Completion Flashcards
Sellers summary of completion
Draft/approve Transfer Deed (TR1) – Rely to Completion Information – Prepare for completion – COMPLETION
Buyers summary of completion
Draft/approve Transfer Deed (TR1) – Requestion Completion Information – Pre-Completion Searches – Prepare for Completion - COMPLETION
What is the buyers solicitors checklist before completion
- draft the transfer deed for the seller’s solicitor’s approval
- once approved by the seller’s solicitor, arrange for the buyer to sign if it contains indemnity covenants (or any other obligation on the part of the buyer)
- if the buyer is taking a mortgage loan, arrange for the buyer to execute the legal charge
- send requisitions on title to the seller’s solicitor
- carry out relevant pre-completion searches
- send certificate of title to the lender, and request the loan advance in time for completion (usually to arrive the day before)
- send the buyer a statement of money needed to complete the purchase
- Stamp Duty Land Tax form approved by client
What is the sellers solicitors checklist before completion
- approve the transfer deed drafted by the buyer’s solicitor
- arrange for the transfer to be executed by the seller
- reply to requisitions on title
- request a redemption statement from the seller’s lender (if any)
- in a residential sale, ask the seller or agent to take final meter readings
Who drafts the transfer deed
Traditionally, the seller’s solicitor drafted the contract, and the buyer’s solicitor drafted the transfer deed.
This is still the default position taken in the Standard Conditions of Sale (SCS) and Standard Commercial Property Conditions (SCPC).
However, in recent years, it has become quite common for the seller’s solicitor to draft the transfer at the same time as the contract, and for the draft transfer to be annexed to the contract in approved form.
Does a transfer of land need to be in the form of a deed
Yes
What land registry forms are most used for the transfer of land
TR1 – the most common, this transfers the whole of a freehold or leasehold title
TP1 – this is used for the transfer of part only of a registered title
TR5 – this is used for the transfer of a portfolio of registered titles (and may include unregistered titles
When is the date written in to the TR1 form
The date is handwritten in on completion, which has the effect of completing the deed, so it should be left blank until completion.
What will a residential buyer put in the address for service section of the TR1 form
put the address of the property being purchased
Can panel 7 TR1 from ‘The transferor transfers the property to the transferee’ which operates to transfer title.’ Be amended
No
What could be included in panel 11 of TR1 form
additional provisions: Anything that is not relevant to panels 1 to 10 but needs to be included in the transfer deed is included in this panel.
This could be an indemnity covenant for positive covenants, or new covenants and easements (although these are more common in transfers of part).
If the transferor is a sole surviving tenant in common, the appointment of a second trustee would appear here.
When must the transferee execute the TR1 form
- if they are tenants in common or agree to hold the property on trust for someone else in Panel 10
- they are providing an indemnity covenant, or any other obligation in Panel 11
How does an individual execute a transfer deed
An individual signs the transfer in the presence of an independent witness who also signs and prints their full name and address
When is the transfer considered delivered (comes into effect)
when it is dated, usually by the transferor’s solicitor.
What are the options for a company executing a deed
- 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 the company secretary) who is authorised under a power of attorney
What pre completion search does the buyers solicitor carry out agaisnt registered land
search with priority (form OS1 or OS2 for part of land) at the Land Registry against the title number.
What does and OS1 or OS2 search do
This updates the official copies that were initially provided, and identifies any changes that have been made. It also confers a priority period of 30 working days in favour of the person searching.
If the buyer’s solicitor submits the application to register the transfer within that priority period, the buyer’s transfer will take priority over any other application, even if lodged before the buyer’s application
What pre completion search is carried out for unregistered land
The 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.
It confers a priority period of 15 working days.
Is the seller under an obligation under SCS and SCPC to disclose any adverse issues that may have resulted in changes to the official copies originally provided.
Yes - If the seller does not, the buyer may have a claim for damages for breach of contract and/or misrepresentation, or even to rescind the contract.
Is it professional negligence if the solicitor forgets to undertake the OS1 Search
Yes
When a solicitor is acting for buyer and lender what search must the buyers solicitor carry out
A bankruptcy search (from k16) agaisnt the buyer to protect the lender
If the buyer is a company what search will a lender want carried out
Company search to check that there is no pending insolvency of crystallisation of a floating charge
If the seller is a company what search should a buyers solicitor undertake just before completion
A company search
What is the purpose of requisitions on title
used more generally to refer to the questions that the buyer’s solicitor needs answering before completion
What form is completed for requisitions on title for residential property
usually in the form of Law Society TA13. The form is also headed ‘Completion information and undertakings’ which is a more accurate description than ‘requisitions on title’.
What is the form for requisitions on title for commercial property
Requisitions on title for commercial transactions may be in the firm’s own precedent form, or the Commercial Property Standard Enquiries (CPSE) form SCR (Solicitor’s completion requirements)
What is the content of a TA13 form
Vacant possession: Asks about arrangements for collecting the keys; for example, whether they are left with the agents.If there is a rent-paying tenant, then asks for an authority for the tenant to pay the rent to the buyer following completion.
Deeds and documents: For unregistered property, asks for a list of deeds and documents to be sent on completion Completion: Asks for confirmation that completion will take place according to the Law Society’s Code for Completion by Post. Similar to Law Society Formula B for exchange, the Code for Completion by Post sets out expectations and undertakings of the solicitors on completion. Money: Asks for the seller’s solicitor’s client account details (to send the money), and for the exact amount payable on completion.
Mortgages and charges: Asks the seller’s solicitor to list any mortgages secured on the property and confirm their undertaking to redeem them on completion.
What does the sellers solicitor undertake in relation to mortgages
The seller’s solicitor undertakes in the Law Society Code for Completion by Post to redeem the mortgages against the property which it will have already notified to the buyer’s solicitor.
On a loan being redeemed how should a lender discharge the charge
the lender should either discharge the charge at the Land Registry electronically (most common) or provide a form DS1 which can be produced to the Land Registry to discharge the charge.
What is completion taken place according to
the Law Society’s Code for Completion by Post. Similar to Law Society Formula B for exchange, the Code for Completion by Post sets out expectations and undertakings of the solicitors on completion.
How does completion almost always happen by
By post - which is facilitated by the Law Society Code for Completion by Post.
Under the Law Society Code for Completion by Post when does the sellers solicitor undertake to send the transfer deed
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 and documents to the buyer’s solicitor.
What is the purpose of The Law Society Code for Completion by Post
The seller’s solicitor provides various undertakings under the Code which the buyer’s solicitor can rely on to know that if the necessary money is sent, completion will take place, or the seller’s solicitor will return the money to the buyer’s solicitor.
What does the sellers solicitor do immediately following completion
Immediately following completion, the seller’s solicitor holds the transfer deed and other deeds and documents to the buyer’s solicitor’s order. This means that the buyer’s solicitor can direct what happens to them.
What does failure to complete on time result in
If either party fails to complete by the time and date specified in the contract, then they are obliged to pay interest for each day’s delay under SCS.
This is calculated at the interest rate specified in the contract. If none is specified, then SCS 1.1.1(e) provides that the Law Society interest rate (the current rate is published on their website) applies.
If the seller is late in completing, the seller pays interest on the full purchase price udner the SCS, does this also apply under the SCPC
NO
Why is rescission (where contract is set aside) not automatically available to non- defaulting party on delayed completion
because under a standard contract, time is not of the essence
Are common law damages for breach of contract available in event of delayed completion
Yes
What is the effect of a notice to complete
Makes time of the essence
The parties must complete within ten working days, the first day being the day after the notice to complete has been served.
The party serving the notice to complete is bound by the notice as well, so they must make sure that they will continue to be ready to complete within the ten working day period.
Once served, the notice to complete cannot be withdrawn unless both parties agree.
If either party fails to complete within the ten working day period, the remedies available depend on whether the non-defaulting party is the seller or the buyer
What are the sellers remedies on failure to complete after notice of completion has been served
The seller may rescind the contract, and on doing so, may also:
forfeit the deposit and any interest accrued on it
resell the property and any contents included in it
claim contractual damages
What are the buyers remedies for failure to complete after notice to complete has been served
The buyer may rescind the contract, and on doing so, may also:
demand return of the deposit with any interest accrued on it
claim contractual damages or even specific performance (an equitable remedy forcing the seller to complete the sale
Following completion, the buyer’s solicitor needs to attend to reporting and paying the appropriate tax - what is this for properties in England
- Stamp Duty Land Tax (SDLT)
- Dependent on purchase price
- Buyer’s solicitor prepares and submits SDLT return on buyer’s behalf
- SDLT return must be submitted and tax paid within 14 days of completion to avoid penalties
- Solicitors can prepare and submit SDLT return online using HM Revenue & Customs portal
- On submitting the return, buyer’s solicitor receives SDLT5 certificate
Following completion, the buyer’s solicitor needs to attend to reporting and paying the appropriate tax - what is this for properties in Wales
- Land Transaction Tax (LTT)
- Dependent on purchase price (but different thresholds and rates apply)
- Buyer’s solicitor prepares and submits LTT return on buyer’s behalf
- LTT return must be submitted and tax paid within 30 days of completion to avoid penalties
- Solicitors can prepare and submit SDLT return online using Welsh Revenue Authority (WRA) portal
- On submitting the return, buyer’s solicitor receives WRA certificate
What documents need to be provided in the AP1 form - registration for registered title
The transfer deed (e.g. TR1)
SDLT5 or WRA (wales) certificate
DS1 - sellers mortgage discharged
Mortgage deed - if appropriate
Certificate of registration of charge at companies house
Other documents as appropriate e.g. death certificate for deceased joint proprietor if the seller is a sole surviving beneficial joint tenant)
What is often the last step of the post-completion work
Land registry application
If title is registered what form is used on the application for registration
AP1
What is the time limit for registering a charge (mortgage) at companies house
within 21 days of the creation of the charge. If this is not done, then the charge is void against any liquidator or administrator, and the lender is not protected.
When completing applications for registration for unregistered title what form is used
FR1
What additional documents are included in the FR1 application for registration unregistered title
The epitome of title and the deeds and documents referred to in it
Land charges search for the seller and previous owners in the chain of title
For both AP1 and FR1 what from should be completed if there are overriding interests
Form DI
Most registration applications are submitted online when is this not possible
for a first registration
How is an application for registration on first regisistartion made
by post or document exchange (DX)
What is the land registry deadline for registered land
For registered land, there is no deadline for application other than the time limit for priority under the OS1 search. The Land Registry will allow an application to be submitted at any time after completion, but may query it if a long period has elapsed.
What is the land registry deadline for unregistered land
deadline of two months from completion. If this is not complied with, the transaction is void.
An application must then be made to the Land Registrar to extend the period.
What, in most cases, is the end of the transaction when purchasing property
Sending the client the update official copies - these are issued by the land registry after the application for registration has been completed
Do charges created by individuals against residential property need to be registered at companies house
No - only Charges created by companies must be registered at Companies House within 21 days of the creation of the charge
Where VAT is payable on the purchase price, id the SDLT calculation based on the purchase price including VAT.
Yes
Does the separate value allocated to contents, such as carpets, white goods and furniture, etc form part of the purchase price for the purpose of SDLT/LTT
NO - only the case if parties chose to value them separately, less common now
What is the first time buyers relief for SDLT
If purchase price is less than £625,000 and all buyers are first time buyers then there is no SDLT for the first £425,000 of the purchase price, and 5% on any part of the price over £425,000 (but not exceeding £625,000)
What is the rule in relation to SDLT on second properties (residential transactions)
If the buyer is buying a second property, then additional SDLT of 3% is charged on the whole of the purchase price.
You can calculate the SDLT that would be chargeable as usual, and then add 3% of the total purchase price.
What is the rule in relation to SDLT on second properties (residential transactions)
If the buyer is buying a second property, then additional SDLT of 3% is charged on the whole of the purchase price.
You can calculate the SDLT that would be chargeable as usual, and then add 3% of the total purchase price.
What are the SDLT rules for non-residential transactions
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.
Example: A buyer buys an industrial unit for £750,000. There is no SDLT on the first £150,000, 2% SDLT on the next £100,000, and 5% SDLT on the remaining £500,000. Total = 0 + £2,000 + £25,000 = £27,000.
How does LTT, the equivalent of SDLT in Wales, differ in how it is charged
• there is no relief for first-time buyers
• Higher rates of LTT applies for buyers who will have a second property after the purchase
the rates are different (again, you do not need to know the rates – if you are asked to perform a calculation, you will be given the rates)
Do the rates change for non - residential property for LTT
Yes
Under both SDLT and LTT do residential buyers pay higher rates if they are acquiring a second property
Yes
When does CGT arise
CGT arises when:
• there is a chargeable disposal
• of a chargeable asset
• by a chargeable person
• which gives rise to a chargeable gain
All of these elements must be satisfied or there is no CGT liability.
When calculating the chargeable gain what allowable expenditure can be taken into account
• costs incurred in acquiring the asset (such as conveyancers’ fees for the purchase)
• costs incurred that contribute to the value of the asset (such as the cost of building an extension but not costs of maintenance or repair)
• costs incurred in disposing of the asset (such as conveyancers’ fees for the sale and estate agents’ commission)
Is the tax payer entitled to an annual exemption in relation to CGT
Yes currently £3000
What is private residence relief in relation to CGT
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.
Can Married couples and civil partners treat more than one property as their main home between them
No they can only have one main home - they can not have one each
