Unit 4 Flashcards
What are the requirements for the transfer deed?
Transfer deed formalities:
S 52 LPA 1925 = the transfer of a legal estate in land must be by deed.
To be valid in law, a deed must:
- Make it clear that it is a deed.
- Be signed by the parties.
- Be delivered.
It is not compulsory to have the deed sealed.
What forms are used for the transfer?
Land Registry TR1 = the deed used to transfer the whole of registered freehold title.
Land Registry TP1 = deed used to transfer part of a registered freehold.
Unregistered = If the land is unregistered, it will be subject to compulsory first registration.
What are the formalities for a private individual to execute a transfer deed?
signature must be witnessed by an independent witness, to counter any potential allegation of undue influence.
How can a company execute a deed?
A company may execute a deed in one of three ways:
- Using the company seal in accordance with the articles of association
- Having it signed by a director and the secretary, or by two directors of the company, provided that the deed is expressed to be executed by the company
- Having it signed by a single director in the presence of a witness who then attests that signature.
Who executes the transfer deed?
- The seller always execute the transfer deed to transfer the land;
- The buyer will only execute the deed if they are entering into an obligation or making a declaration of trust in the TR1 (transfer form), like giving an indemnity covenant or declaring a beneficial interest under a trust.
- Where the buyers will be co-owners, a declaration of trust is needed (so buyers need to sign this).
- Transfer deed must reflect the terms of the contract and the title deeds
When is the deed presumed delievered?
- Presumption of delivery = A document which makes it clear on the face of it that it is a deed is presumed to have been delivered on execution.
- This presumption can be rebutted by contrary intention – e.g., the client has signed the transfer but does not wish it to come into force yet, solicitor needs to expressly state this in covering letter when sending deed.
When is the deed dated?
On completion.
How should the purchase price be stated?
In figures as well as words. For commercial properties, should include VAT
For registered land, why is Form OS1 done?
to see if any new entries have been made since the official copies were produced and provides the buyer with a priority period.
What is a prioirty period?
Provides protection to the applicant against any subsequent entries which may be placed on the register after the date of the pre-completion search but also before the buyer is registered as proprietor.
- Buyer takes the property free from any entries, provided they submit their application for registration by 12 noon on the last day of the priority period.
Prioirty period for OS1 = 30 working days.
If the buyer is buying with a mortgage, whose name should form OS1 be in?
- If buyer is buying with a mortgage, the application for a Land Registry search should be in the name of the lender and not the buyer, even where the lender is separately represented.
- This allows the results to confer priority on both buyer and lender (since mortgage is deemed to take place slightly after the purchase by the buyer)
- Important note – A search made solely on behalf of the buyer will not protect the lender.
For unregistered land, why is form K15 search done?
to see if any new entries have been made since the official copies were produced and provides the buyer with a priority period.
What is the prioirty period for K15?
15 working days from the date of the result, during which time the searcher will take free of any entries made on the register between the date of the search and the date of completion, provided that completion takes place during the 15 working day period.
What search has no prioirty period?
Company search – Should be completed as close as possible to the day of compeltion.
What is form TA13?
Asks the seller to confirm important information relevant to completion, including:
- Arrangements for handing over the keys
- The place, method of completion
- Documents to be handed over at completion
- Exact amount payable by the buyer on completion.
- Discharging mortgages – form contains the undertaking the seller’s solicitor gives to redeem the mortgage out of the completion money on completion.
– Buyer’s solicitor asks seller’s solicitor to send evidence of discharge of any outstanding mortgage.
If a buyer is financing purchase with the aid of a mortgage, what must a lender receive before releasing the mortgage advance?
- A certificate of title to confirm that the property is adequate security for the loan being advanced
- A solvency search against the borrowers
- A clear OS1R in the name of the lender
- An executed but not completed mortgage deed.
On receipt of the money for the purchase, what does the seller’s solicitor do?
- On receipt of the money, seller’s solicitor completes the transaction by dating the TR1 form.
– Once this has been done, the lender’s solicitor (where applicable) will date the mortgage deed.
Note – lenders solicitor cannot date the mortgage deed until after TR1 has been dated.
What are the key features of completion by post?
- Seller’s solicitor acts as the agent of the buyer’s solicitor for the purpose of carrying out the completion procedure.
- Important for the buyer’s solicitor to set out in writing precisely what the seller’s solicitor is to do on their behalf.
- The documents which would have been handed over to the buyer’s solicitor are instead sent by first-class post or document exchange.
- Seller’s solicitor gives an implied undertaking to carry out the buyer’s solicitor’s instructions. (This can be enforced through the courts).
When does legal title pass to the buyer?
- Registered land
– Legal title does not pass to the buyer until the buyer is registered at the Land Registry as proprietor of the land.
- Unregistered land
– Legal title passes to the buyer on completion.
How to discharge a seller’s mortgage?
- Once the lender has received the amount required to redeem the mortgage from the seller’s solicitor, they will either:
Complete land registry form DS1 and send it to the seller’s solicitor for onward transmission to the buyer’s solicitor; or
Submit an e-DS1 electronic discharge through the Land Registry portal; or
Use the Electronic Discharge (ED) system, sending an electronic message to the Land Registry which automatically removes the charge from the register.
What are the requirements for registration of a new charge at companies house?
If buyer is a company and is purchasing with the aid of mortgage, the lender’s solicitor needs to:
– register the charge at Companies House within 21 days (from completion) to ensure constructive notice of it is given to other creditors of the company.
- Time limit cannot be extended.
- Failure to register results in the charge being void against a liquidator or administrator of the borrower and the borrower’s other creditors (prejudicing the lender’s security).
What is form AP1? (registered land)
Land Registry form AP1 = application to have the buyer registered as the registered proprietor of the Land (and the lender registered as the registered proprietor of the charge).
When should AP1 be carried out? (registered land)
Timing = application must be made before the expiry of the priority period of the OS1 search which was carried out prior to completion.
KEY NOTE – Failure to register within the priority period means the buyer and lender loses the benefit of the priority period and would take subject to matters registered during that period.
What is form FRi (unregistered land)?
Form FR1 = An application for first registration of title must be made within two months of completion of the transaction.
Form DL = Documents accompanying the application need to be listed in duplicate on form DL (one copy is sent back to solicitor).
What is on form FRI1?
Documents can be originals/ copies, need to be numbered in chronological sequence and include the following:
- all the documents 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
- the transfer deed
- the seller’s mortgage, duly receipted
- SDLT/LTT certificate
- Form DI (see below)
- Original mortgage deed (only if there is a new mortgage).
KEY NOTE: Conveyancers have the option of submitting certified copies, however, non-conveyancers must submit original deeds & documents.
What is the Title Information Document? (TID) (unregistered land)
Title Information Document (TID) = the official copy of the entries on the register sent to the buyer’s solicitor once their client’s been entered on the register.
– Where property is bought with a mortgage, lender should be asked if they wish to retain the TID.
When is the contractual completion date if the contract is silent?
20 working days after the date of the contract.
When is money due on completion day?
- Money due on completion must be paid before 2pm on the day of completion and, if it is not, completion is treated as taking place on the next working day as a result of the buyer’s default.
- Parties can agree to vary completion time in the contract.
How can a party get contractual compensation for late completion?
SC 7.2 = both the buyer and seller can be asked to pay this compensation.
SCPC 10.3 = only the buyer can be required to pay compensation.
- Compensation calculated from the period between the contractual completion date and the actual completion.
- Calculated at a daily rate (multiplied by the number of days of default) and at the rate specified in the contract. If there is none, then it is the Law Society’s Interest Rate, which is currently 4% above the Barclays’ Bank Base rate.
- If the non-paying party was also at fault for some of the period, then those days are ignored.
- Payable on completion.
What is the calculation for contractual compensation?
If buyer has to pay = interest is calculated on the balance due after deduction of deposit price.
If seller has to pay = interest is calculated on the whole price (excluding chattels).
- Calculate daily interest (balance of purchase price (minus deposit paid) x contract rate) divide by 365 = Y
- Count how many days the payment is late = Z
– Include the day the transaction was supposed to complete, but not the day it was actually completed.
– Remember to count days and not working days.
- Compensation = Z X Y.
When can a party get common law damages for late completion?
I.e., breach of contract under normal contractual principles.
Damages may be available, but only where the party can establish that it has suffered a loss.
Damages assessed under Hadley v Baxendale = putting the claimant in the position it would have been in had the contract been properly performed.
Damages will be awarded for:
- Losses flowing naturally from the breach and
- Reasonably foreseeable consequential loss – note that this could include wasted legal costs, putting furniture into storage, costs of renting another property, the cost of bridging finance and rebooking removal costs.
NOTE – the fact the seller has received contractual compensation does not prevent the seller from claiming damages for extra losses for breach of contract in the normal way. However, the contractual compensation the innocent party receives will be deducted from the contractual damages.
When can a notice to compete be served?
Can only be served after the contractual completion time on the contractual completion date.
E.g., for a contract incorporating SCs, after 2pm 20 working days after exchange.
– Once served, the notice to complete makes time of the essence and gives the other party 10 working days to complete (from the day after deemed service to complete).
– If defaulting party fails to complete within 10 working days, then the party who served notice can rescind the contract (but is not obliged to do so).
– Notice to serve will be received when deemed received under SCS/SCPC 1.3.
– Immediately upon receipt of notice to complete, the buyer must pay to the vendor, a deposit of 10% of the purchase price or top up any deposit already paid of less than 10% to 10%.
Seller serves:
- If the defaulting party is the buyer, the seller can keep the deposit + interest, claim damages and resell the property.
Buyer serves:
- If the defaulting party is the seller they can compel specific performance, but only when it is not adequate to grant repayment of the deposit + interest and claim damages.
What is the effect of recision after late completion / failure to complete?
If the contract is rescinded, there is no contractual right to compensation – you would have to go to court for damages (SCS 7.1.2 & SCPC 10.2)
- Parties can rescind if the other side delays completion or totally fails to complete.
– They can only rescind once notice to serve has been given and where “time is of the essence”. Time is not of the essence until notice is served.
- Misrep = recission can be relied on where there has been misrep, only where the seller’s error or omission results from fraud or recklessness, or the buyer would be obliged to accept a property differing substantially (in quality/quanitity/tenure) from what the error or omission had led them to expect.
