Pre-completion Flashcards
Risks pre-completion
- The property is damaged between exchange and completion –> buyer gets insurance
- A registration is made against the property –> carry out pre-completion searches to freeze registration
What happens pre-completion?
- Transfer deed
- Pre-completion searches
- Replies to requisitions
Buyer’s solicitor’s checklist before completion
- Draft the transfer deed for seller solicitor approval
- If buyer is taking a mortgage loan, arrange for the buyer to execute the legal charge
- Send requisitions on title to the seller’s solicitor
- Carry out relevant pre-completion searches
- Send certificate of title to the lender in its final form and request the loan advance in time for completion
- Send the buyer a statement of money needed to complete the purchase
- SDLT form approved by the buyer
Seller’s solicitor’s checklist before completion
- Approve the transfer deed drafted by the buyer’s solicitor - review and execute
- Arrange for the transfer to be executed by the seller
- Reply to requisitions on title
- Request a redemption statement from seller’s lender (to clear existing mortgage)
- In residential sale, ask the seller or agent to take final meter readings (practical steps)
Transfer of land is in the form of a deed
- TR1 - transfer the whole of a freehold or leasehold title
- TP1 - used for transfer of part
Execution of the transfer deed - who is required to execute?
The transferor must always use the TR1 form
When is the transferee required to execute the TR1 form?
The transferee must execute the deed if:
- they are tenants in common or agree to hold the property on trust for someone else
- they are providing an indemnity covenant or any other obligation
Dating the TR1 form
The date (panel 3) should be left blank until completion
- it is filed in by hand when solicitors complete the purchase
Executing the transfer deed (individual)
The individual signs in the presence of an independent witness (who also signs and prints their full name and address)
Executing the transfer deed (company)
- Check if the company has a policy on executing deeds
Options include
- company seal in accordance with Articles
- signed by two directors, or one director and company secretary
- signed by one company director and witnessed by independent witness
- signed by senior employee who is authorised under power of attorney
Agreeing and executing the transfer deed
Once the deed is agreed, the seller’s solicitor sends the engrossment (final) transfer deed to the seller for execution
- The seller’s solicitor holds the executed but undated transfer deed ready for completion
Can the buyer occupy the property after the exchange of contracts but before completion?
The buyer may be able to occupy as a licensee
- occupation before completion is a risk for the seller
- the best option is for a seller to enter a licence of occupation under the lease
- the terms would prevent the registration of any interest and any actual occupation
- this would allow the seller to make money from the buyer occupying the premises, without allowing any rights in the land
What is the purpose of a pre-completion search?
To check and protect the buyer’s (and lender’s if appropriate) ability to obtain title to the property
- to make sure there are no new problems or changes which could cause issues for the buyer (or lender)
Pre-completion searches for registered land
Buyer’s solicitor carries out a search with priority at the Land Registry against the title number. This means the buyer’s transfer will take priority over any other application
- OS1 - search for whole
- OS2 - search for part
Confers a priority period of 30 working days
Under what name is the OS1 search carried out?
It is carried out in the name of the buyer client, unless they have taken out a mortgage, in which it is carried out in the name of the bank
Pre-completion searches for unregistered land
Buyer’s solicitor carries out a land charges search at the Land Charges Registry
- Form K15
Confers a priority period of 15 working days
Solvency search for individuals
- K16: Solvency search against the buyer (individual), when the solicitor is acting for the buyer and lender
- K16 confers a 15 working days priority period
Solvency search for companies
If the buyer is a company, the lender will want a company search carried out against the buyer to check there is no pending insolvency or crystallisation of a floating charge
- the company search gives no priority period, so is carried out as late as possible
If the seller is a company, then the buyer’s solicitor should carry out a company search immediately before completion
What are requisitions on title?
As a pre-completion step, the buyer’s solicitor sends the requisitions on title to the seller’s solicitor
The purpose of the requisitions on title is to obtain key information regarding completion, to ensure completion runs smoothly, and deal with relevant undertakings required by seller’s solicitor
- Residential transaction: Form TA13
- Commercial: firm’s precedent or CPSE form SCR
Content of TA13
- Vacant possession - asks about arrangements for collecting keys
- Deeds and documents - asks for unregistered property, asks for list of deeds/documents to be sent on completion
- Completion - asks confirmation that completion will take place according to Law Society’s Code for Completion by Post (expectations and undertakings)
- Money - asks for seller’s solicitor’s client account and amount payable
- Mortgages and charges - asks seller’s solicitor to list any mortgages secured on property and confirm undertaking to redeem them on completion
What undertaking must the seller’s solicitor give relating to the mortgage?
Seller’s solicitor undertakes to redeem the mortgages against the property
- undertakes to give the money to the bank, so the bank can discharge the mortgage
- Need to ensure the mortgage is cleared from the property promptly after completion, so the buyer’s transfer can be registered
