Completion Flashcards
Buyer’s solicitor’s 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 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 solicitors
- carry out relevant pre-completion searches
- send certificate of title to lender and request loan advance in time for completion (usually to arrive the day before)
- send the buyer a statement of money needed to complete the purchase
- SDLT form approved by client
Seller’s solicitor’s 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
- in residential sale ask the seller to take final meter readings
Transfer deed
Traditionally buyer’s solicitor drafts the transfer deed but common for the seller’s solicitor to draft it at the same time as the contract
Form of transfer deed
Must be deed!
Registered land:
TR1 - most common, transfers whole of a freehold or leasehold title
TP1 - used for a transfer of part
TR5 - used to transfer a portfolio of titles
Unregistered land:
Any kind of deed but TR1 can be used
TR1: panels 1-4
Panel 1: title number (if unregistered leave blank)
Panel 2: property (enter a brief description of the property, for most properties this will be address which can be found in the official copies or root of title)
Panel 3: date
Date is handwritten in on completion which has the effect of completing the deed so it should be left blank until completion
Panel 4: the transferor(s)
Will usually be the registered proprietor(s) of the property. If the seller’s name is different than it was when they bought the property then change of name or marriage certificate should be provided.
Buyer’s solicitor will need this for Land Registry application.
If a second trustee is appointed for a sole surviving tenant in common, their details go here as well.
If transferor is a company their company number should be provided as well.
TR1: panels 5 to 7
5: transferee(s)
Insert the buyer’s full name. A maximum of four people or companies can be named.
6: Address for service
Insert the buyer’s address here. This should be the address of the property (if residential purpose).
Land Registry will use the address for service to direct any notices relating to the property
7: Transfer wording - cannot be amended.
TR1: panels 8 to 9
8: Consideration
3 tick boxes
1. sum of money for the property
2. no monetary consideration (gift)
3. other receipts (e.g. house swap or pay off a debt) - very uncommon
9: title guarantee
full or limited
if none leave blank
TR1: 10 to 11
10: declaration of trust
- skip if sole buyer
- joint tenants or tenants in common
- option for unequal shares
11: additional provisions
e.g. indemnity covenants
appointment of a second trustee would appear here
TR1: 12
12: execution
Transferor must always execute
Transferee must also execute if:
- tenants in common or agree to hold on trust for someone else
- providing an indemnity covenant or any other obligation
TP1 and TR5
TP1:
- transfers of part fo the land
- part identified by a plan attached to the TP1 and Panel 3 refers to the plan
- additional provisions provides headings such as “rights granted for the benefit of the property” and “rights reserved for the benefit of other land”
TR5: transfer of portfolio of titles
- main difference is that a panel contains a table where a number of properties and their title numbers (if registered) can be set out
Execution: individual
Individual signs in the presence of an independent witness who also signs and prints their full name and address.
Transfer is considered delivered when it is dated.
Execution: company
Different options:
- company seal in accordance with articles (usually one or two authorised signatories)
- 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 senior employee who is authorised under a power of attorney
Agreeing and executing the transfer: steps
- Buyer’s solicitor drafts transfer deed
- Seller’s solicitor either amends draft for buyer’s approval or approves the transfer as drafted
- Once agreed, seller’s solicitor sends the engrossment transfer deed to the seller for execution
- The seller’s solicitor and if appropriate the buyer’s solicitor, hold the executed but undated transfer deed ready for completion
Purpose of pre-completion searches
Check and protect the buyer’s (and lender’s if appropriate) ability to obtain title to the property.
Concerned with (1) the property and (2) the parties
Priority period: registered land
Buyer’s solicitor carries out a search with priority (form OS1 or OS2 (for part of land) at the land registry against the title number.
This updates the official copies that were initially provided and identifies any changes that have been made.
Confers a priority period of 23 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.
Priority period: 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. Run search against the seller (no need to run against previous owners)
Confers a priority period of 15 working days.
Unlike OS1 search, it is only necessary to complete the purchase (not submit LR) within the priority period to take priority
Search from date and priority period
As the OS1 search updates the official copies that the buyer’s solicitor has seen, the buyer’s solicitor provides the Land Registry with their date, and this is the date from which the search is run.
If nothing has changed since that date, then the search will come back clear; otherwise updated official copies will be sent to the searcher.
Importance of priority
Under SCS and SCPC, the seller should disclose any adverse issues that may have resulted in changes to that official copies
If the seller does not, buyer may have a claim for damages for breach of contract and/or misrep. or even to rescind the contract
However, a buyer’s solicitor should never rely on this
If search was not carried out then it is likely to cost time and money to put right any entry and would be a clear case of professional negligence
Solvency searches
Acting for buyer and lender: Buyer’s solicitor should run a bankruptcy search against the buyer (form k16) to protect the lender.
If buyer is a company then lender will want a company search carried out against the buyer to check that there is no pending insolvency or crystallisation of a floating charge.
A company search gives no priority period so should be left as a late as possible.
If seller is a company - complete a company search immediately before completion.
Requisitions on title
Used more generally to refer to the questions that the buyer’s solicitor needs answering before completion.
Residential: Law Society TA13 (completion information and undertakings)
Commercial: CPSE form SCR (commercial property standard enquiries (CPSE) form Solicitor’s completion requirements (SCR)
- the forms are similar in content if not in form.
Content of the TA13
- Vacant possession:
- asks about arrangements for collecting the keys (e.g. 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 completion
- 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. - Money
- asks for the seller’s solicitor’s client account details 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.
Seller’s solicitor’s undertaking to redeem mortgage
Law Society Code for Completion by Post - seller’s solicitor undertakes to redeem the mortgage against the property which it will have already notified to the buyer’s solicitor.
Note: undertaking is not to discharge the mortgage - not within solicitor’s power.
On the loan being redeemed, lender should discharge the charge at Land Registry (electronically) or provide a DS1 form which can be produced to the Land Registry to discharge the charge.
With large value transactions, the buyer’s solicitor may insist that the seller’s solicitor obtains an executed but undated DS1 in advance of completion.
What is the process of completion?
Involves the balance of the purchase price being paid to the seller and the legal title in the property being passed to the buyer.
Completion now almost always happens by post under the Law Society Code for Completion by Post.
Although completion can take place on any working day, most residential transactions still take place on Friday. This gives a buyer the weekend to settle in, and the seller the weekend to spend some of the sale proceeds.
