Pre-completion, completion and post-completion matters

Question 1

What interest is transferred on completion?

Answer 1

The legal interest

Question 2

How is the legal interest transferred?

Answer 2

Through completion of the transfer deed, balance purchase price paid and the keys are handed over

Question 3

Who normally produces the draft transfer deed?

Answer 3

The buyer’s solicitor

Question 4

Which form would be used for the transfer of the whole of the registered land?

Answer 4

TR1

Question 5

Which form would be used for the transfer of part of the registered land?

Answer 5

TP1

Question 6

The seller/transferor must always execute the transfer however when does a buyer need to execute it?

Answer 6

If they are entering into a new covenant or agreeing to any new declarations within the deed.

Question 7

What important purposes does a pre-completion HM Land registry search serve?

Answer 7

1. it updates the official copies provided and investigated pre-exchange to confirm whether any adverse entries have been made to the title since the issue date
2. it provides the buyer’s solicitor with a thirty working day priority period to submit the HM Land registry application to register the transfer.

Question 8

What is an OS1?

Answer 8

An official search with priority of the whole of the land in a registered title. Most common and used when all of the land in the title is being transferred.

Question 9

What is an OS2?

Answer 9

It is an official search with priority of part of the land in a registered title. Used when part of the land is being transferred.

Question 10

What must be submitted with an OS2?

Answer 10

A plan

Question 11

What should an OS1 and OS2 search be made against?

Answer 11

The title number from the search from date on the official copies

Question 12

What name should an OS1 and OS2 be made in?

Answer 12

The name of the lender if there is a mortgage as this gives both the buyer and the lender’s applications priority whereas a search in the buyer’s name would just protect the buyer.

Question 13

For unregistered land, what pre-completion search is needed?

Answer 13

A full pre-completion Land Charges search against the seller.

Question 14

Which search, an OS1/OS2 or a pre-completion land charges search, gives priority to the HM Land registry application and which gives priority to the completion date.

Answer 14

OS1/OS2 - HM Land registry application

Pre-completion land charges search - completion date

Question 15

If a buyer is an individual and borrowing to fund the purchase what search must be made against them?

Answer 15

Bankruptcy

Question 16

If a buyer is a company and is borrowing to fund a purchase what search is needed?

Answer 16

A company search

Question 17

What does a company search check?

Answer 17

Whether the company is in existence, subject to any insolvency proceedings or procedures and whether it has granted any fixed or floating charges over its assets

Question 18

What should the client be advised to do before completion?

Answer 18

A personal inspection of the property to check the general state and condition, for any potential occupiers, any relevant fittings are present, no fixtures have been removed and whether any issues remain to be resolved under the terms of the contract.

Question 19

What must a buyer’s solicitor raise pre-completion?

Answer 19

Pre-completion requisitions on title of the seller’s solicitor.

Question 20

What do pre-completion requisitions deal with?

Answer 20

Things such as vacant possession and key arrangements, what deeds and documents are going to be handed over on completion, place and method of completion, amount payable and undertaking to redeem or discharge any mortgages.

Question 21

What should a seller’s solicitor seek before giving the undertakings relevant to any mortgages?

Answer 21

A redemption statement to ensure there will be sufficient funds from the proceeds of sale.

Question 22

What are the steps for completion?

Answer 22

1. The balance purchase price is transferred to the seller’s solicitor
2. The deposit is released (if stakeholder)
3. The transfer deed and buyer’s mortgage deed are dated
4. The seller’s solicitor then immediately sends the amount by way of telegraphic transfer, in fulfilment of their undertaking to do so

Question 23

In the rare event no completion date is set on exchange of contracts, when will completion take place?

Answer 23

20 working days after the date of the contract

Question 24

What is a DS1 form?

Answer 24

Or an e-DS1 for electronic systems, is executed by the lender confirming that a charge over the whole of a registered title has been discharged

Question 25

What is a DS3 form?

Answer 25

A form executed by the lender confirming that a charge has been discharged over part of a registered title - it should always have a plan annexed to identify the part of the title that has been released

Question 26

What is the time for completion?

Answer 26

Unless amended by way of special condition it will be 2pm

Question 27

Where does completion usually take place?

Answer 27

At the office of the seller's solicitors

Question 28

What is the effect of completion?

Answer 28

For unregistered land the legal title passes to the buyer. However for registered land legal title does not technically pass until the disposition is completed by registration

Question 29

What are the main tasks for the seller's solicitor post-completion?

Answer 29

After sending the redemption monies to any mortgagee: - send the dated transfer deed and other title deeds to the buyer's solicitor - registered land with existing mortgage - complete DS1 or DS3 - send evidence of discharge of mortgage to the buyer's solicitor - account to the client for the balance due

Question 30

What are the main tasks of the buyer's solicitor post-completion?

Answer 30

- check the documents from the seller's solicitor - deal with SDLT/LLT formalities - if the buyer is a company and there is a mortgage or charge, register it at Companies House within 21 days - register the disposition at H M Land Registry or apply for first reg - check title information received from H M Land registry - send a copy of the title information to the lender - make any necessary accounts and close the file

Question 31

What are the rules for SDLT/LLT return?

Answer 31

England - SDLT return sent to HMRC within 14 days Wales - LLT return sent to WRA within 30 days An SDLT5 or WRA certificate will be received in return when the tax has been paid

Question 32

For registered land, how is the disposition registered at H M Land Registry?

Answer 32

Using form AP1 within the priority period of the OS1/OS2 search

Question 33

What needs to be sent to H M Land Registry for a disposition to be registered for registered land?

Answer 33

- Evidence of discharge - transfer - SDLT5/WRA certificate - mortgage - certificate of registration at Companies House (if app.) - Form DI (disclosable overriding interests form) - relevant fee

Question 34

What form is used to make an application for first registration and when does it need to be sent to H M Land Registry by?

Answer 34

FR1 and within 2 months of completion

Question 35

What happens if completion does not happen at the agreed time?

Answer 35

There is no immediate right to rescind as time is not of the essence of the contract until a notice to complete is served but contractual compensation may be payable

Question 36

Which parties might have to pay contractual compensation for late completion?

Answer 36

Under SCs either the buyer or the seller Under SCPCs only the buyer

Question 37

What is notice to complete?

Answer 37

It can be served y either the seller or the buyer, provided they are ready and able to complete and the time for contractual completion has passed. The effect is to make time of the essence of the contract, and it gives the party in default 10 working days to complete following service

Question 38

What happens if a party has served a notice to complete and the notice is not complied with?

Answer 38

It gives the party serving the notice the option to rescind the contract and the deposit may be forfeited with accrued interest or repaid with accrued interest

Question 39

What is the option other than notice to complete, rescission or contractual compensation?

Answer 39

Common law damages - normal contractual principles for breach of contract - may be claimed for losses such as additional legal work , removal and storage costs