UNIT 4 - Completion Flashcards
A solicitor is acting for the buyer on the purchase of a residential freehold property with a registered title. Title has been deduced, searches and enquiries have been carried out and contracts have been exchanged.
Is the solicitor required to carry out a search at the Land Registry prior to completion?
A) Yes, because it is a part of the investigation of title.
B) Yes, because the results will reveal whether there have been any changes to the register since the date of the official copies obtained prior to exchange of contracts.
C) Yes, because it is needed to check that the seller is the registered proprietor.
D) No, because the buyer will be protected by the priority period created when the official copies were issued.
E) No, because new entries cannot be made on the registers of title without the consent of the seller.
CORRECT ANSWER B - Options A and C are not the best answers because the solicitor will have already investigated title and checked that the seller is the registered proprietor before exchange of contracts. The purpose of the pre-completion search is two-fold: first, to see if there have been any changes to the register since the date of the official copies obtained prior to exchange of contracts and second, to obtain a priority period in which to register the buyer as new proprietor (and to register any lender as new chargee). Option D is wrong as this priority period is created by the issue of the Land Registry search result (OS1R), not by the issue of the official copies. Option E is wrong as third parties can apply for unilateral notices to be entered on the charges register without the consent of the registered proprietor
A solicitor is acting for a lender that has advanced money for the purchase of a registered freehold property. The borrower and purchaser of the property is a limited company. The money advanced by the lender is secured by a first legal charge over the property. An official search of whole (OS1) was carried out against the property in the name of the lender prior to completion. Both the transfer of the property and the legal charge have been completed.
Which of the following best describes what steps (if any) the lender’s solicitor should take after completion to protect the legal charge?
A) The legal charge automatically binds any subsequent purchasers and lenders and so no further steps are required to protect it.
B) The legal charge must be registered at Companies House within 14 days of its creation and at the Land Registry within the priority period conferred by the OS1 search result.
C) The legal charge does not need to be registered at Companies House, but must be registered at the Land Registry within the priority period of the OS1 search.
D) The legal charge must be registered at Companies House within 21 days of its creation and at the Land Registry within two months of completion of the purchase.
E) The legal charge must be registered at Companies House within 21 days of its creation and at the Land Registry within the priority period conferred by the OS1 search result.
CORRECT ANSWER E - As the borrower is a company, the legal charge must be registered at Companies House within 21 days of its creation to ensure constructive notice of it is given to other creditors of the company. Options A and C are wrong because further steps are necessary and the legal charge does have to be registered at Companies House. Option B is wrong as it refers to the wrong time limit of 14 days.
The legal charge must also be registered at the Land Registry to ensure the lender has a legal interest that binds those subsequently dealing with the property. Option D is not the best answer as registration at the Land Registry should be completed within the priority period conferred by the OS1 search result to ensure the lender has priority over any other applications, rather than within two months of completion.
A solicitor acts for the buyer of a freehold property. The contract for the purchase of the property incorporates Part 1 of the Standard Commercial Property Conditions (‘SCPC’) without amendments. Contracts have been exchanged and the completion date is tomorrow. The seller’s solicitor contacted the solicitor yesterday to confirm that they are ready for completion.
The solicitor has been contacted by the buyer today. The buyer has requested that completion be delayed for a week due to some funding issues.
Which of the following statements best describes the consequences of the delayed completion?
A) Only the buyer can be liable to pay compensation under the SCPC.
B) The buyer and the seller can be liable to pay compensation for late completion under the SCPC.
C) The contract rate will be applied to the full purchase price to calculate the amount of compensation to be paid.
D) If the seller has any actual loss resulting from the delayed completion, they will be able to claim for breach of contract and keep this in addition to any compensation paid under the SCPC.
E) The seller can immediately terminate the contract.
CORRECT ANSWER A - In a contract incorporating the SCPC, SCPC 10.3 only requires the buyer to pay compensation to the seller in the event of late completion and there is no corresponding requirement for the seller to pay, so option A is correct and option B is wrong.
The contract rate is applied to an amount equal to the purchase price less the deposit in order to calculate the amount of compensation, so C is incorrect.
The seller can receive damages for breach of contract, but these are reduced by the amount of any compensation paid, so option D is wrong.
Finally, the seller can terminate the contract, but only when they have served a notice to complete and the buyer has failed to complete by the expiry of the notice. Time is not of the essence until the notice to complete is served on the buyer, so option E is wrong.
You act for a buyer on the purchase of a freehold retail outlet. You exchanged contracts last week and you are due to complete next week.
The following is the correct order that you, as the buyer’s solicitor, would carry out the following steps:
- Arrange for TR1 to be executed
- Pay balance of purchase price to seller’s solicitor
- Agree date of TR1
- Date mortgage deed
- Pay stamp duty land tax
- Register transfer of title at Land Registry
- Check Title Information Document when received back from Land Registry
- Deal with safe custody of Title Information Document and other papers
- Close file
TRUE OR FLASE:
TRUE - In anticipation of completion, the TR1, which will transfer the legal title from the seller to the buyer, will need to be executed.
On completion, the buyer’s solicitor will send the balance of the purchase price (as the seller will already have been given the deposit on exchange).
On receipt of the money, the seller’s solicitor will complete the transaction by dating the TR1.
Once the TR1 has been dated, the buyer’s solicitor will need to date the mortgage deed. This cannot be done until after the TR1 has been dated, as technically, the buyer does not own the property until then and so would not be in a position to grant a mortgage over it.
The seller’s solicitor will send the TR1 to the buyer’s solicitor who must then arrange for SDLT to be paid, if due. The application to register the buyer as the new registered proprietor cannot take place until this has been done.
Once SDLT, if due, has been paid, the buyer’s solicitor will then need to apply to have the buyer registered as the new registered proprietor of the land in the title. This must be done before the expiry of the priority period of the OS1 search that should have been carried out prior to completion.
The Land Registry will process the application for registration and insert the buyer as the new registered proprietor. Then the Land Registry will forward an official copy of the entries on the register, known as a Title Information Document (or TID), to the buyer’s solicitor. This is not a document of title but it is for the buyer to keep as evidence that it is the new owner and should be checked to ensure that the transfer has been correctly carried out.
Once the TID has been checked, the buyer’s solicitor will need to deal with the safe custody of the TID and other papers. Where the property has been bought with the aid of a mortgage, as here, you should check with the lender about whether it wants you to send in these papers. Often a lender will only require the updated TID.
Finally, when all the above matters have been dealt with and the bill paid, it is possible to close the file.
You act for a buyer of a property and are drafting the TR1. In the final panel you need to draft the execution clause.
Which ONE of the following statements is correct?
A) Both transferor and transferee will need to execute the transfer in every sale.
B) Only the transferor ever needs to execute the transfer on sale.
C) The transferor will always execute the transfer and the transferee will also execute it in specified circumstances.
D) The only situation in which a transferee will need to execute the transfer is when the transferees are co-owners.
E) Only the transferee ever needs to execute the transfer on sale.
CORRECT ANSWER C - Option E is wrong as the transferor is always required to execute the transfer to enable ownership to pass.
In addition, the transferee will sign in certain circumstances only, such as if there is more than one transferee (as they will need to make a declaration of co-ownership in the transfer) and also if the transferee is entering into a covenant in the TR1. This therefore rules out Options A, B and D, as the transferee does not always need to execute the transfer, but sometimes it does and a declaration of co-ownership is not the only time that the transferee needs to execute the transfer.
When acting for a buyer of registered land the solicitor should carry out a pre-completion search at the Land Registry.
Why is this search required?
A) It is a part of the investigation of title.
B) The results tell you whether there have been any changes to the register since the date of the official copies obtained pre-contract.
C) It is used to check that the seller is the registered proprietor.
D) The search gives a priority period in which to register the buyer as the new proprietor, but this will only protect the lender.
E) The results tell you whether there have been any changes to the register since the date of exchange of contracts for the sale and purchase.
CORRECT ANSWER B - Options A and C are wrong as you will have already investigated title and checked that the seller is the registered proprietor before exchange of contracts.
The purpose of the pre-completion search is two-fold: first, to see if there have been any changes to the register since the date of the official copies obtained pre-contract (and not since the date of exchange of contracts, so this rules out Option E) and second, to obtain a priority period in which to register the buyer as the new proprietor (and to register the lender as the new chargee). If the search is made in the name of the lender it will give the protection of the priority period to the buyer as well as the lender, so Option D is also wrong.
You acted for Kendalls plc on the purchase of a registered property (the “Property”) from Armstrongs plc. Completion took place on 12 December. You carried out a priority search prior to completion, which gave you a priority period ending on 28 December. On 4 January you returned from a three week holiday and submitted your application for registration of the transfer of the Property to Kendalls to the Land Registry.
You have now discovered that a different firm acting for Armstrongs had been in negotiations with the owner of a neighbouring property (Glasers plc) for the grant of a right of way over the Property to Glasers. Due to a communication breakdown, the solicitor acting for Armstrongs was unaware of the sale and completed the grant of the easement on 10 December. Glaser’s solicitor applied to register the easement prior to going away for Christmas.
This right of way would significantly interfere with Kendalls’ plans for the property.
Which ONE of the following statements is correct?
A) Because the easement was created after the Property had been transferred to your client, Glasers will be unable to register this easement at the Land Registry
B) Because you did not submit your application to the Land Registry before the expiry of the priority period, your client will take the Property subject to the easement
C) The grant of the easement will be invalid as it was made during the priority period
D) If you carry out another OS1 search immediately today you will be able to avoid your client taking the Property subject to the easement
E) Even if the easement has been registered at the Land Registry, this will not matter as the transfer of the legal title will take priority over the third party right.
CORRECT ANSWER B - The priority period simply gives you a fixed time within which you have first right to register a transaction, without worrying about any other transactions which may have taken place since the date of your search, so Option C is wrong as the grant of the easement will be valid. If you do not submit your application to register to arrive by 12 p.m. on the last day of the priority period (28 December), you lose this priority to any prior applications. The Land Registry will therefore register the easement to Glasers plc in priority to the transfer to your client as Glasers got its application in before the Land Registry received your application dated 4 January.
Option A is wrong as the easement was created before the transfer to Kendalls.
Option D is wrong as Glasers has already made its application, so a new OS1 search will be subject to this prior application and will not give you priority over it.
Option E is wrong as the transfer of the legal title does not take priority over third party rights.
You act for Deirdre and Hugh Donaldson, who are buying a freehold house at 14 Barrow Street, Birmingham, B2 2JP from the sellers: Adam and Angela Green.
Contracts (incorporating the Standard Conditions of Sale (5th Edition – 2018 Revision) without amendment) were exchanged last week with completion due to take place in three weeks’ time. One task that needs to be carried out in preparation for completion is drafting the TR1 which will transfer legal title from the sellers to the buyer.
How should you complete panel 9 of the TR1 concerning the title guarantee?
A) Leave it blank as the contract is silent on the matter.
B) Select full title guarantee as the sellers own the entire legal and equitable title to the property.
C) It would be necessary to check the contract as to the title guarantee with which the sellers agreed to sell and then complete panel 9 accordingly.
D) It would be necessary to take the sellers’ instructions as to the title guarantee with which they are prepared to sell.
E) Select limited title guarantee as the sellers are trustees and should therefore not be expected to give full title guarantee.
CORRECT ANSWER C - The type of title guarantee is fixed by the contract, so this needs to be checked and whatever it says should be reflected in the TR1. The Standard Conditions of Sale (“SC”) contract has a specific provision on the front of the contract dealing with title guarantee where the sellers should have stated which title guarantee they were giving. If this is left blank then the small print contract deals with the issue. SC 4.6.2 states that the seller is to transfer the title with full title guarantee. This therefore means that Option A is wrong; if a matter is not expressly dealt with on the front or back pages of the contract, it does not mean that there are no provisions dealing with the issue: the chances are that it has been dealt with in the “small print” of the SC instead.
Option B is also wrong; whilst it is correct that full title guarantee should be given by sellers in these circumstances, ultimately panel 9 must reflect whatever was agreed to in the contract and you should not therefore just assume that full title guarantee should be inserted into panel 9.
Option D is wrong as the title guarantee that will be given is determined by the contract at exchange. The TR1 must simply reflect what has been agreed; this would have been dealt with in the contract either by completion of the space on the front of the contract or in default, by SC 4.6.2.
Option E is wrong; if a seller has only limited knowledge of the property (for example because the seller is a personal representative) it may be acceptable to sell with limited title guarantee. Here, however, the sellers should have full knowledge of the title and so should sell with full title guarantee, but again, ultimately Box 9 must reflect whatever the parties agreed in the contract.
You act for Anthea Green and Keith Price who are buying a house at 14 Corby Road, Chester CH2 1AP. Contacts (incorporating the Standard Conditions (5th Edition – 2018 Revision)) were exchanged last week with completion due to take place in three weeks’ time.
One task that needs to be carried out in preparation for completion is the drafting of the TR1 which will transfer the legal title from the sellers to the buyers. Anthea and Keith are buying the house as tenants in common in unequal shares to reflect their unequal contributions to the purchase price. They are also giving an indemnity covenant in respect of positive covenants in the Charges Register.
Which ONE of the following statements is correct?
A) There is no panel in the TR1 in which to record that they will hold the property in unequal shares.
B) The shares in which they hold the property can be recorded in panel 10 of the TR1 and the indemnity covenant can also be recorded in panel 10.
C) The shares in which they hold the property can be recorded in panel 10 of the TR1 and the indemnity covenant can also be included in panel 11.
D) The shares in which they hold the property can be recorded in panel 11 of the TR1.
E) There is no requirement to include this information in the TR1 as it is included in the contract.
CORRECT ANSWER C - There is space in the TR1 in panel 10 to make a declaration of trust as to how the co-owners hold the beneficial interest. The indemnity covenant should be included in panel 11. Therefore Options A, B and D are wrong.
Option E is wrong as the contract will not reveal how the buyers will hold the property and whilst the contract will deal with the agreement of the buyers to give an indemnity covenant (either by an express special condition or by reliance on SC 4.6.4), the actual giving of the covenant is done in the TR1.
The results of the pre-completion search at the Land Registry take the form of an official certificate of search which confers a period priority on the applicant.
For how long after the date of the certificate does the applicant have priority?
A) 21 days.
B) 21 working days.
C) 30 days.
D) 30 working days.
E) 2 months.
CORRECT ANSWER D - The applicant has 30 working days. This provides protection to the buyer (and lender) against any subsequent entries which are placed on the resister after the date of the search but before the buyer is registered as the new proprietor. The buyer takes free from these entries provided that a correct application to register them as a new proprietor is received by Land Registry by 12pm on the last day of the priority period. The other timescales are wrong.
The 2 month timescale in Option E is the time within which an application for first registration of unregistered land must be made to the Land Registry.
A solicitor is acting for the buyer of a freehold residential property. The property is registered at the Land Registry and is being purchased with the aid of a mortgage. The buyer’s solicitor is also acting for the lender. Contracts have been exchanged and the solicitor is preparing for completion by carrying out an official search at the Land Registry using form OS1.
Which ONE of the following statements best describes in whose name the OS1 search should be made?
The solicitor, as they are the party applying for the search.
The lender, as this will confer priority upon both the lender and the buyer.
The buyer, as this will confer priority upon the buyer.
The lender and the buyer, as they both require the protection of the priority period.
The current registered proprietor, as they can then confer the benefit of the priority period on the buyer.
CORRECT ANSWER B -A search carried out in the name of the lender will protect both buyer and lender. As the solicitor acts for both the buyer and the lender, the solicitor should ensure both are protected by the priority period conferred by the search result.
Option C, whilst correct, is not the best answer as a search carried out in the name of the buyer will only protect the buyer.
Option D is not the best answer as only one applicant can be named.
Options A and E are wrong. The search result confers a priority period for the benefit of the applicant, allowing the applicant to register at Land Registry within that period with priority over any other applications. Neither the current owner nor the solicitor requires the protection of the priority period.
A solicitor is acting for an individual who is purchasing a freehold property. The title to the property is unregistered and it is being acquired without the aid of a mortgage. Contracts were exchanged four weeks ago. The usual land charges searches were carried out and clear results with a 15 working day priority period obtained. The solicitor is now preparing for completion.
Which ONE of the following statements best describes who the solicitor should search against at the Land Charges Department pre-completion?
A) The previous estate owners revealed by the epitome of title (excluding the current seller).
B) The current seller.
C) The current seller and the buyer.
D) The current seller, buyer and previous estate owners revealed by the epitome of title.
E) The current seller and previous estate owners revealed by the epitome of tile.
CORRECT ANSWER B - The facts state that the usual land charges searches were carried out before exchange. This means land charges searches against any previous estate owners revealed by the Epitome (to the extent that valid searches against these parties had not been provided in the Epitome) and the seller. This search will need to be repeated against the current seller’s name, unless completion can take place within the 15 working day priority period conferred by the pre-exchange search. The facts indicate that exchange took place four weeks ago and therefore completion cannot take place within the priority period conferred by the pre-exchange search.
Option A is wrong as it excludes the current seller and it is not necessary to search again against the names of the previous estate owners, as no entries can have ben registered against them after they parted with the property. So, Option E is not the best answer for the same reason.
Options C and D are also not the best answers as the solvency of the buyer can be checked at the land charges department, but this check would only be made if there were a lender involved in the transaction. The facts indicate there is no mortgage and therefore no search against the buyer is required.
A property purchase is due for completion. The buyer’s solicitor is in cleared funds for the balance of the purchase monies and the seller’s solicitor is in possession of a correctly executed Transfer Deed. The solicitors’ offices are not geographically close.
Which ONE of the following statements best describes the most appropriate method for completion of this transaction?
A) The parties should adopt the Law Society Code for Completion by Post.
B) The buyer’s solicitor must attend in person at the seller’s solicitor’s office.
C) The seller’s solicitor must attend in person at the buyer’s solicitor’s office.
D) The parties should use Law Society Formula B.
E) The parties should use Law Society Formula A.
CORRECT ANSWER A - As the parties’ solicitors’ offices are not near to one another, attendance in person is not the most practical solution. In any event, it is never an absolute requirement that attendance take place in person. As a result, Options B and C, which suggest attendance MUST be in person are not the best answers. Further, Option C suggests the seller’s solicitor must go to the buyer’s office: although this is possible, completion in person will usually take place at the seller’s solicitor’s office.
Options D and E refer to the Law Society Formula: these can be used at exchange of contracts, not at completion.
You act for the buyer of a property and are drafting the TR1. In the final panel you need to draft the execution clause.
Which of the following statements is correct regarding the transfer?
A) The transfer only needs to be signed by the seller and in some cases the buyer. There are no other formal requirements.
B) The transfer only needs to be signed by the seller and in some cases the buyer and their signatures need to be witnessed. There are no other formal requirements.
C) The transfer only needs to be signed by the seller and in some cases the buyer, the transfer must make clear it is a deed and it needs to be sealed. There are no other formal requirements.
D) The transfer only needs to be signed by the seller and in some cases the buyer, and the transfer must make clear it is a deed. The signature of any individuals also needs to be independently witnessed.
E) The transfer only needs to be signed by the seller and in some cases the buyer, the transfer must make clear it is a deed and it must expressly state that the document is being delivered.
CORRECT ANSWER D - Section 52 of the Law of Property Act 1925 states that 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, must be signed by the parties and be delivered. Where the deed is executed by a private individual, the signature must be witnessed by an independent witness, to counter any potential allegation of undue influence. As regards delivery, a document which makes it clear on its face that it is intended to be a deed is presumed to have been delivered on execution (although this can be rebutted by a contrary intention). These requirements therefore rule out Options A, B and E.
It is no longer compulsory to have the deed sealed (although companies may use seals in accordance with their articles of association), hence Option C is also wrong.
A solicitor is acting on the purchase of a freehold commercial property. Contracts have been exchanged incorporating the Standard Commercial Property Conditions (Third edition-2018 revision) (“SCPC”) without amendment. A ten per cent deposit was paid on exchange. The agreed completion date was today, but the client will not have the balance of the purchase monies available until tomorrow.
Which of the following statements best describes what the seller can do if the buyer is unable to complete until tomorrow?
A) The seller can rescind the contract.
B) The seller can charge the buyer interest at the contract rate on the purchase price.
C) The seller can serve a notice to complete on the buyer.
D) There is nothing the seller can do.
E) The seller can forfeit the deposit.
CORRECT ANSWER C - If the buyer fails to complete on the contractual completion date, the seller can serve a notice to complete to make time of the essence. The buyer will then have ten working days to complete. If they fail to do so by the expiry of the notice to complete the seller can rescind the contract and retain the deposit. Until the expiry of the notice to complete, the seller cannot rescind (and so Option A is wrong) nor can they retain the deposit (so Option E is wrong).
Option B is not the best answer as, although the seller an also charge the buyer interest at the contract rate, this will be charged on the BALANCE of the purchase price (i.e. the purchase price less the deposit).
Option D is wrong, as the seller does have remedies if the buyer is late in completing, including serving a notice to complete and charging interest.
