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Property Law and Practice > Completion, post completion & remedies > Flashcards

Completion, post completion & remedies Flashcards

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1
Q

What are apportionments?

A

Items to be added or deducted - like insurance premiums where the buyer has decided to take over the seller’s policy and in leasehold transactions, rent.

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2
Q

What investigation would the lender’s solicitor do?

A

Review the certificate of title prepared by the borrower’s solicitor and report on this to the lender.

The provision os a satisfactory certificate of title will be one of the conditions that must be satisfied before the lender will provide the finance.

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3
Q

When do you send the final, signed version of the CLLS certificate of title to the lender’s solicitor?

A

On completion date.

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4
Q

What documents do you need to draft the TR1?

A
  • The official copies are needed for the title number and the list of Specified Incumbrances
  • The contract is needed to get the correct names of both the buyer and the seller
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5
Q

What does the buyer’s solicitor need to do for obtaining finance pre-completion for the buyer?

A

Confirmation of funding requested from the lender by providing the draft certificate of title to the lender before exchange.

The buyer’s solicitor should now contact the lender to ensure that the money will arrive in good time for the day of completion.

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6
Q

What is the first reason for carrying out an ‘Official Search’ (or priority search)?

A

To check whether any further entries have been made on the registers for the property since the issue date of the official copies supplied to the buyer’s solicitor at beginning of transaction. (the ‘search from date’)

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7
Q

What are examples of further entries you should look for in your priority search?

A
  • new mortgages or charges entered into by the seller
  • new covenants (positive or restrictive) benefiting or burdening the property
  • new easements benefiting or burdening the property
  • any deed of variation of an existing easement
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8
Q

What remedies can the buyer get if the seller have not disclosed adverse issues in the further entries on the register, and what SCPC gives authority to this?

A

SCPC 4.1.3

The buyer may:

  • have a claim for damages for breach of contract or misrepresentation
  • in the most serious case, the buyer may be entitled to rescind the contract
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9
Q

What does the buyer’s solicitor need to ensure with the new entires?

A

To ensure that the seller’s solicitor’s undertaking at completion covers ALL outstanding charges, not just the ones in the original official copies.

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10
Q

What is the second purpose of an OS1 search?

A

To provide the searcher with a priority period of 30 working days (starting from the date of the search result).

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11
Q

What would you see on the OS1 application if the buyer is using a loan to buy the property? What’s the effect of this?

A

The application would be made in the name of the lender. This automatically confers protection to both the lender and the borrower.

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12
Q

In a commercial transactions, who does the buyer’s solvency searches?

A

The lender’s solicitor will undertake either a company search or a bankruptcy search

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13
Q

If the buyer is an individual, what does the lender’s solicitor need to check?

A

Need to undertake a bankruptcy search on Form K16 at the Central Land Charges Department.

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14
Q

Why should the buyer’s solicitor do a company search against a corporate seller?

A

A seller’s floating charges (stocks) and pending insolvency will not be revealed on the Land Registry title.

It will reveal any relevant insolvency, e.g. the appointment of a liquidator.

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15
Q

What should you check and update on the morning of completion?

A

A company search on the seller

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16
Q

What should the buyer’s solicitor do when investigating title for an unregistered land?

A

To ensure that ‘Central Land Charges’ searches on Form K15 are carried out against the seller and all previous known owners of the land for the period of their ownership.

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17
Q

What does Central Land Charges searches give to an unregistered land when investigating its title?

A

A ‘protection period’ for 15 working days from the date of the search result, within which the buyer must complete the purchase.

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18
Q

What does K15 CLC searches reveal?

A

The bankruptcy of any individual seller.

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19
Q

What steps must the seller’s solicitor carry out following tasks in preparation for completion?

A
  1. Reply to the buyer’s Completion Information and Undertakings Form
  2. Prepare a completion statement for the buyer’s solicitor and request a redemption statement from the seller’s lenders(s) (if any)
  3. Agree the form of Transfer and arrange for it to be executed by the seller
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20
Q

What does SCPC 7.3.1 requires the seller’s solicitor to do?

A

It requires the seller’s solicitor to reply to written requisition within 4 working days after receiving them from the buyer’s solicitor.

This relates to the Completion Information and Undertakings Form

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21
Q

What is a completion statement and who has the responsibility to deal with it?

A

A completion statement is sent by the seller’s solicitor to the buyer’s solicitor showing the total amount due from the buyer on completion and how this sum is calculated.

22
Q

What is a redemption figure?

A

The amount required by the lender to pay off the seller’s mortgage.

23
Q

What does the lender do to the loan and which Register will you see traces of it?

A

The lender protects the money it originally loaned the seller by taking a charge over the property and registering a ‘Restriction’ on the Proprietorship Register.

That charge is registered at the Land Registry appearing as an incumbrance on the property’s Charges Register.

24
Q

What should the buyer’s solicitor check with regards to the redemption figure?

A

It is vital for the buyer that both the redemption and the removal of the entry in the Charges Register are taken care of otherwise the buyer will take the property subject to the seller’s charge.

25
Q

What should the seller’s solicitor check with regards to the redemption figure?

A

The seller’s solicitor should check in good time before completion that the redemption figure is less than the sale proceeds.

If it is not, the seller’s solicitor will not be in a position to procure the discharge without obtaining additional funds from the seller.

26
Q

What is an engrossment?

A

The final agreed version printed out for execution by the seller.

The Transfer is drafted by the seller’s solicitor and once the TR1 is agreed, the buyer’s solicitor will forward an engrossment.

27
Q

When does a transferee required to execute the TR1?

normally they don’t have to

A
  • entering into new restrictive or positive covenants
  • giving the transferor an indemnity covenant, pursuant to SCPC 7.6.5
  • declaring a trust - where joint purchasers declare whether or not they will hold the property as tenants in common or joint tenatns
28
Q

What are the requirements for execution by individuals provided by s.1(3) of the Law of Property (Miscellaneous Provisions) Act 1989?

A

An instrument is validly executed as a deed by an individual if, and only if -

(a) it is signed -
(i) by him in the presence of a witness who attests the signature; or
(ii) at his direction and in his presence and the presence of two witnesses who each attest the signature; and

(b) it is delivered as a deed by him or a person authorised to do so on his behalf

29
Q

What are the requirements for executing a valid deed by a company? And, where do you find the legal authority for it?

A

s.44(1) and (2) Companies Act 2006

A company can execute a document by two authorised signatories (with or without a company seal as stipulated in the Articles) or by a single director of the company in the presence of an independent witness who attests the signature.

30
Q

How do the parties deal with completion via post? Who regulates this kind of completion?

A

The parties deal with each other by telephone and the completion funds are sent by telegraphic transfer to the seller’s solicitor.

31
Q

When will the buyer’s solicitor receive the title documents?

A

Once the funds are received, the TR1 will be dated and the title documents to the property can be sent, either by DX (document exchange) or first class post, to the buyer’s solicitor.

32
Q

What should the buyer’s solicitor check just before completing the transaction?

A
  1. Completion information
  2. Transfer
  3. Mortgage documentation
  4. Pay completion monies
33
Q

What are the documents need to be handed to the buyer’s solicitor once the completion monies arrive?

A
  1. The executed and dated TR1
  2. An original title or other deeds relating to the property held by the seller - a deed of easement
  3. Seller’s solicitor’s undertaking in respect of any outstanding charges on the property - to be followed by DS 1/ evidence of discharge by Electronic Discharge
  4. Originals of planning permissions/building regulation approvals/ structural guarantees
  5. (if relevant) receipts for payment of apportionents and receipts for any chattels purchased separately
34
Q

What are the two elements in drafting the seller’s solicitor undertaking?
(EXTRA ATTENTION TO DETAIL HERE)

A
  1. An undertaking to remit the funds required to redeem the charge (i.e the figure referred to in the lender’s redemption statement
  2. An undertaking to forward the DS1/ED/e-DS1 discharge confirmation within a short specified timeframe (typically within an agreed timeframe following receipt).
35
Q

What does the case Patel v Daybells [2001] give authority to?

A

A buyer’s solicitor was not negligent in accepting an undertaking from the seller’s solicitor that an outstanding mortgage on the property would be discharged out of the purchase monies and that a DS1 would be forwarded after completion.

36
Q

What are the post completion matters that a seller’s solicitor need to do?

A
  1. Prepare notices to third parties. E.g to tenants who need to know who the new landlord is to pay future rents.
  2. The seller’s lender will forward DS1 to the seller’s solicitor once the redemption funds are received by them. Then will be send to the buyer’s solicitor.
37
Q

What documents should the buyer’s solicitor check on completion?

A

All relevant original documents: original planning consents, building regulation approvals, and insurance policies.

TR1 and if the seller had a mortgage, the DS1.

38
Q

What are the three post-completion steps that the buyer’s solicitor need to carry out ASAP after completion has taken place?

A
  1. Registration of security only relevant if buyer is a company and buyer bought with the aid of a mortgage
  2. Pay stamp duty land tax and lodge Land Transaction Return
  3. Register at the Land Registry
39
Q

What does s.859A CA 2006 say?

A

All charges (created by the security document Debenture) by a company incorporated in, or with a place of business in England and Wales, must be registered at Companies House within 21 days beginning with the day after the date of creation of the charge using the Form MR01 and paying a fee of £23 (£15 online)

40
Q

What are the consequences of not registering the buyer’s charge at Companies House within the 21 days deadline?

A
  • The charge will not be valid against administrators and liquidators and priority will be lost as against other creditors of the borrower - s.859H
  • If a charge is void for non-registration, the amount secured becomes payable ‘on demand’
  • Failure to register will usually be construed as negligence by the solicitor who failed to register.
41
Q

What do you have to do with Form AP1 following completion?

A

The charge must be perfected by registration at the Land Registry.

The AP1 should be accompanied by a certified copy of the Companies House Certificate of Registration of Charge.

42
Q

How and when should the buyer’s solicitor submit the Land Transaction Return?

A

Online: by way of an SDLT e-Submission Form; OR
By post: by way of Form SDLT1; and

pay the DLT due within 14 days of the ‘effective date’ (i.e completion date)

HMRC will issue an SDLT 5 certificate acknowledging receipt of the Land Transaction Return.

43
Q

What is the criteria for the Land Registry to register the transfer of the property to the new owner?

A

Unless a certified copy of the SDLT 5 is lodged at the Land Registry with the buyer’s application for registration.

44
Q

What does Form AP1 do?

A

For registered titles, this is the form for the buyer’s application to send to the Land Registry to register a sale of land.

The buyer’s solicitor will send this along with the relevant fee and certified copies of:

  1. TR1
  2. DS1
  3. Debenture
  4. The registration certificate from Companies House
  5. SDLT 5
45
Q

Which two sections in the Land Registration Act 2000 set out the requirement to register a sale of land?

A

s. 4(1) and (2)

s. 27(2)(a)

46
Q

What does the application to Land Registry do?

A
  1. Remove the seller’s old charge
  2. Register the Transfer relating to the purchase
  3. Register the buyer’s new charge

These must be submitted within the priority period of 30 working days from the date of the OS1 search result.

47
Q

What are the consequences if an application to the Land Registry is not made within the 30 working days deadline?

A
  • the buyer would take the property subject to any third party interests that may have been registered subsequent to its OS1 search
  • the buyer will only have beneficial title (not legal title) to the property until they are registered as the new owner at the Land Registry.
48
Q

What is the SDLT 5 and what is the consequence of failing to file that to the Land Registry?

A

HMRC will issue an SDLT 5 certificate acknowledging the the receipt of the Land Transaction Return.

Unless a certified copy of the SDLT 5 is lodged at the Land Registry with the buyer’s application for registration, the Land Registry will not accept the application to register the transfer of the property to the new owner.

49
Q

What happens to the legal and beneficial title if the sellers are joint tenant and one of them died?

A

The whole legal and beneficial interest of a joint tenant property will be passed automatically by operation of law if one of them died.

The survivor will be able to contract and transfer the Property in his sole name.

50
Q

When can the seller forfeit the deposit or rescind the contract?

A

The seller can only take steps to forfeit the deposit or rescind the contract until he serves a notice to complete (SCPC 9.8.2) to make time of the essence and then he has to wait for the notice to expire before he can take such steps.

51
Q

When do you not have to do a bankruptcy search?

A

A bankruptcy search is not required to be undertaken against any seller of registered land (any bankruptcy would appear on the official copies).

Property Law and Practice (15 decks)

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