Lecture 4 - Pre-completion steps Flashcards
Who always has to execute the TR1?
The seller.
When does the buyer have to execute the TR1?
Only if entering into new covenants, have made any entries in panel 11 or making a declaration of trust.
Filling out the TR1 requires you examine what documents?
- OCs of the seller’s title - name of registered proprietor, address of property, title number
- Contract - new covenants entering into - double checking who buyer and seller are, thereby also ensuring you use the right execution clauses
(Do not need pre-contract search results obvs)
What is the purpose of the TA13/ completion information and undertakings form?
For the buyer’s sol to raise practical enquiries of the seller’s sol.
- Bank account details so can send completion monies!
- Where can keys be collected from, so buyer can take possession.
- B’s sol will want to ensure satisfactory replies to these enquiries are obtained!
How would the seller’s sol reply to the enquiry requesting undertaking to discharge mortgage?
Usually draft a letter in response….but in Elton Hall file they have merely filled out TA13…..
In order to comply with SRA O(11.2) what should the seller’s solicitor undertake to do regarding any mortgages that are to be discharged on sale?
- They should list all charges that will be discharged upon completion.
- Undertake to REMIT MONIES to each lender so that THEY will discharge the mortgages.
Wording will be something like:
‘On our completing this transaction with you, we undertake to immediately send [lender] the amount required to discharge the charge and send you the DS1 as soon as we receive it.
What are the pre-completion finance steps?
1) Seller’s completion statement - included in the TA13 if not a separate reply to enquiries….is a statement of monies required from the buyer to complete.
2) Financial statement - Buyer’s solicitor to their client! (Purchase price + fees, LESS deposit paid and loan monies from bank).
What are the pre-completion searches required?
When are these done?
- OS1
- Check that no changes have occurred to the title since you examined the OCs.
- Provide a priority period by ‘freezing’ the register for 30 working days from date of search. As long as TR1 is submitted during this priority period no other interest can be registered against the title and the buyer will take free of any new charges.
- Solvency searches!!!!!
- K16 BANKRUPTCY SEARCH on BUYER is required IF also acting for Lender b/c owe duty of care to client…
n. b. will never need to do K16 on individual Seller b/c if insolvent ALL their financial affairs will have been taken over by a TRUSTEE IN BANKRUPTCY who will REGISTER A CAUTION AGAINST ALL OF SELLER’S PROPERTIES AT LR!
If Buyer is a company and you are acting for B and Lender to B, then need to do a company search against Buyer per duty to lender.
If Seller is Company will ALWAYS do company search - still exist and still solvent.
These are done on the day of completion.
When would a seller’s bankruptcy show up?
Either at very beginning when deducing title - Trustee in bankruptcy will have registered a caution against all their properties.
OR
If become insolvent during transaction will show up via OS1 search.
When does the buyer’s sol do the OS1 and any necessary K16 or company searches?
On the day of completion.
If acting for buyer and lender in a transaction, on whose behalf do you conduct an insolvency search on the buyer?
On behalf of the lender. Duty to inform….O(4.2)
What pre-completion finance steps does seller’s sol need to complete?
- Provide replies to TA13
- Send completion statement to buyer’s sol (probs in TA13)
- Get redemption figure(s) from lenders for seller’s charges - i.e. amount required to redeem the mortgage (pay-off)
- Agree form of TR1 and get seller to execute
What pre-completion search is required by buyer of unregistered land?
K15
Why must you never undertake to discharge the mortgage?
An undertaking is a promise to do something, thus as a solictor you are beholden to make good on this.
In the case of negative equity - where the mortgage value exceeds the equity in the property due to fall in property prices, if you had undertaken to discharge the mortgage, you would be personally liable to find the shortfall!
