Property (Freehold) - Pre-Completion Formalities (8) Flashcards
What are pre-completion formalities?
Pre-Completion Formalities: Both parties conduct a number of steps prior to completion. By default, completion is 2pm 20 working days after exchange of contracts (it is common to alter this to two weeks by special condition).
>In some instances, exchange and completion are arranged to be simultaneous.
What needs to be done in terms of the transfer deed?
Transfer Deed: The transfer deed must be drafted and executed in readiness of completion.
(1) Draft: Buyer’s solicitor drafts deed (seller’s solicitor can take responsibility for simple residential transactions).
(2) Formalities: Must be clear as a deed, signed, witnessed, and dated (s1 LP(MP)A).
(3) Contents: See transfer deed.
What pre-completion searches need to be undertaken?
Title Search
Title Search: Buyer’s solicitor will reconduct search of title (‘Official Search’) as close to completion as possible. This is made on the prescribed form, plus a fee.
(1) Priority Period: The search provides a priority period in which the purchaser must register transfer of title. No charges registered in this priority period will bind the purchaser (or lender).
(2) Registered Title: Search is made at Land Registry against title number on Form OS1 (whole) or OS2 (part).
Contents: Title number, address, name of proprietors, name of applicant, reason.
Applicant: Made in the name of purchaser, unless funded by mortgage, in which case lender. This protects the mortgage against potential interests.
Priority: Search confers 30 working days to register transfer by 12 noon. Search also reveals any new entries since pre-contract search (Form OS1R/OS2R).
(3) Unregistered Title: Search is made at Land Charges in name of seller for the period of ownership on Form K15. There is no need to search against previous owners, as no new charge can be made against their names.
Priority: Search confers 15 working days (Form K18).
Solvency Search
Solvency Search: Buyer’s solicitor may need to conduct solvency searches.
(1) Natural Borrower: Search may need to be made against a natural borrower on behalf of a lender.
Registered Title: If purchasing registered title, use ‘Bankruptcy Only’ Form K16 at Land Charges. This is specific to bankruptcy, so does not reveal additional irrelevant information.
Unregistered Title: If purchasing unregistered title, add search to Form K15 title search used for priority period, by adding the buyer’s name alongside the seller.
(2) Corporate Borrower: Search may need to be made against a corporate borrower for the purpose of a lender.
Companies House: Search made at Companies House for solvency and charges. No priority period.
Registry of Winding Up: High risk borrowers should be re-searched as late as possible by telephoning the Registry of Winding Up Petitions at the Companies Court.
(3) Natural Seller: Natural sellers can also be searched on Form K15.
Registered Title: This is not required for registered title, as equity’s darling takes land despite bankruptcy (s86 LRA). This merely requires no notice of bankruptcy on the title (irrespective of vesting in trustee).
(4) Corporate Seller: Search may be required for corporate sellers by the same method as corporate borrowers. This is important to avoid paying purchase money to an insolvent company.
What needs to be done in terms of finances?
Finances: Buyer’s solicitor should ensure all finance requirements are in order prior to completion.
Lender Requirements
Lender Requirements: The lender will require: a) certificate of title; b) solvency search; c) OS1R/OS2R in their name; d) executed mortgage deed (pending completion).
Borrower Requirements
Borrower Requirements: The borrower will require a Financial Statement, advising them on: a) remaining purchase price; b) stamp duty; c) registration fees; d) disbursement fees; e) solicitor fees; and f) other relevant sums.
Funding Requirements
Funding Requirements: The solicitor must ensure that: a) mortgage has been advanced; and if relevant b) remaining purchase money has been advanced.
What is the completion information form?
Completion Information Form: Both parties must agree on practical completion information and undertakings. This is supplied in one of three prescribed forms, the most common being Form TA13.
(1) Information: Seller confirms: a) hand-over; b) method of completion; c) documents required; d) balance to pay.
(2) Undertaking: Seller’s solicitor will undertake to redeem seller’s mortgage on completion (see post-completion).
Wording: [Seller’s solicitor] undertakes to redeem or discharge [listed mortgages and charges] on completion and send to [Buyer’s solicitor] Form DS1, DS3, and receipted charge(s) or confirmation that notice of release or discharge in electronic form has been given to the Land Registry as soon as you receive them? Yes.
