Completion

Question 1

What are the pre-completion tasks that the buyer’s solicitor needs to carry out before completion?

Answer 1

1) Pre completion searches OS1 (Land Registry Search)
2) Company Search against seller or search for bankruptcy if against an individual through central land charges department
3) Draft TR1 (Purchase Deed)
4) Ensure Funding is received from buyer and lender: send financial statement to buyer and CLLS certificate of title to lender
5) Send standard requisitions on title to seller’s solicitor

Question 2

What is an OS1 search?

Answer 2

It is a search in the land registry regarding the title of the property.

Purpose of this search is to check whether any further entries have been made on the register of title to the property since the date of the official copies which were supplied at the beginning of the transaction (the ‘search from date’)

It also freezes the register for a period of 30 working days.

If the buyer completes and applies to register their name as the new owner during this priority period, no other interests can be lodged in priority to the buyer’s interest.

Question 3

What is a TR1 form?

Answer 3

It is a purchase deed which must be drafted by buyer’s solicitor before completion.

A standard form TR1 is used for the transfer of both freehold and leasehold registered land (where the land being transferred comprises the whole of the land in the registered title).

If only sale of part TP1 is used and TR5 is used to transfer larger portfolios.

TR1’s also used for unregistered land.

Question 4

What is a CLLS certificate?

Answer 4

It is the certificate of title to a property, which is used for a lender to determine whether they will want to provide a mortgage to a buyer.

Question 5

What are standard requisitions?

Answer 5

Questions from buyer’s solicitor to seller’s solicitor dealing with straight forward matters like where keys are, bank details of the seller’s solicitor firm, etc. before completion.

May also deal with questions about whether the seller’s solicitor is prepared to undertake to discharge the seller’s registered financial charges.

Question 6

When would a seller be prepared to undertake a discharge to the seller’s registered financial charges?

Answer 6

Once he has received the redemption statement from seller’s lender to be sure sale of proceeds will be sufficient to discharge the seller’s mortgage.

Question 7

Why is a company search necessary?

Answer 7

To check seller is not insolvent and still exists.

Question 8

Which additional pre completion search would be carried out if you were acting for a buyer of residential property, where the buyer was taking out a mortgage?

Answer 8

a bankruptcy search against the buyer- company search if the buyer is a corporate entity.

Question 9

What are the post completion matters to be carried out by the buyer’s solicitor after the purchase of a registered freehold property?

Answer 9

Register new charge if buyer is a company using MR01 to companies house within 21 days beginning with the day after the day on which the charge is created

Pay SDLT and File Land Transaction Return using SDLT1 to HMRC within 30 days of completion

Register:

• discharge of seller’s old charge
• the transfer
• the buyer’s new charge

Using AP1 to the land registry within priority period of OS1 search (ie. within 30 working days from date of search result)

Question 10

What does the seller’s solicitor of unregistered land need to give to the buyer’s solicitor to investigate title?

Answer 10

Title deeds

Question 11

What does the enforceability of any third party rights burdening the property of unregistered land depend on?

Answer 11

It depends on whether the third party rights were registered at the Central Land Charges Department against the owner of the property at the time of creation.

Therefore buyer’s solicitor needs to ensure that searches were carried out against all previous known owners of the land for the period of their ownership.

Question 12

What form must the buyer’s solicitor send to the Central Land Charges Department to determine whether there are any third party rights burdening the land?

Answer 12

K15 form to the Central Land Charges Department. It gives protection period of 15 working days. It is necessary to complete the purchase within this period.

Question 13

What is required from the buyer’s and seller’s solicitor in terms of finance?

Answer 13

Seller’s solicitor needs to send a completion statement to buyer’s solicitor to let him know the amount required to complete.

The buyer’s solicitor then needs to send a financial statement together with the bill for legal fees to the buyer.

The buyer’s solicitor will need to make sure that the lender received the certificate of title and ensure that the funds will arrive in good time for completion.

The buyer will need advance warning to send the required funds to the solicitor in time for completion. Many banks will require advance notice to allow buyer to withdraw money.

Question 14

What are the pre-completion tasks that the seller’s solicitor needs to carry out before completion?

Answer 14

Agree to the purchase deed

Execute the purchase deed

Reply to requisitions on title

Finance

Question 15

What must the seller’s solicitor do in terms of the purchase deed prior to completion?

Answer 15

The seller’s solicitor must amend, agree, and approve the purchase deed (generally a TR1 form) drafted by the buyer’s solicitor to ensure that the document accurately reflects the terms of the contract.

Once purchase deed is approved, the buyer’s solicitor will prepare an engrossed purchase deed.

Question 16

What must the seller’s solicitor do in terms of executing the purchase deed prior to completion?

Answer 16

The seller’s solicitor must arrange for the engrossed purchase deed to be executed.

If it’s execution by individuals, they must sign the purchase deed in the presence of a witness who will also sign the deed, including the witnesses name and address.

If its an execution by companies:

1) common seal of the company to be affixed to the purchase deed in presence of officers (a secretary and director or two directors), who must sign and describe the office they hold within the company.
2) Officers of company (company secretary and director or two directors) who must sign and describe the office they hold within the company.
3) Single director signs in the presence of a witness who attests the signature by also signing the deed -including the director’s office, name and address of witness.

Question 17

What must the Seller’s solicitor do with respect to the submitted requisitions on title before completion?

Answer 17

SCS 4.3.1 and SCPC 6.3.1 require seller’s solicitor to reply to requisitions within four working days after receiving them

Question 18

What must the seller’s solicitor do in terms of finance before completion?

Answer 18

The seller’s solicitor must send a completion statement to buyer’s solicitor showing the amount which is due for completion.

He must also get the redemption figure from the bank - if seller in negative equity, then solicitor must ensure the seller has enough cash to redeem the mortgage when the property is sold.

The seller’s solicitor must send the seller his bill for his services.

Question 19

Describe the steps involved with completion over telephone.

Answer 19

1) Preliminary check:

Buyer’s solicitor must ensure that account has enough funds from the lender and buyer.

Seller’s solicitor must ensure that it has signed the TR1 form (if registered land) and has obtained a redemption figure from the seller’s lender.

2) First phone call:

Seller’s solicitor confirms undertaking to redeem seller’s mortgage and provide a DS1
on receipt, which shows that the original seller’s mortgage has been discharged.

Buyer’s solicitor agrees to forward the completion funds.

3) Between first and second phone call:

Buyer’s solicitor instructs its accounts department to transfer completion funds to the seller’s solicitor.

Seller’s solicitor waits until seller’s solicitor’s accounts department notifies them of
receipt of funds.

4) Second phone call:

Buyer’s solicitor agrees to complete - i.e. release funds to seller and date any new
mortgage (if any)

Seller’s solicitor confirms receipt of funds and agrees to complete (i.e. DATE the TR1)

Question 20

By what time must completion occur to be ‘on time’?

Answer 20

SCPC 8.1.2 provides for 2pm unless otherwise stated in contract.

Question 21

How do you calculate the daily amount of compensation payable under the contract in the event of delayed completion?

Answer 21

If the contract rate is 4% per annum above the base rate and the base rate of Barclays Bank for ex. is 1%, then it will be 5% all together.

The interest is calculated on the balance of the purchase price minus any deposit already held by the seller.

Then to find out daily interest, you need to divide the amount of the .05% by 365 days. Rounded to two decimal points per day.

Question 22

When does a notice to complete need to be served by?

Answer 22

It must be served at any time on the completion day. SCPC 8.8.1

Question 23

When is a notice sent by fax deemed to arrive?

Answer 23

One hour later SCPC 1.3.7(d).

Question 24

When is a notice sent by fax after 4pm deemed to arrive?

Answer 24

If it is sent after 4 pm it is deemed to arrive the next working day.

Question 25

At what point can a seller rescind the contract post completion?

Answer 25

Party can only rescind the contract if time is of the essence - SCS 6.1.1

SCPC 8.1.1 confirm that time is not of the essence unless specifically provided for in the contract.

Time can made ‘of the essence’ by the seller or buyer serving a notice to complete:

Under SCS 6.8.1 the party can only serve this until the time for completion under SCS 6.1.2 has been passed (i.e. after 2pm).

However in commercial property transactions under SCPC 8.8.1 notice to complete can be served at any time - therefore could serve notice on the morning of the day of completion.

Once the notice is served, time is made of the essence and the parties have 10 working days to complete (excluding the day of service) - SCS 6.8.2 and SCPC 8.8.2

If there is a failure by the buyer to comply with a notice to complete, under SCS 7.4/7.5 and SCPC 9.5/9.6 the seller can rescind the contract AND do the following:

A) Forfeit the deposit (and any accrued interest)

B) Resell the property; and

C) Claim damages

If the seller fails to comply with a notice to complete, the buyer can rescind the contract and demand repayment of the deposit plus any accrued interest

Question 26

What are the main documents which need to be dealt with in the purchase of a registered freehold in the stage of post completion?

Answer 26

TR1- purchase deed

MR01-registration of new mortgage

DS1-discharge of any existing mortgage

SDLT1- Stamp duty land tax
form and SDLT5-Stamp duty land tax certificate for payment

Any other documents including death certificates, deeds of appointment etc.

Question 27

What is the main document which needs to be completed for a registered free hold?

Answer 27

Purchase deed aka TR1

Transfer of land

Question 28

If the buyer is a company:

What type of document is needed to register a new mortgage for a sale of registered free hold land after completion?

Where must it be sent?

Answer 28

If the buyer is a company, a new mortgage must be registered at Companies House within 21 days after the date of the charge using MRO1.

Also a certified copy of the mortgage must also be sent to companies house.

Upon doing so, a certificate of registration will be received in return.

Question 29

What must be paid to HMRC once the land transfer has been completed? When must it be paid by?

Answer 29

Buyer must pay SDLT to HMRC within 30 days of completion. Submit form SDLT1 to do this and recieve an SDLT5 certificate of payment in return.

Question 30

What must be registered at the Land Registry after purchase of land has been completed?

Which forms must be used?

When must it be completed?

Answer 30

The new information regarding the property must be registered at the land registry.

Form AP1 which is to amend the property registry.

This must be done within the priority period of the OS1 search.

Check that the official copies have been updated correctly after the application is completed.

Question 31

What documents must be sent to the land registry upon post completion?

Answer 31

• A land registry fee
• SDLT 5
• DS1 (if any)
• TR1
• New mortgage if any with companies house ceritificate, certificate of lender’s solicitor that mortgage has been lodged
• Any documents including death certificates, name changes, etc.

Question 32

Besides late completion what is another potential problem which may occur post completion?

What are the consequences?

Answer 32

If the seller misrepresents the property before completion.

If the buyer discovers that a misrepresentation has been made by the seller, he may no longer wish to proceed with the purchase - therefore seller, even though duty of disclosure is quite low, should be wary of choosing not to disclose certain matters.

Question 33

What may amount to misrepresentation?

Answer 33

William Sindall plc v Cambridgeshire County Council - a seller replying ‘not so far as the seller is aware’ amounts to an assertion that the seller has made reasonable investigations into the matter

Actively concealing physical defects or answering questions dishonestly will amount to misrepresentation - Gordon v Selico

Question 34

What options are there for a buyer facing a potential issue of misrepresentation?

Can the buyer rescind the contract?

Answer 34

Options for a buyer: set out in SCS 7 and SCPC 9

1) If there is a material difference between the property as represented by the seller and the actual property, the buyer is entitled to claim damages (but NOT rescission - as this isn’t available when damages are adequate) - SCS 7.1.1(a)/SCPC 9.1.2

A material difference is one which can be remedied by money whereas a substantial difference can not be remedied by money.

2) However, if the error or omission is made by the seller as a result of:

• Fraud;
• Recklessness; or
• There is a substantial difference in quality, quantity or tenure between the actual
property and that represented by the seller

Only then will the buyer will be able to rescind the contract - SCS 7.1.2/SCPC 9.1.3

Note that in any advice you give in the exam, you should state that you would pursue
remedies under the Standard Conditions instead of common law or equitable remedies because:

when you pursue remedies under the Standard Conditions there is no requirement to prove that the misrepresentation induced the buyer to enter into the contract with the seller.