions.
a. Buyers’ solicitor wants to ensure that the mortgage is cleared from property promptly
b. On the land being redeemed the lender should either discharge the charge at land
registry electronically or provide a form DS1.
Only seller’s solicitor only gives undertakings.
On completion – buyers solicitor gives full money.
And it’s called and completed.
Completion?
Law society code for completion by post:
- Law society code avoids the need for solicitors to physically attend the office by treating sellers’ solicitors as an agent for the buyer’s solicitor.
- Seller’s solicitor provides various undertakings under the code which the buyers solicitor can rely upon to know if money is sent then completion will occur.
- Immediately following completion, the seller’s solicitor holds the transfer deed and other deeds and documents to the buyer’s solicitor’s order. As soon as possible and NO LATER than the end of the working day after completion the seller’s solicitor undertakes to send the transfer deed and other deeds to buyers’ solicitor.
Delay or failure?
Seller’s failure to complete
- For example
- Not returned executed transfer
- Seller has returned executed transfer but instructs solicitor not to date it
Buyers’ failure to complete
- Not received money needed to complete
- Has received money but instructs solicitor not to release it
The defaulting party is the one who fails
Interest starts to accrue. Its based on working days so includes weekend.
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. This is calculated at interest rate specified in contract, if none written then in SCS 1.1
Remedies for failure to complete?
As the seller has breached the contract, the buyer can claim common law damages for the buyer’s losses. However, it is not always practical/cost effective to take proceedings if the seller resists the claim. If the buyer is successful in a claim, the interest received under SCS is deducted from such sum.
Recission
Where they’re put back in the position they would be if the contract never took place.
Not automatically available because time is not of the essence.
After failure the other party can serve a notice to complete on other which has the effect of making time of the essence. So, then parties must complete within 10 WORKING DAYS starting from the day AFTER SERVICE NOTICE.
Service notice to complete?
- Either party may serve it
- If buyer was defaulting party and they didn’t pay the 10% they have to make it up.
Effect of notice to complete – once serves it CANNOT be withdrawn unless both parties agree. If after the 10 working days they fail then the remedies are available depend on whether buyer or seller:
Post-completion steps?
Buyers’ solicitor still has work to do settling SDLT and registering buyers title at land registry.
Properties in England
- SDLT
- Dependent on purchase price
- Buyers’ solicitors prepare and submits it on behalf of buyer
- SDLT must be submitted and tax paid within 14 days of completion
- Solicitors can prepare and submit SDLT return online using HMRC portal
- On submitting receive SDLT5 certificate
Properties in Wales
- Land transaction tax
- Dependent on purchase price but different thresholds
- Solicitor submits on behalf
- 30 days of completion
- WRA portal
- WRA certificate
Registration of charge at companies’ house
- Register a charge given by a company at companies’ house within a 21 DAY period – if deadline is missed, necessary to apply for court order to allow the filing out of time.
Land registry?
Land registry application
- Last step
Application for registration – registered title
- Form AP1 is used to set out details of application and documents provided. Includes:
- Transfer deed
- SDLT5
- Form DS1 to discharge seller’s mortgage
- Mortgage deed
- Certification of registration of charge at companies’ house if relevant.
Application for registration – unregistered title
- Instead of AP1 the FR1 is used which contains additional boxes
- - epitome of title and deeds
- Land charges searches for seller a previous owner in chain of title
- CANNOT BE DONE ONLINE MUST BE DONE BY POST.
SDLT?
Paid on freehold purchases.
SDLT is assessed on the purchase price paid for the property, and different percentage rates
apply to the slices of the total purchase price.
It’s possible for parties to allocate separate value to contents such as carpets and good, this does not form part of purchase price. But it must be genuine value. Otherwise considered tax fraud. But less common to occur now.
SDLT on residential transactions – first time buyers
- Discount relief if applicable for first home provided purchase price is no more than 625,000.
Second properties
- If buyers are buying a second property, then additional SDLT 3% is charges on the whole of the purchase price.
- There are qualifications to this rule, such as if brought to replace buyers’ main home, or if first property is sold within 36 months.
On non-residential transactions – more simple
SDLT is simpler on non-residential transactions:
* Up to £150,000, there is no SDLT payable.
* Over £150,000 up to £250,000, SDLT of 2% is payable.
* Over £250,000, SDLT of 5% is payable.
CGT and private residence relief?
- Private Residence Relief applies so that a person does not pay Capital Gains Tax if they sell or
- dispose of their home, provided the following conditions are met:
- it has been the person’s main home for all the time that they lived in it
- they have not let it out (other than taking a lodger)
- it has not been used for business purposes (using a room as a temporary office is ok)
- the grounds including all buildings are less than 5,000 square metres
- it was not bought just to make a gain
- If any of these conditions are not met, then Private Residence Relief may be reduced or not
- available at all.
