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Completion Flashcards

1
Q

What is in the buyer’s solicitor’s pre-completion checklist?

A

Draft the transfer deed for the seller’s solicitor’s approval

Arrange for buyer to sign it if it contains indemnity covenants

Arrange for buyer to execute a legal charge

Send requisitions on title to the seller’s solicitor

Carry out relevant pre-completion searches

Send certificate of title to the lender and request the loan advance in time for completion

Send buyer a statement of money needed to complete the purchase

SDLT

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2
Q

What is the seller’s solicitor’s checklist before completion?

A

Approve transfer deed drafted by buyer’s solicitor

Arrange for the transfer to be executed by the seller

Reply to requisitions on title

Request a redemption statement from seller’s lender

In a residential sale - ask seller or agent to take final meter readings

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3
Q

Who drafts what?

A

Seller’s solicitor drafts a contract

Buyer’s solicitor drafts transfer deed

  • Increasingly common for seller’s solicitor to also draft transfer and annex to contract in an approved form
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4
Q

What form is the transfer deed in?

A

Transfer of land: Deed S52 LPA

Registered land:

Land Registry forms must be used

TR1: transfers whole of a freehold or leasehold title

TP1: transfer of part of a registered title

TR5: Transfer of a portfolio of registered (and also even unregistered) titles

Unregistered land:

Can be done in a conveyance

Reality: standard to use the TR1

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5
Q

When should the date of a TR1 be filled in?

A

Only on completion

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6
Q

When should the transferor execute the TR1?

A

Always

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7
Q

When should the transferee execute the TR1?

A

Tenants in common purchasing, or agreeing to hold the property on trust

Providing an indemnity covenant

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8
Q

How does an individual execute a deed?

A

Individual: signs transfer in presence of an independent witness who also signs and prints their full name and address

Transfer is delivered (comes into effect) when it is dated – by transferor’s solicitor

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9
Q

How does a company sign a deed?

A

Seal in accordance with the company’s articles of association

No company seal, but signed by two directors / one director and company secretary

Signed by one company director and witnessed by an independent witness

Signed by a senior employee authorised under a power of attorney

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10
Q

Why do pre-completion searches need to be carried out by the buyer’s solicitor?

A

In order to check and protect the buyer and lender’s ability to obtain title as per the contract

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11
Q

How does a buyers’ solicitor carry out a pre-completion search?

A

Registered land: search with priority at the Land Registry, form OS1 / OS2

Unregistered land: Land Charges Search - form k15

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12
Q

What is the effect of carrying out a search via form OS1?

A

Priority period of 30 working days in favour of person searching

Buyer’s solicitor submits application to register the transfer of land within period  buyer’s transfer will take priority over any other application, even if lodged before buyer’s application

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13
Q

What is the effect of carrying out a land charges search via form K15?

A

Confers a purchase priority period of 15 working days

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14
Q

What happens while priority period is in operation?

A

Seller should disclose any adverse issues that may result in changes to the official copies

If seller does not – buyer may have a claim for damages for breach of contract and / or misrepresentation - or even to rescind

Registration must always be protected by priority at the Land Registry

If search not carried out – will cost time and money to put right any entry - Clear case of professional negligence on conveyancing solicitor

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15
Q

What is a sensible approach to Land Charges search as completion approaches?

A

Carry out search again to regain priority

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16
Q

If you are acting for both buyer and lender - what should you do?

A

Carry out bankruptcy search against buyer to protect lender - form k16

If the buyer is a company, search should be carried out against CH to check no pending insolvency / crystallisation of a Floating charge

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17
Q

What is a requisition on title?

A

Questions that the buyer’s solicitor needs answering before completion

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18
Q

What form is residential requisition on title in?

A

TA 13 - Completion Information and Undertakings

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19
Q

What form is commercial requisition on title in?

A

Firm’s own precedent, CPSE / SCR

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20
Q

What is on a TA13?

A

Vacant possession
Deeds and documents
Completion
Money
Mortgages and charges

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21
Q

What should seller’s solicitor do when the mortgage on a property is redeemed?

A

Lender should discharge at Land Registry online or provide a form DS1 which can discharge

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22
Q

What is the process of completion itself?

A

Process of completion involves the balance of the purchase price (i.e. after the deposit) being paid to the seller and the legal title in property being passed to the buyer

Completion now almost always happens via post: facilitated by the Law Society Code for Completion by Post

Most residential transactions still take place on Friday

23
Q

When must seller’s solicitor undertake to send transfer deed and other deeds and documents to buyer’s solicitor

A

No later than end of the working day after completion

24
Q

What must the buyer send to the solicitor the day before completion?

A

Balance left on property less deposit and mortgage, and any money needed to pay costs, SDLT and registration fees

25
What must seller's solicitor do after exchange
Order a redemption statement showing amount needed to repay the mortgage. Confirms that the lender will accept money from seller’s solicitor’s firm to redeem mortgage.
26
Under the SCS, what penalty is there for late completion
Interest payable for each calendar day's delay under SCS (e.g. including weekends, etc) Calculated at contract rate - if none, Law Society interest rate applies
27
On what sum does buyer pay interest if they are late?
If buyer late - interest on purchase price, less deposit paid (SCS and SCPC)
28
On what sum does seller pay interest if they complete late?
Interest on full purchase price (SCS only)
29
If seller has breached contract, what can the buyer claim?
Common law damages for buyer's losses. If successful, interest received would be deducted from such a sum Automatically available
30
What happens once a notice to complete has been served?
Time is now of the essence Parties must complete within 10 working days - does not include the day on which the notice itself is given
31
What remedies are available for the seller if buyer defaults after a notice to complete has been served?
* Seller may rescind contract and forfeit deposit + any interest accrued * May resell property and any contents included * Seller can claim contractual damages
32
What remedies are available for the buyer if seller defaults after a notice to complete has been served?
Buyer can rescind contract and in doing so can also: o Demand return of the deposit with any interest accrued o Claim contractual damages / even specific performance o Can claim for reasonable costs incurred in delay less contractual compensation
33
If completion does not happen at all, can you claim contractual compensation?
No - only remedy here now would be damages
34
How long after completion does buyer's solicitor have to prepare and submit SDLT return? Why SDLT
14 days of completion - SDLT 5 certificate to prove it SDLT in england
35
How long after completion does buyer's solicitor have to prepare and submit LTT return? Why LTT?
30 days to pay WRA certificate Wales only
36
How long does the buyer's solicitor have to register a charge on a company
* Must be done within 21 days of creation * If not done, void against any liquidator or administrator and lender won’t be protected * CH cannot extend this deadline – important to get application correct * Deadline missed – must apply to court for order to allow filing out of time. * This does not apply to charges given by an individual – only when dealing with company buyer / borrower
37
What documents must you include for a the Land Registry application for a transfer of registered land?
Form AP1 with following documents attached * Transfer deed – TR1 * SDLT5 or WRA certificate to prove payment of SDLT / LTT * Form DS1 to discharge seller’s mortgage * Mortgage deed in favour of buyer’s lender * If appropriate, certificate of registration of charge at Companies House * Other documents e.g. death certificates, etc
38
What documents must you include for a the Land Registry application for a transfer of unregistered land?
Form FR1 o Transfer deed – TR1 o SDLT5 or WRA certificate to prove payment of SDLT / LTT o Form DS1 to discharge seller’s mortgage o Mortgage deed in favour of buyer’s lender o If appropriate, certificate of registration of charge at Companies House o Other documents e.g. death certificates, etc * Epitome of title * Deeds and documents referred to in the epitome of title * Land charges searches for the seller and previous owners in the chain of title
39
How should you confirm that there are no overriding interests?
Buyer's solicitor confirm or complete form DI
40
How is the Land Registry application submitted?
* Many solicitors can submit online * Application for a first registration cannot be done online – must be made by post or DX * Best to send certified copies of the transfer and mortgage deed – Land Registry do not return paper documents * Original mortgage deed should be sent to lender – original transfer deed should be kept if it has covenants
41
What are the Land Registry deadlines for both types of land?
* Registered land: no deadline other than limit created by 30 days from OS1 search * Unregistered land: deadline of two months from completion – is not complied with, transaction is void o An application must then be made to the Land Register to extend the period
42
How does SDLT change if VAT is payable?
SDLT then is based on the purchase price including VAT?
43
How does SDLT relief work for first time buyers?
* Discount applicable for a person buying their first home provided that purchase price is no more than £625,000 * If more than one person buying – ALL must be first time buyers * If relief applies: - No SDLT for first £425,000 of purchase price - 5% on any part of the price over £425,000
44
How does SDLT work on second properties?
* Additional SDLT is charged on the whole of the purchase price * Calculate standard SDLT – and add 3% of purchase price * Qualifications: o Replacing buyer’s main home o First property sold within 36 months
45
What key differences are there between SDLT and LTT?
No relief for first time buyers under LTT Higher rates of LTT apply for buyers who will have a second property after purchase
46
When does CGT arise?
Chargeable disposal of a chargeable asset by a chargeable person which gives rise to a chargeable gain All elements must be satisfied
47
What is a chargeable disposal?
* Sale of an asset * Lifetime gift of an asset NOT a gift on death
48
What is a chargeable asset?
* All property assets are chargeable assets, except main home where and insofar as it qualifies for Private Residence Relief
49
Who is a chargeable person?
* An individual who is a UK taxpayer for the relevant tax year * Companies do not pay CGT * Charities are usually exempt from paying CGT
50
What is a chargeable gain?
Looks at the increase in value of an asset – allowing for allowable expenditure For property this would include: * Costs incurred in acquiring the asset – e.g. conveyancing fees * Costs incurred that contribute to the value of an asset – cost of building an extension, but not the costs of maintenance or repair * Costs incurred in disposing of the asset – conveyancers’ fees for sale, estate agents’ commission
51
How much is the annual exemption to CGT?
£3,000
52
What is Private Residence Relief?
Applies so that a person does not pay Capital Gains Tax if they sell / dispose of their home
53
What conditions are there for private residence relief?
o It has been the person’s main home for all the time that they have lived in it o They have not let it out (other than taking a lodger) o Not been used for business purposes – using a room as a temporary office is ok o All grounds must be less than 5,000 sq m o It was not bought just to make a gain

Property Law and Practice (6 decks)

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