Pre-completion steps relevant to a freehold/leasehold property transaction

Question 1

Buyer’s solicitor’s checklist before completion - Freehold

Answer 1

• draft the transfer deed for the seller’s solicitor’s approval
• once approved by the seller’s solicitor, arrange for the buyer to sign if it contains indemnity
  covenants (or any other obligation on the part of the buyer)
• send requisitions on title to the seller’s solicitor
• carry out relevant pre-completion searches
• send certificate of title to the lender, and request the loan advance in time for completion
  (usually to arrive the day before)
• send the buyer a statement of money needed to complete the purchase
• Stamp Duty Land Tax form approved by client

Question 2

Seller’s solicitor’s checklist before completion - freehold

Answer 2

• approve the transfer deed drafted by the buyer’s solicitor
• arrange for the transfer to be executed by the seller
• reply to requisitions on title
• request a redemption statement from the seller’s lender (if any)
• in a residential sale, ask the seller or agent to take final meter readings

Question 3

Who drafts the transfer deed? - freehold

Answer 3

Traditionally, the seller’s solicitor drafted the contract, and the buyer’s solicitor drafted the
transfer deed.

This is still the default position taken in the Standard Conditions of Sale (SCS) and Standard Commercial Property Conditions (SCPC).

However, in recent years, it has become quite common for the seller’s solicitor to draft the transfer at the same time as the contract, and for the draft transfer to be annexed to the contract in form.

Question 4

Form of the transfer - Registered land - freehold

Answer 4

Land Registry forms must be used:
TR1 – the most common, this transfers the whole of a freehold or leasehold title
TP1 – this is used for the transfer of part only of a registered title
TR5 – this is used for the transfer of a portfolio of registered titles (and may include unregistered titles

Question 5

Form of the transfer - Unregistered land - freehold

Answer 5

Unregistered title may still be transferred in the form of a conveyance, and could even be written in copperplate on parchment!
In practice it is usual to use the Land Registry form TR1, which can be used for unregistered land as well.

Question 6

Pre-completion searches - registered land

Answer 6

The buyer’s solicitor carries out a search with priority (form OS1 or OS2 for part of land) at the Land Registry against the title number.
This updates the official copies that were initially provided, and identifies any changes that have been made.
It also confers a priority period of 30 working days in favour of the person searching.

Question 7

Pre-completion searches - unregistered land

Answer 7

The buyer’s solicitor carries out a land charges search of the Land Charges Registry (Form K15).

This identifies any incumbrances or other adverse matters registered against the owner/seller of the unregistered land.
It confers a priority period of 15 working days.
If the buyer’s solicitor registers the transfer with the Land Registry within the priority period conferred by the search, then the buyer’s transfer will take priority over any other applications, even if they were lodged before the buyer’s transfer.

Question 8

What happens at the pre-completion stage? (6)

Answer 8

1. contracts have been exchanged
2. parties are bound to complete
3. transfer deed prepared by seller and approved by buyer
4. money ready to be exchanged
5. check information obtained in pre-contract stage is still correct
6. submit report on title to lender and request mortgage advance if appropriate
7. pay balance and receive keys
8. undertaking to discharge seller’s mortgage

Question 9

Reasons for pre-completion searches? (by buyer’s solicitor) (4)

Answer 9

1. make sure that the seller has not further encumbered the title since investigation of title took place
2. check the financial circumstances of the borrower when acting for the lender
3. To gain priority for the buyer, and the lender, over anyone else making an application before the buyer applies to register the change of ownership at the Land Registry
4. If the seller is a company, to check that the company has not gone into liquidation before the balance of the purchase price is paid over on completion.

Question 10

Pre-completion title search for registered land:
1. what search?
2. priority period?
3. Mortgage?

Answer 10

1. a Land Registry search should be made against the title number to see if any new entries have been made since the ‘search from’ date, that is, the date on which the official copies were produced.
2. The search result will reveal any new entry made since the ‘search from’ date and confer on the applicant a ‘priority period’ of 30 working days from the date of the search result. The priority period provides protection to the applicant against any subsequent entries which may be placed
   on the register after the date of the search but before the buyer is registered as proprietor. The buyer will take free from any such entries, provided that they submit their application for registration by 12 noon on the last day of the priority period.
3. If the buyer is financing the purchase of the property with the aid of a mortgage, then the application for a Land Registry search should be in the name of the lender and not the buyer.

Question 11

Pre-completion title search for unregistered land?
1. what search?
2. priority period
3. need to be repeated?
4. previous estate owners?

Answer 11

1. a land charges search is made on a form K15
2. 15 working days from the date of the result if completion happens during the 15 day period
3. will need to be repeated until completion can happen within the 15 day period
4. It is not necessary to search again against the names of the previous estate owners as no entries can have been registered against them after they parted with the property.

Question 12

Search from date and priority period

Answer 12

• As the OS1 search updates the official copies that the buyer’s solicitor has seen, the buyer’s solicitor provides the Land Registry with their date, and this is the date from which the search is run.
• If nothing has changed since that date, then the search will come back clear; otherwise updated official copies will be sent to the searcher.

Question 13

Search from date and priority period - Example

Answer 13

The buyer’s solicitor is lodging an OS1 search on 1 June, ready for a completion date of 5 June.
The buyer’s solicitors official copies are dated 10 February, so the buyer’s solicitor will use this as the ‘search from’ date for the search.
The search comes back clear (ie, with no changes since that date) and priority of 30 working days from 1 June. As long as the buyer’s solicitor applies for registration within this period, the buyer’s transfer takes priority over any intervening applications

Question 14

Land charges search - pre-completion steps

Answer 14

the land charges search gives priority (although only 15 working days) . Any entry
against the landowner during the priority period, does not affect the ability of the buyer to register the transfer

The land charges search against the seller, however, should be carried out just before completion to give a sufficient priority period to lodge the application for first registration .

Question 15

Solvency searches - Freehold

Answer 15

When acting for buyer and lender, the buyer’s solicitor must carry out a bankruptcy search (Form K16) against the buyer to protect the lender. Like a land charges search, it confers a priority period of 15 working days.

It is not usual practice to carry out a bankruptcy search against an individual seller. The buyer can (and should) rely on the OS1 search for registered land.
For unregistered land, bankruptcy is covered by the land charges search.

If the buyer is a company, then a lender will want a company search carried out against the buyer to check that there is no pending insolvency or crystallisation of a floating charge.
A company search gives no priority period, so should be carried out as late as possible and updated if necessary.

If the seller is a company, then the buyer’s solicitor should carry out a company search
immediately before completion.

Question 16

Seller’s solicitor’s undertaking to redeem mortgage

Answer 16

The seller’s solicitor undertakes in the Law Society Code for Completion by Post to redeem the mortgages (ie, pay in full) against the property which it will have already notified to the buyer’s solicitor. Note that the undertaking is not to discharge the charge, as this is not within the solicitor’s power.

On the loan being redeemed, the lender should either discharge the charge at the Land Registry electronically (most common) or provide a form DS1 which can be produced to the Land Registry to discharge the charge.

The seller’s solicitor’s undertaking will be to forward the appropriate form of discharge to the buyer’s solicitor once received by the seller’s solicitor.