Completion Flashcards
Post-completion steps - paying SDLT and LTT
SDLT (England)
- Buyer’s solicitor prepares and submits SDLT return on buyer’s behalf
- SDLT1 must be submitted and tax paid within 14 days of completion to HMRC
- On submitting, buyer’s solicitor receives SDLT5
LTT (Wales)
- Buyer’s solicitor prepares and submits LTT return and pays tax within 30 days of completion
- On submitting, receive WRA certificate
The consequences of failing to pay SDLT / LTT within the relevant deadline = penalties and interest
Registration of a charge at Companies House
Must register a charge given by a company at Companies House within 21 days of creation of the charge (e.g., a client is a company and is taking out a mortgage)
- If this is not done, the charge is void against any liquidator or administrator and the lender is not protected
- If the deadline is missed, need to apply to court for a filing out of time (involves time and expense)
Land Registry Application Form - Registered Title
Land Registry form AP1 is used to set out details of the application and documents provided
- Transfer deed - TR1
- SDLT5 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
- Certificate of registration of charge at Companies House (if applicable)
- Other documents as appropriate (e.g., death certificate for a deceased joint proprietor, if the seller is a sole surviving beneficial joint tenant)
Land Registry application forms - unregistered title
Application for first registration, a form FR1 is used, which contains additional boxes to AP1 relevant to unregistered title
Enclosures are listed on a separate form DL:
1. Numbers 1-6 as for registered title
2. Epitome of title and the deeds and documents referred to in it
3. Land charges searches for the seller and previous owners in chain of title
Land Registry priority period
The application must be submitted within 30 working days of the buyer’s solicitor’s OS1 search with priority. This is to avoid subsequent entries being made on title which bind the purchaser
- A new OS1 search can be submitted, but this will start a new priority period
Land registry deadlines
Registered land:
- no deadline for application
- other than time limit for priority under OS1 search
Unregistered land:
- deadline of two months from completion
- if this is not complied with the transaction is void
What happens at the end of the transaction?
Send the client the updated official copies = end of transaction
What happens at completion?
Completion is when the balance of the purchase price is paid to the seller and the legal title in the property is passed to the buyer
How does completion take place?
Completion usually happens by post (Law Society Code for Completion by Post)
- the Code contains professional undertakings
- completion occurs at seller’s solicitor’s office as the hold the executed TR1 and receive completion monies
Seller’s solicitor’s undertakings for completion
- Immediately following completion, the seller’s solicitor holds the transfer deed and other documents to the buyer’s solicitor’s order (buyer’s solicitor can direct what happens to them)
- Requirement of the Code: ASAP, 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/documents to buyer’s solicitor
- written confirmation of completion must be sent to buyer’s solicitor
Overview of completion
- Buyer’s solicitor has received the mortgage advance and balance of money required from client, and send required amount to seller’s solicitor by bank transfer
- Seller’s solicitor phones buyer’s solicitor when money arrives to confirm completion, dates the transfer deed, calls seller to let them know and estate agent to release keys to buyer if appropriate
- Buyer’s solicitor calls buyer, who can now collect keys and physically move in. If acting for lender, buyer’s solicitor dates the legal charge
- Seller’s solicitor sends the transfer deed and any other agreed deeds/documents to buyer’s solicitor, redeems mortgage and sends balance of the money
Delay or failure to complete
Seller’s failure to complete
- seller’s solicitor is unable to date an executed transfer
Buyer’s failure to complete
- seller’s solicitor has not received the money needed to complete from the buyer’s solicitor; or, has received the money but buyer instructs the buyer’s solicitor not to release it to seller’s solicitor
Contractual compensation
If a party fails to complete by the date and time specified in the contract, they are obliged to pa interest for each calendar day’s delay
Interest = contractual compensation
- If buyer is late in completing, the buyer pays interest on the purchase price, less any deposit paid (SCS / SCPC)
- If seller is late in completing, the seller pays interest on full purchase price (only applies to SCS). Under SPCP, default rate is 4%
What can the seller claim if the buyer is late in completing?
The seller can claim contractual compensation. The buyer pays interest on the purchase price, less any deposit paid
- Damages are only permitted if the seller has suffered a loss above and beyond what contractual compensation can give
Common law damages
If the seller has breached the contract, the buyer can claim damages for their losses
E.g., the buyer might have additional sums for removal trucks, temporary accommodation or legal fees incurred as a result of the seller’s delay. Interest under the contract may not be enough to cover this
How would you advise a buyer client to pursue common law damages
It is not always practical or cost effective to take proceedings if the seller is resisting a claim
- advise the client on this
If successful, the interest received under SCS (contractual compensation) is deducted from the sum - cannot have ‘double compensation’
Rescission
A remedy where the contract is set aside and the parties are put back in the position in which they were before the contract was made
- This remedy is not automatically available as under a standard contract, time is not of the essence (not a condition)
Serving notice to complete
After either party has failed to complete on time (by the time and date in the contract), the non-defaulting party can serve a notice to complete which makes time of the essence.
The parties must then complete within ten working days, the first day being the day after the notice has been served
- the party serving the notice is also bound by it, so they must continue to be ready within ten workings
- once served, the notice cannot be withdrawn unless both parties agree
What are the seller’s remedies (following service of a notice to complete)?
The seller may rescind the contract and on doing so may also:
- forfeit the deposit and any interest accrued on it
- resell the property
- claim contractual damages
If the seller rescinds the contract, the seller is no longer entitled to contractual compensation
- the seller must choose to rescind the contract
What are the buyer’s remedies (following service of a notice to complete)
The buyer may rescind the contract, and on so doing may also:
- demand return of the deposit with any interest accrued on it
- claim contractual damages or specific performance
What does contractual compensation only apply to?
Contractual compensation (interest) only applies to delayed completion
- completion must actually occur for the SCS compensation to be payable
What is the remedy if completion does not take place?
The remedy is damages
- if the contract is rescinded, completion cannot take place, meaning there is no entitlement to compensation under the contract.
- instead, common law damages can be claimed for breach of contract
