Property Practice - Completion and Post-Completion Flashcards
Completion Time
Under standard conditions of sale this must be 2pm
Methods of Completion
- Personal attendance
- Agent
- Post
Personal Attendance
- Very rare
- Buyer’s solicitor goes to seller’s solicitor’s office in person and hands over banker’s draft for balance of purchase money and takes physical possession of deeds
By agent
- Buyer’s solicitor appoints a local firm to attend to completion at seller’s solicitor’s office
- Rare
Post
- Seller’s solicitor acts as agent for buyer’s solicitor on completion
- As soon as completion takes place seller’s solicitor sends documents to buyer’s solicitor
- Most common method
- The Law Society has established a Code for Completion by Post - if parties have adopted the Protocol they must follow the Code
Code for Completion by Post
- Buyer’s solicitor sends balance of completion monies to seller’s solicitor’s client account by bank transfer
- On morning of completion buyer’s solicitor should be in position to send 90% of purchase price to seller’s solicitor
- When funds received by seller’s solicitor they will phone buyer’s solicitor to confirm receipt and this is when completion takes place
Effect of Completion
When does title pass?
Unregistered: on completion
Registered: on registration
Post-Completion: Seller’s Solicitor
- Report completion to seller
- Discharge any mortgages using appropriate HMLR form or method depending on type of charge and lender’s instructions
- If property being sold is unregistered: send original mortgage deed to lender and then to buyer’s solicitor once returned by lender
- Pay estate agent’s bill (if authorised to do so)
- Send bill for legal fees
Post-Completion: Buyer’s Solicitor
- Report completion to buyer
- Send bill for their own legal fees
- If buyer a company and taken out mortgage to fund purchase: register company charge with Companies House within 21 days of completion
- Stamp Duty Land Tax: return form to be submitted to HMRC and tax paid within 14 days of completion (return due even if no tax due)
- Registered title: register transfer and any new mortgage with Land Registry within 30 day priority period
- Unregistered title: make application to Land Registry within 2 months of completion
Stamp Duty Land Tax
Residential freehold property: threshold for paying SDLT is £125,000
Residential leasehold property: assessed on premium paid and also the net present value (based on total rent that will be paid over the life of the lease discounted according to length of lease) - threshold is £125,000 for both
Commercial property: threshold is £150,000
Post-Completion: Leasehold Transactions
New lease:
- If lease for a term of over seven years the buyer’s solicitor must apply to register the lease at HMLR
- If property has been lease with a mortgage the new mortgage will be leased at the same time and tenant’s solicitor must serve notice of mortgage on the landlord
- If managed by management company buyer may need to apply for share in management company (solicitor assists with this)
Assignment of existing lease:
- Seller’s solicitor will send buyer’s solicitor the original lease, original share certificate (if applicable) and original licence to assign (if applicable)
- Buyer’s solicitor arranges for payment of SDLT
- Buyer’s solicitor serves notice to the landlord of the assignment and notice of charge (of any new mortgages)
- Seller’s solicitor prepares final service charge adjustment (if retention agreed)
- Buyer’s solicitor arranges for registration at HMLR of transfer and any new mortgages
- May be necessary for seller to transfer their share in management company to buyer (done by a stock transfer form)
Merger
On completion the contract merges with the purchase deed - buyer can no longer sue on contract terms
Unless contract states that any clauses will not merge on completion
Standard Conditions of Sale contain a ‘non-merger clause’: this states that completion will not cancel liability to perform outstanding obligations under the contract
