🏡Property: Completion Flashcards
Pre completion steps
Prepare transfer deed
Pre completion searches
Make practical arrangements
Ensure finances in order
Formalities for valid deed for transfer of land
- Clear it’s a deed
- Signed by parties
◊ individual-witnessed by independent witness
◊ company, execute:
a. With co. seal in acc with articles
b. OR signed by Dir and Sec OR Dir x2 provided deed is expressed to be executed by the Co
c. OR signed by 1 Dir in presence of witness who attests signature - Delivered
Who executed the transfer deed?
Seller-always
Buyer-will if entering into an obligation (eg. Indemnity cov) or making declaration (as to beneficial ownership) in TR1
What transfer deed should be used?
Registered: Land Registry Form TR1
Unregistered: Best use TR1 not conveyance as will be subject to compulsory first registration
Who prepares the transfer deed?
Conventionally buyers sol
Simple residential transactions-sellers sol and sent to buyer in pre contract package
What should the transfer deed reflect
Terms of contract/title deeds
How should the purchase price be written in the deed?
Figures AND words
Possible add VAT
What pre completion searches could be done if relevant?
- OS1/K15
- If acting for lender: check buyers solvency
- If seller, co: company search
- If seller individual: bankruptcy search
Who carries out pre completion searches
buyers solicitor
When should pre completion searches be done?
As close to completion as possible
Why are pre completion searches done?
- Check seller hasn’t further encumbered title since investigation took place
- Check financial circumstances of borrower (when acting for lender)
- Gain priority for buyer and lender, over anyone else making app before the buyer applies to register the change of ownership at the Land Registry
- If sellers a Co, to check it hasn’t gone into liquidation before the balance of the purchase price is paid over on completion.
How to do pre completion searches in registered land?
□ Land Registry search against title number to see if new entries made since ‘search from’ date (date official copies produced)
On form OS1-sale of whole
OR OS2-sale of part (normally also a plan)
How to do pre completion searches in unregistered land
Land charges search on form K15
What form do the results come back on for pre completion searches
Registered: OS1R/OS2R
Unregistered: K18
What will the OS1 include details of?
Title number
Address
Names of registered proprietors
Name of applicant
Reasons for search
What priority period is conferred as a result of an OS1/2 or K15 pre completion search?
OS1/OS2: 30 working days from date of search result
K15:15 working days from result
Effect of the priority period conferred by pre completion searches in registered land
Buyer will take free from such entries if submit application for registration by 12pm on last day of priority period
For registered land, whos name should the search be done in and why
Buyer
UNLESS have mortgage then use name of lender, will confer priority period on buyer and lender
Effect of priority period in unregistered land
Searcher will take free of entries on register between search date/completion date if completion takes place during 15d period
How to check buyers solvency on behalf of lender?
INDIVIDUAL BUYER =apply for land charges search against buyer Registered: is a Bankruptcy only search on from K16
Unregistered: will already be making land charges search against seller so ask name of buyer to be searched against on K15
CO BUYER-Co search (not possible to do bankruptcy land charges search)
Why do a company search against a seller company?
to check seller…
◊ Still in existence
◊ Solvent
Has created any fixed/floating charges
When should you do a company search and why
As close to completion date as possible as no priority period
On completion day: do phone search at Registry of Winding Up Petitions at Co Court
How/when to do a bankruptcy search against an individual seller?
Unregistered-K15 search
Registered-mostly not considered necessary but can do for high value/if concerned
Why is a bankruptcy search against an individual seller mostly not considered necessary for registered land?
s86(5) LRA 2002 provides where no notice/restriction relating to bankruptcy appears on registered title, a buyer acting in good faith without notice of bankruptcy petition/adjudication will take good title from bankrupt seller even though legal title vested in trustee in bankruptcy
For residential property, how are practical arrangements for completion made?
Form TA13 Completion info and undertakings:
□ Arrangements for handing over keys
□ Place/method of completion
□ Docs to be handed over at completion
□ Exact amount payable on completion
□ Contains undertaking by sellers sol to redeem mortgage out of completion money on completion (and send buyers sol evidence of discharge as soon as received from lender)
What will a lender expect to receive before releasing the mortgage advance?
- Certif of title to confirm prop is adequate security
- Solvency search against borrowers
- Clear OS1R in name of lender
- Executed but not completed mortgage deed
What does the buyers solicitor need to do in relation to ensuring finances are in order?
- send client a Financial Statement advising them of funds needed to complete
- Ensure received mortgage advance from lender and balance of purchase price from client
- Once money received, sellers sol will contact buyers sol and completion will take place
What may be included in a Financial Statement to a client (info on funds needed to complete)
Purchase price
SDLT/LTT
Registration fee
Outstanding amount for other disbursements
Sol fees
Other amounts
What happens on completion
Buyers sol will send balance of purchase price and release deposit paid on exchange to seller
On receiving, sellers sol will complete by dating TR1 (then will need to date mortgage deed)
SC/SCPC on hoe completion money should be paid
Via direct transfer/electronically in cleared funds from an acc held in name of conveyancer at clearing bank
What are the 2 most common ways to complete?
- In Person (Buyers sol usually attends sellers sol office)
- Post
What do the buyers/sellers solicitor do if completing in person?
Buyers sol:
□ arranges for completion money to be sent electronically
checks any title docs against evidence previously sent to them
Sellers sol:
In return for receiving money, hands over title docs/other docs relating to prop
Arranges for release of keys
Downsides of completing by post?
Takes time and can be unreliable but Law Soc Code for Completion by Post includes undertakings to make it less unreliable
What do the seller and buyers sol do if using the Law Society Code for Completion by Post?
Sellers sol:
◊ Acts as agent of buyers sol at no cost to buyer
◊ On receiving money, carries out buyers sols instructions and contacts buyers sol to inform completion has taken place
◊ Hands over docs by 1st class post/doc exchange
Buyers sol:
Sets out in writing what sellers sol should do ie. Whatever they would have done if they’d attended office in person
When does legal title pass?
Unregistered: on completion
Registered: when buyer registered at Land Registry as a proprietor of the land
When should completion occur
20 working days from exchange at 2pm
Post completion steps
- Seller discharge mortgage
- Buyer pay SDLT/LTT
- LR apps to register buyer as new proprietor (AP1/FR1)
- Register new charge at CH (if buyer co who used mortgage)
How does the buyer know the seller will discharge their mortgage
Buyer usually relies on undertaking from sellers sol
Can the sellers sol ask the buyer to sent the amount direct to the lender with only balance being sent to sellers sol?
Yes
Once the lender has received the money, how may they discharge the sellers mortgage
□ LR form DS1 and send to sellers sol to forward to buyers sol
□ E-DS1 electronic discharge via Land Registry portal (sellers sol needs to send notice of discharge to buyers sol)
□ Electronic Discharge system, sending message to Land Registry which automatically removes charge from register (sellers sol needs to send notice of discharge to buyers sol)
How/when to pay SDLT/LTT?
SDLT: 14d completion with tax return SDLT1
LTT: 30d completion with tax return Land Transaction Return
Effect of paying SDLT/LTT
SDLT: HMRC will produce SDLT5 as proof
LTT: WRA will produce WRA certificate as proof
App to register buyer as new registered proprietor will be rejected unless SDLT5/WRA certif accompanies app
Effect of not paying SDLT/LTT
Buyer wont be registered as new proprietor
Fines/penalties
Forms to file at LR post completion
Registered: AP1
Unregistered: FR1 (apply for first registration)
What should be filed with AP1
◊ Certified copy of transfer
◊ Fee
◊ SDLT/LTT certif
◊ DS1 (if used)(discharge existing mortgage)
◊ Form DI setting out overriding interests (will be entered and cease to be overriding)
What should also be filed with AP1 if the buyer created a mortgage?
◊ Certified copy of mortgage deed
Buyer co-certified copy of certif of registration issued by CH AND sol/lenders written confirmation that the enclosed certified copy mortgage deed is the same as the one filed at CH an to chich the certif of registration relates
Must the buyer apply to discharge the sellers mortgage?
If discharged electronically, entries on charges register automatically removed
If DS1 used, buyer must apply for discharge (also on AP1)
Deadline for applying to be registered as new proprietor of registered land?
Before expiry of priority period of OS1 search or will take subject to entries during that period
Deadline for applying for first registration
2 months of completion
What should be filed with FR1?
◊ Fee
◊ all docs which formed the evidence of title supplied by the seller’s solicitor
◊ all the buyer’s pre- contract searches and enquiries relating to the title with their replies
◊ the contract
◊ requisitions on title with their replies
◊ all pre- completion search certificates
◊ transfer deed
◊ seller’s mortgage, duly receipted
◊ SDLT/ LTT certificate
◊ Form DI setting out overriding interests (will be registered and cease to be overriding)
◊ If new mortgage-original mortgage deed
Do you need to include details of the conveyancer/parties identity on AP1/FR1?
YES if property over £5k
Where should documents accompanying FR1 also be listed and what happens?
List in duplicate on form DL
1 copy of form DL will be returned to app sol giving estimate of time LR expects to deal with app ( Bc Registrar needs to investigate title to decide which class of title to allocate)
Once the LR have processed a FR1 and entered the buyer as new proprietor, what will the buyer be sent?
Title Information Document (TID)-official copy of entries on register to buyers sol
NOT doc of tile but IS evidence of new owner
What should be done by the buyers solicior on receipt of the TID
Check to see if mortgage/transfer correctly registered
Sort safe custody of TID/other papers, ask lender if wish to retain
Deadline to register new charge at CH if the buyer is a company with a mortgage?
21d of the charges creation
Can the deadline for registering a charge at CH be extended?
No
Effect off failing to register a charge at CH
Renders charge void against liquidator/administrator of borrower
SC/SCPC on delayed completion
Time not of the essence unless a notice to complete served (=no automatic right to rescind/terminate)
Remedies for delayed completion
- Contractual compensation (payable regardless of loss)
- Common law damages (bc failure to complete is breach of contract)
- Notice to complete
- Recession
SC/SCPC on who pays contractural compensation for delayed completion?
SC-buyer AND seller can be required to pay
SCPC-ONLY buyer can be required to pay
If payable, WHEN is contractural compensation for delayed completion paid?
On completion
How is contractural compensation for delayed completion calculated?
Calculated at contract rate (9%) on balance of purchase price (LESS deposit if defaulting party buyer) for period between contractual and actual completion date
=Calculate daily rate (amount /356)
Times by number of days delayed (LESS days non paying party is in default)
How are common law damages for delayed completion calculated?
Seller entitled to be put in position they would have been if contract had been performed- Hadley v Baxendale: For losses flowing naturally from breach AND any reasonable foreseeable consequential loss
LESS contractual compensation if received
When/why could a notice to complete be served?
Where delay wont be resolved quickly, either party can serve AFTER contractual completion time on contractual completion date
Effect of serving a notice to complete?
Makes time of essence and gives other party 10 working days to complete or can rescind contract
□ If buyer in default, seller can retain deposit and interest
□ If seller in default defaulting party, seller, they must repay deposit to buyer
SC/SCPC on recission of contract
provide for recission in certain circumstances eg:
1. Failure to comply with notice to complete
2. Misrep by seller in a plan, statement, contract or negotiations leading up to contract (Only allowed where sellers error/omission results from fraud/recklessness OR buyer would be obliged to accept a prop differing substantially from what lead to expect)
