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Property Law and Practice > Completion > Flashcards

Completion Flashcards

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1
Q

How must land be transferred?

A

By deed

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2
Q

What form must be used for registered land?

A
  • TR1 - most common - transfers whole of freehold or leasehold title
  • TP1 - transfer of part only of registered title
  • TR5 - used to transfer portfolio of registered titles (and may include unregistered titles
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3
Q

What forms are used for transferring unregistered land?

A

More flexible. Can use TR1 or can be done by form of conveyance.

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4
Q

How are deeds to be executed by an individual?

A

Individual signs transfer in presence of independent witness

Witness signs and prints their full name and address

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5
Q

When is a transfer considered to be delivered?

A

When it is dated, usually by transferor’s solicitor

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6
Q

How are deeds executed by a company?

A

One of following options:

  • company seal attached, and signed by two directors or one director and company secretary
  • no company seal, but signed by two directors or 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 or company secretary) who is authorised under a power of attorney
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7
Q

What is the purpose of pre-completion searches?

A

To check and protect the buyer’s ability to obtain title to the property as per the contract.

To make sure no material changes to title or property in intervening period between pre-exchange searches and completion

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8
Q

What pre-completion search should be carried out against registered land?

A

Buyer’s solicitor should carry out search with priority at the Land Registry against title number

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9
Q

What is the purpose and effect of a search with priority against registered land?

A

Identifies any changes that have been made between the pre-exchange searches and now.

Confers a priority period of 30 working days in favour of the person searching

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10
Q

What pre-completion search should be carried out against unregistered land?

A

Buyer’s solicitor should carry out land charges search of Land Charges Registry

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11
Q

What is the purpose and effect of a land charges search against unregistered land?

A

Identifies any incumbrances or other adverse matters registered against the owner/seller of the unregistered land.

Confers a priority period of 15 working days if buyer completes transaction within 15 day period.

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12
Q

Why should a buyer do priority searches? Are they protected in any other ways?

A

Buyer already protected against adverse issues under contract - possible damages/claim for misrepresentation, possible rescission

Searches add extra layer of protection and provide that their registration is protected by priority

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13
Q

When will a solvency search need to be carried out against an individual buyer?

A

When buyer is acting for buyer AND lender - bankruptcy search (conferring priority of 15 days

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14
Q

What solvency searches will need to be carried out if either buyer or seller is a company?

A

Solvency searches against both buyer and seller to protect lender and buyer.

Make sure no pending insolvency or crystallisation of floating charge

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15
Q

When should solvency searches be carried out against a company?

A

As late as possible as they confer no priority

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16
Q

What are requisition on title?

A

Key questions the buyer’s solicitor needs answering before completion

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17
Q

What key information may a buyer’s solicitor want to know before completion?

A
  • Either how to get keys if vacant or authority for rent to be collected by them following completion
  • For all deeds and documents to be sent to them following completion
  • Confirmation of form of completion
  • Client account details to send money to and exact amount to be sent confirmed
  • List of mortgages and to confirm undertaking to redeem them on completion
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18
Q

What undertaking will the seller’s solicitor give in relation to mortgages?

A

Undertaking to redeem mortgages

Not undertaking to discharge the charge as not within solicitor’s power - bank’s power

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19
Q

What will be involved in completion?

A

Balance of purchase price being paid to seller

Legal title passing to buyer

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20
Q

What requirements are there under the Law Society Code for Completion by Post?

A

Provided that buyer’s solicitor sends necessary money, seller’s solicitor provides various undertakings eg to transfer title, send over various documents

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21
Q

What happens to the transfer deeds immediately following completion?

A

Seller’s solicitor holds them as agent for the buyer’s solicitor meaning they can direct what happens to them

As soon as possible seller’s solicitor should send them to buyer’s solicitor. Must be done no later than end of next working day following completion.

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22
Q

What does it mean to say the seller has failed to complete?

A

Seller’s solicitor is unable to date an executed transfer

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23
Q

What does it mean to say the buyer has failed to complete?

A

Seller’s solicitor has not received the money to complete from buyer’s solicitor either because buyer not sent it or instructs seller’s solicitor

24
Q

Who are the defaulting and non-defaulting parties?

A

Defaulting party - party that fails to complete

Non-defaulting party - party who is ready to complete but can’t

25
Q

What happens if you fail to complete under the SCS?

A

Defaulting party obliged to pay interest for each day of delay

26
Q

How is interest to be calculated in result of failure to complete under SCS?

A

Calculated by rate specified in contract

If contract silent, then Law Society interest rate

27
Q

What do defaulting parties pay interest on?

A

Seller in default - interest on full purchase price

Buyer in default - interest on purchase price less any deposit paid

28
Q

Aside from interest under SCS for defaulting, what other remedy would automatically be available on default?

A

Common law damages

Interest received under SCS would be deducted from any such sum

29
Q

When would rescission be able for defaulting party?

A

Not automatically - time is not of essence.

Time becomes of the essence on notice to complete being served. Ten days must elapse then contract can be rescinded.

30
Q

Is the party serving notice to complete also bound by it? When would they not be bound?

A

Yes, they are also bound.

Only not bound where both parties consent to withdraw notice

31
Q

What happens to deposit on serving notice to complete?

A

If less than 10% deposit, deposit must be made up to 10% of the purchase price

32
Q

What remedies does the seller have if they validly rescind the contract?

A
  • forfeit the deposit and any interest accrued on it
  • resell the property and any contents included it
  • claim contractual damages
33
Q

What remedies does the buyer have if they validly rescind the contract?

A
  • demand return of the deposit and any interest accrued on it
  • claim contractual damages or even specific performance
34
Q

What taxes are exclusively payable on property sales in England and Wales?

A

England - Stamp Duty Land Tax (SDLT)

Wales - Land Transaction Tax (LTT)

35
Q

When must the SDLT return be submitted and paid to HMRC?

A

Within 14 days of completion

36
Q

When must the LTT return be submitted and returned to Welsh Revenue Authority?

A

Within 30 days of completion

37
Q

If the purchase involves a charge given by a company, when must it be registered at Companies House?

A

Within 21 day from day of creation of charge. If not charge is void against any liquidator or administrator and lender is not protected

38
Q

If the property is already registered at the Land Registry, what must be done post-completion?

A

Application for registration of purchase - form AP1 - must be sent to Land Registry

Will include

  • transfer deed (TR1)
  • SDLT 5 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 buyer’s lender
  • if appropriate - certificate 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
39
Q

If the property is unregistered at the Land Registry, what must be done post-completion?

A

Application for first registration must be made.

FR1 form must be used.

Forms included:

  • transfer deed (TR1)
  • SDLT 5 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 buyer’s lender
  • if appropriate - certificate 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
  • epitome of title and deeds and documents referred to in it
  • land charges searches for the seller and previous owners in the chain of title
40
Q

What must be done with overriding interests post-completion and filing at the Land Registry?

A

If there are no overriding interests, should say that on forms sent to land registry.

If there are overriding interests, then they should be disclosed to the land registry.

41
Q

Can an online application be made to the land registry?

A

Yes if property is registered already.

Not if unregistered.

42
Q

What is the time limit for registering registered land with the Land Registry?

A

No time limit but if not done within 30 working days of OS1 search with priority then priority will be lost

43
Q

What is the time limit for registering unregistered land with the Land Registry?

A

Deadline of two months from completion - otherwise transaction is void

44
Q

What will happen after registration?

A

Land Registry will issue new official copies showing buyer as proprietor, and lender as the proprietor of any legal charge.

Buyer’s solicitor should check all details are correct

45
Q

What are the key features of SDLT for residential property purchases?

A
  • different bands of SDLT payable at different percentages of purchase price
  • Nil rate band up to certain level
  • relief for first time buyers up to certain amount
  • second properties charged an additional 3%
46
Q

What are the key features of SDLT for commercial property purchases?

A
  • different band payable at different rates
  • nil rate band up to certain level
47
Q

What are the key differences between SDLT and LTT?

A
  • no first time buyer relief with LTT
  • LTT has different rates for those buying a second home
  • rates are different again
48
Q

When is capital gains tax chargeable? What four requirements are needed?

A
  • there is a chargeable disposal
  • of a chargeable asset
  • by a chargeable person
  • which gives rise to a chargeable gain
49
Q

What is a chargeable asset?

A

Most valuable personal possession and certain non-physical assets such as shares

Not cars.

Land although exemption for main home - Private Residence Relief

50
Q

Who is a chargeable person?

A

Individual who is a UK taxpayer for the relevant tax year

Companies do not therefore pay CGT

51
Q

What is a chargeable gain?

A

Increase in value between purchase price and sale price less any allowable expenditure

52
Q

What allowable expenditure can be deducted from any chargeable gain amount?

A
  • cost incurred in acquiring the asset (such as conveyancer’s fees)
  • costs incurred that contribute to the value of the asset (the cost of building an extension but not costs of maintenance or repair)
  • costs incurred in disposing of the asset (such as conveyancer’s fees for the sale and estate agents’ commission)
53
Q

What happens if the taxpayer has made losses at the same time they made the gains?

A

The taxpayer can offset any loses against any gains made

54
Q

What annual exemption is a taxpayer entitled?

A

£6,000 currently

55
Q

What conditions must be met for Private Residence Relief to apply so no CGT due?

A
  • 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
  • the grounds including all buildings are less than 5,000 square metres
  • it was not bought just to make a gain

Property Law and Practice (12 decks)

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