Completion

Question 1

Buyer’s checklist before completion?

Answer 1

Draft transfer deed for seller’s solicitor’s approval, arrange for buyer to execute if it contains indemnity covenants, if buyer taking mortgage loan, arrange for buyer to execute legal charge, send requisitions on title, carry out pre-completion searches, send certificate of title to lender, send buyer statement of money needed to complete purchase, client approve SDLT form.

Question 2

What is on the seller’s solicitor’s checklist before completion?

Answer 2

Approve transfer deed, arrange transfer to be executed, reply to requisitions on title, request redemption statement from seller’s lender.

Question 3

Who drafts transfer deed?

Answer 3

In recent years it has become common for sellers solicitors to draft it at same time as contract.

Used to be buyers solicitor who drafted the transfer deed.

Question 4

What is the TR1?

Answer 4

The most common transfer deed, which transfers the whole of a freehold or leasehold title.

Question 5

What is the TP1?

Answer 5

Used for the transfer of part only of a registered title.

Question 6

What is a TR4 used for?

Answer 6

Used for the transfer of a portfolio of registered titles.

Question 7

Who must execute the TR1?

Answer 7

The transferor must always execute the TR1.

The transferee must execute the TR1 if they are tenants in common or agree to hold the property on trust for someone else in panel 10, or they are providing an indemnity covenant, or any other obligation in panel 11.

Question 8

How do the buyer and sellers’ solicitors agree and execute the transfer deed?

Answer 8

Buyers solicitor drafts, sellers solicitor amends or approves.

Once agreed, the sellers solicitor sends the engrossment (final) transfer deed to the seller for execution (buyer’s only does if buyer needs to execute).

Sellers solicitor and if appropriate buyer’s solicitor hold the executed but undated transfer deed ready for completion.

Question 8

What is a search with priority?

Answer 8

Search with form OS1 or OS2 that the buyer’s solicitor carries out at the Land Registry against the title number. It updates the official copies that were initially provided and identified changes that have been made.

Confers a priority period of 30 working days to favour the person searching. If buyer’s solicitor submits the application to register the transfer within that priority period, the buyer’s transfer will take priority before any other application, even if lodged before the buyer’s application.

Question 9

What is the alternative to OS1/OS2 for unregistered land?

Answer 9

Land Charges Registry form K15 - this identifies any encumbrances or other adverse matters registered against the owner or seller of unregistered land. It confers a priority period of 15 working days, but NOTE THAT IT IS ONLY NECESSARY TO COMPLETE THE PURCHASE - NOT SUBMIT THE REGISTRATION APPLICATION - within the priority period.

Question 10

What is a solvency search and when would it be carried out?

Answer 10

When acting for buyer and lender, buyers solicitors to carry out bankruptcy search (Form K16) against the buyer to protect the lender.

If the buyer is a company, lender will also want a company search carried out against the buyer to check no pending insolvency/crystallisation of floating charge.

Question 11

What are requisitions on title?

Answer 11

General question buyer’s solicitor needs answering before completion. Usually in form of Law Society TA13 for residential. Commercial may be in CPSE form SCR.

Question 12

What is the content of the TA13 form (requisition on title for residential transactions).

Answer 12

1. Vacant possession? Asks about arrangements for collecting keys
2. Deeds and Docs: Unregistered property - list of deeds and docs to be sent on completion.
3. Completion - asks for confirmation that it will take place with Law Society’s Code for Completion by Post.
4. Money - asks sellers solicitor’s client account details, amount payable on completion.
5. Mortgages and charges - Asks seller’s solicitor to list any mortgages secured on the property and confirm their undertaking to redeem them on completion.

Question 13

How does buyer’s solicitor ensure that the mortgage is cleared from the property so that buyer’s transfer can be registered?

Answer 13

Sellers solicitor undertakes to redeem the mortgage against the property (not to ‘discharge’ the mortgage - but to pay in full). On loan being redeemed, lender should discharge the charge at the Land Registry electronically or provide a DS1 form to go to the land registry to discharge the charge.

Sellers solicitors undertaking is to forward appropriate form of discharge to buyers solicitor once received by sellers solicitor..

Question 14

An overview of completion

Answer 14

Buyers solicitor has received mortgage advance and balance of money, sends to sellers solicitor.

Sellers solicitor confirms money arrived, and dates transfer deed, calls seller to let them know and estate agent to release keys to buyer.

Buyers solicitor calls buyer to collect keys and move in.

Sellers solicitor sends transfer deed and any other agreed deeds and docs to buyers solicitors, redeems mortgage, sends balance of money to seller.

Question 15

What do the SCS say about failure to complete?

Answer 15

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, then the seller pays interest on the full purchase price (only under SCS, not SCPC).

If the buyer is late in completing, then the buyer pays interest on the purchase price less any deposit paid(applies under SCS and SCPC).

Question 16

Is recession automatically available to the non-defaulting party?

Answer 16

No. This is because under a standard contract, time is not of the essence (SCS 6.1.1 or SCPC 9.1.1).

After either party has failed to complete on time, however, the non-defaulting party can serve notice to complete on the other (SCS 6.8.1 or SCPC 9.8.1). This has the effect of making time of the essence. The parties must then complete within ten working days (excluding the day on which notice is given)

Question 17

What is the effect of notice to complete?

Answer 17

Parties must complete within ten working days. Once served, cannot be withdrawn unless both parties agree.

Question 18

What are the seller’s remedies if buyer fails to complete within the ten working-day period?

Answer 18

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

Question 19

What are the buyer’s remedies if sellerfails to complete within the ten working-day period?

Answer 19

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)

Note that contractual compensation (interest) only applies to delayed completion, so where completion does not take place at all, the remedy is damages.

Question 20

What is the time limit for registering a charge given by a company at Companies House?

Answer 20

21 day period, starting day after creation of charge. If not done, charge is void against any liquidator or administrator and lender is not protected.

Missed deadline = court order.

Question 21

How does an application for registration work at the Land Registry with already registered land?

Answer 21

If the title is already registered, then Land Registry form AP1 is used to set out the details of the application and the documents provided.

For a purchase, these will include:
(a) The transfer deed (eg TR1)
(b) SDLT5 or WRA certificate to prove payment of SDLT or LTT
(c) Form DS1 to discharge the seller’s mortgage if appropriate (this can be sent on later if not yet available)
(d) Mortgage deed in favour of the buyer’s lender
(e) If appropriate, certificate of registration of charge at Companies House
(f) Other documents as appropriate (eg, death certificate for deceased joint proprietor if the seller is a sole surviving beneficial joint tenant)

Question 22

How does application for registration work when there is unregistered title?

Answer 22

Instead of the form AP1, a form FR1 is used, which contains additional boxes relevant to unregistered title.
Unlike the AP1, the FR1 does not have a box where the enclosures are listed. Instead they are listed on a separate form DL.
The following documents are included:
(a) Numbers 1 to 6 on the previous page
(b) The epitome of title and the deeds and documents referred to in it
(c) Land charges searches for the seller and previous owners in the chain of title

Question 23

When does the SDLT relief on residential transactions for first time buyers apply?

Answer 23

Person buying their first home provided purchase price is no more than £625k. No SDLT for first £425 k and then 5% on any part of the price from 425k to 625k

Question 24

what are the SDLT rules if the buyer is buying a second property?

Answer 24

Additional SDLT of 3% is charged on the whole of the purchase price.

Question 25

When does CGT arise?

Answer 25

When there is a chargeable disposal of a chargeable asset by a chargeable person which gives rise to a chargeable gain.

Question 26

What is a chargeable disposal?

Answer 26

Sale of an asset or lifetime gift of an asset

Question 27

What’s a chargeable asset?

Answer 27

All property is except the main home where and insofar as it qualified for Private Residence Relief.

Question 28

Who is a chargeable person?

Answer 28

UK taxpayer.

Question 29

What is a chargeable gain?

Answer 29

Chargeable gain looks at the increase in value of the asset.

In calculating the chargeable gain, the taxpayer can take into account allowable expenditure. In the case of property, this may include:
* 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)

Question 30

What is a taxpayer has made losses on assets that tax year?

Answer 30

They may offset that against gains made.

Question 31

What is private residence relief?

Answer 31

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.