Completion

Question 1

What steps must solicitors take immediately after exchange of contracts in a property transaction?

Answer 1

1. Inform Clients: Notify both buyer and seller that exchange has occurred.
2. Transfer Contracts: Send signed and dated parts of the contract, with the completion date inserted, to the other party’s solicitor.
3. Comply with Undertakings: Fulfill any undertakings made during the exchange process, especially under Law Society Formula A, B, or C if exchange occurred via telephone.
4. Finalize Preparation: Begin preparing for pre-completion tasks such as drafting the transfer deed and conducting pre-completion searches.

Question 2

What are the main tasks for solicitors in the pre-completion stage of a property transaction?

Answer 2

1. Prepare the Transfer Deed: Draft and finalize the deed of transfer (TR1 for whole registered title; TP1 for part).
2. Conduct Pre-Completion Searches: Update title searches to ensure no changes or encumbrances.
3. Arrange Completion Logistics: Finalize practical arrangements, including payment methods, key handover, and document exchange.
4. Ensure Financial Readiness:
   * Verify receipt of mortgage funds from the lender.

• Confirm buyer’s funds for the balance of the purchase price.

Question 3

What are the legal requirements for executing a valid deed to transfer property?

Answer 3

1. Clearly Indicate It’s a Deed: State explicitly that the document is a deed.
2. Proper Execution:
   * For Individuals: Signed in the presence of an independent witness who attests to the signature.
   • For Companies:
   • Use a company seal, or
   • Signed by two directors, or
   • Signed by one director and witnessed.
     3. Delivery of Deed: Presumed delivered upon signing unless explicitly stated otherwise in accompanying correspondence.

Question 4

Why are pre-completion searches necessary, and how are they conducted?

Answer 4

Purpose:
1. Ensure the title has not been further encumbered by the seller since the initial investigation.
2. Check for financial solvency of the buyer or seller if required by the lender.
3. Secure priority for the buyer and lender at the Land Registry to prevent adverse third-party claims during the registration gap.

Methods:
* Registered Title: Use Form OS1 for whole title, or OS2 for part. This grants a 30-working-day priority period.
* Unregistered Title: Conduct a Land Charges Department search using Form K15; results on Form K18 grant a 15-working-day priority period.

Question 5

What is Form TA13, and how is it used in completion arrangements?

Answer 5

Form TA13 (Completion Information and Undertakings) is used to finalize practical arrangements for completion. It includes:
1. Key Handover Details: Specifies how and when the buyer will receive keys to the property.
2. Completion Method: Identifies how completion will occur (e.g., in-person or by post).
3. Outstanding Documents: Lists documents the seller must provide, such as title deeds or planning permissions.
4. Mortgage Undertaking: Seller’s solicitor undertakes to discharge any existing mortgage and provide evidence (e.g., Form DS1).

Question 6

What financial preparations must be completed before the day of completion?

Answer 6

1. Financial Statement: Buyer’s solicitor issues a detailed statement of funds needed, including:
   
   • Balance of purchase price.
   • Stamp Duty Land Tax (SDLT) or Land Transaction Tax (LTT).
   • Registration fees.
   • Solicitor’s fees and other disbursements.
     2. Mortgage Funds: Ensure lender has provided funds or will release them upon receiving required documents (e.g., certificate of title, solvency search results).
     3. Buyer’s Funds: Confirm the buyer has transferred the required balance to the solicitor’s client account.

Question 7

What are the consequences if pre-completion Land Registry priority is lost due to late registration? Include an example.

Answer 7

1. Buyer loses priority to third-party entries made after the priority period expires.
2. Adverse rights or encumbrances may take precedence over the buyer’s interest.

Example:

• Solicitor for Rabinet plc failed to register the transfer of a freehold property within the OS1 priority period.
• Beckwith Limited (the seller) granted a right of way to Southwood Ltd before completion.
• Since the OS1 priority period expired before Rabinet’s registration, the Land Registry gave priority to Southwood’s easement, significantly affecting Rabinet’s property plans.

Question 8

What are the two main methods for completing a property transaction, and how does the Law Society Code for Completion by Post work?

Answer 8

1. In-Person Completion: Buyer’s solicitor visits the seller’s solicitor to exchange funds for documents and keys.
2. Completion by Post:
   * Seller’s solicitor acts as an agent for the buyer’s solicitor.

• Completion documents are exchanged electronically or by post.
• The Law Society Code imposes implied undertakings on the seller’s solicitor to ensure instructions are followed.

Question 9

What is the effect of completion, and why is the registration gap significant?

Answer 9

Effect of Completion:
1. Unregistered Land: Legal title transfers immediately on completion.
2. Registered Land: Legal title transfers only when the buyer is registered as proprietor at the Land Registry.

Significance of Registration Gap:
* The gap between completion and registration exposes the buyer to risks of third-party claims.
* Pre-completion Land Registry searches ensure priority during this period, protecting the buyer and lender’s interests.

Question 10

What happens to the seller’s mortgage post-completion?

Answer 10

1. Pre-Arranged Redemption:
   
   • Buyer typically agrees to allow seller’s solicitor to redeem the mortgage post-completion using funds received at completion.
   • Alternatively, the buyer’s solicitor may directly send the redemption funds to the lender with any remaining balance sent to the seller’s solicitor.
     2. Redemption Methods by Lender:
   • Form DS1: Completed and sent to the seller’s solicitor for transmission to the buyer’s solicitor.
   • e-DS1: Submitted electronically through the Land Registry portal.
   • Electronic Discharge (ED): An automated system where the lender notifies the Land Registry directly, and the charge is removed from the title.
     3. Notification to Buyer:
   • If ED or e-DS1 is used, seller’s solicitor informs the buyer’s solicitor of the electronic discharge. Otherwise, the DS1 is forwarded to the buyer’s solicitor as proof of discharge.

Question 11

What are the requirements for SDLT/LTT payment after completion?

Answer 11

1. Deadlines:
   
   • Stamp Duty Land Tax (SDLT): Must be paid within 14 days of completion in England.
   • Land Transaction Tax (LTT): Must be paid within 30 days of completion in Wales.
     2. Process:
   • File the tax return (SDLT1 or Land Transaction Return) and make payment either online or via paper.
     3. Proof of Payment:
   • HMRC issues an SDLT5 form (England).
   • Welsh Revenue Authority (WRA) issues a WRA certificate.
     4. Consequences of Non-Payment:
   • Penalties and fines are levied for late payment.
   • Applications for Land Registry registration are rejected unless accompanied by an SDLT5 or WRA certificate.

Question 12

Why must a mortgage be registered at Companies House?

Answer 12

1. Purpose:
   
   • To ensure constructive notice is given to other creditors of the company about the mortgage.
     2. Time Limit:
   • Must be registered within 21 days of the charge’s creation (completion).
     3. Consequences of Failure:
   • Charge becomes void against the borrower’s other creditors and administrators.
   • Seriously prejudices the lender’s security.
     4. Remedy for Missed Deadline:
   • Can only be resolved by obtaining a court order.

Question 13

What steps are involved in registering property and a new charge at the Land Registry?

Answer 13

1. Form AP1: Used to apply for registration of:
   
   • Buyer as registered proprietor.
   • Lender’s charge.
   • Discharge of seller’s mortgage if a DS1 was used.
     2. Required Documents:
   • Certified copy of the transfer deed (TR1).
   • SDLT5/WRA certificate.
   • Mortgage deed (if applicable).
   • Form DI (disclosing overriding interests).
     3. Priority Period:
   • Application must be submitted before the OS1 priority period expires (30 working days).
     4. Effect of Delay:
   • Failure to meet the deadline risks exposing the buyer to third-party claims or adverse registrations during the intervening period.

Question 14

What is the process for registering unregistered land for the first time?

Answer 14

1. Form FR1: Must be submitted within 2 months of completion.
   
   2. Supporting Documents:
      * Title evidence from seller’s solicitor (originals or certified copies).
      * Pre-contract searches, replies, and requisitions.
      * SDLT5/WRA certificate.
      * Form DI for overriding interests.
   3. Registrar’s Role:
      * Investigates the title and determines the class of title to assign (e.g., Absolute or Qualified).
   4. Outcome:
      * Buyer is registered as proprietor, and lender’s charge is noted if applicable.
      * Buyer receives a Title Information Document (TID).

Question 15

What remedies are available when completion is delayed?

Answer 15

1. Contractual Compensation:
   
   • SC/SCPC conditions provide for daily interest on the outstanding balance (minus deposit) at the contract rate.
   • Compensation applies until actual completion.
     2. Common Law Damages:
   • Claim damages for foreseeable losses under Hadley v Baxendale.
   • Examples include legal fees, temporary accommodation, storage costs, and rebooking removal services.
     3. Notice to Complete:
   • Time becomes of the essence after notice.
   • Defaulting party has 10 working days to complete.
   • Failure to comply allows the innocent party to rescind the contract and claim damages.
     4. Rescission:
   • Contract may be rescinded for failure to complete after notice or for serious misrepresentation.

Question 16

What is the purpose and effect of a notice to complete?

Answer 16

1. Purpose:
   
   • Gives the defaulting party 10 working days to complete.
   • Makes time of the essence for the transaction.
     2. Requirements:
   • Can only be served after the contractual completion date and time (e.g., 2 pm).
   • Serving party must be ready, willing, and able to complete.
     3. Consequences of Non-Compliance:
   • Seller can forfeit the buyer’s deposit.
   • Buyer can demand the return of the deposit if the seller defaults.
   • Innocent party may claim damages for losses caused by the delay.

Question 17

A buyer’s solicitor conducted an OS1 priority search valid until 28 December. The seller granted a right of way to a third party on 10 December. The buyer’s solicitor submitted the registration application on 4 January. Will the buyer be bound by the right of way?

Answer 17

Yes.
1. The OS1 priority period protects the buyer from third-party claims only if the application is submitted before its expiry.
2. The solicitor missed the priority deadline, and the easement granted to the third party (on 10 December) takes precedence.
3. The buyer will be bound by the right of way, as it was registered before the buyer’s application.

Question 18

Calculate the compensation for a delayed completion (3 days) with the following terms:

*	Purchase price: £300,000
*	Deposit paid: £30,000
*	Contract rate: 8.5%.**

Answer 18

1. Outstanding balance: £300,000 - £30,000 = £270,000.
2. Annual interest: £270,000 × 8.5% = £22,950.
3. Daily interest: £22,950 ÷ 365 = £62.88.
4. Compensation for 3 days: £62.88 × 3 = £188.64.

Question 19

What final steps should the buyer’s solicitor take post-completion?

Answer 19

1. Check SDLT/LTT Payment: Ensure the tax is paid and proof is received (SDLT5 or WRA certificate).
2. Verify Land Registry Application: Confirm all documents are submitted within the priority period.
3. Check Title Information Document (TID):
   * Ensure buyer is correctly registered as proprietor.

• Verify lender’s charge is properly noted.

4. Document Custody:
   * Retain or transfer the TID and other documents as per client or lender instructions.
5. Close File: Once all matters are resolved and the client’s bill is settled.

Question 20

What are the differences between Land Registry searches and Land Charges Department searches in terms of form used, when to use, search criteria, fees, result forms, and priority periods?

Answer 20

1. Form Used:
   * Land Registry: OS1 (or OS2)
   * Land Charges Department: K15
2. When to Use:
   * Land Registry: For registered land.
   * Land Charges Department: For unregistered land.
3. Search Criteria:
   * Land Registry: Searches are conducted against the title number.

• Land Charges Department: Searches are conducted against owners’ names.

4. Fees:
   * Land Registry: Standard fee for each search.
   * Land Charges Department: Fee is based on each name searched.
5. Result Form:
   * Land Registry: Results are provided on OSR1 (or OSR2).

• Land Charges Department: Results are provided on K18.

6. Priority Period:
   * Land Registry: Priority period lasts 30 working days.
   * Land Charges Department: Priority period lasts 15 working days.

Question 21

In a contract incorporating the Standard Commercial Property Conditions (SCPC), what does SCPC 10.3 require in terms of compensation for late completion?

Answer 21

• SCPC 10.3:
• Requires only the buyer to pay compensation to the seller in the event of late completion.
• There is no corresponding requirement for the seller to pay compensation to the buyer if the seller is late in completing.