Completion and post-completion steps relevant to a freehold and/or leasehold property transaction including remedies for a delayed completion Flashcards
Completion in person:
Parties normally attend at the offices of the seller’s solicitor.
Completion in person -
Buyer’s solicitor:
Arrange for completion monies to be sent electronically OR banker’s draft BUT NOT a personal cheque.
Unregistered land, check title documents once again AGAINST previous title disclosure.
Completion in person -
Seller’s solicitor:
Hold the transfer deeds, form DS1, other relevant documents, keys, AND release them on receipt of the completion monies.
Completion by post (law society code for completion by post):
Parties MUST expressly agree to adopt the Law Society Code for completion by post.
Seller’s solicitor will act as agent for the buyer’s solicitor at completion AND will give undertakings to carry out completion procedure.
Completion by post (law society code for completion by post) -
Buyer’s solicitor:
Before completion WILL send funds to seller’s solicitor on OR day before completion.
Will send instructions as to documents to be examined, memoranda, AND to be endorsed, undertakings to be given, deeds, AND documents to be sent to buyer’s solicitor AFTER completion, AND any other consents/certificates to deal with restrictions at HMLR.
Completion by post (law society code for completion by post) -
Seller’s solicitor:
Receipt of the completion monies, the seller’s solicitor WILL complete the transaction
UNLESS notified otherwise by the buyer’s solicitor.
Seller’s solicitor undertakes to comply with any agreed completion arrangements AND instructions which would include, for example, to discharge any outstanding mortgage, hold the transfer deed, conveyance, OR other title documents to the order of the buyer’s solicitor AND notify the buyer’s solicitor that completion has occurred.
Documents will be sent by 1st class post OR DX to buyer’s solicitor.
Effect of completion -
Registered land:
Legal title will pass when the buyer is registered at HMLR.
MUST register buyer as new owner during the 30-day priority period.
Effect of completion -
Unregistered land:
Legal title passes on completion.
Post-completion steps:
*Buyer to pay within 14 days SDLT (England).
HMRC will issue a SDLTs form as proof tax has been paid.
*Buyer to pay within 30 days LLT (Wales).
Welsh Revenue Authority (WRA) will issue a WRA certificate as proof tax has been paid.
*Buyer is a company; the mortgage MUST be registered at Companies House within 21 days of creation.
Post-completion steps -
Registered land – complete within 30 days priority period HMLR, form AP1 to have:
Buyer registered as the registered proprietor of the property.
Lender registered as the holder of the new mortgage over the property.
Apply for the seller’s mortgage to be removed, where a form DS1 has been completed.
With form AP01, send the following documents:
Certified copy of transfer.
HMLR fee.
SDLT5 form/WRA certificate.
Form DS1.
Form DL setting out any overriding interests that burden the title.
Post-completion steps - Unregistered land:
complete within 2 months of completion of transaction HMLR form FR1 for first registration of title (freehold OR leasehold)
AND form DI (list of documents that accompany a first registration application).
Must include:
All the documents which formed the evidence of title supplied to the buyer’s solicitor by the seller’s solicitor.
Any new mortgage documents AND any overriding interests that burden the title which can then be entered on to the register
AND cease to be overriding.
Common law damages:
*Failure to complete a contract for sale on the contractual completion date gives the innocent party a claim for damages.
*Innocent party CAN’T unilaterally terminate the contract
UNLESS the time for completion has been made of the essence.
*Damages for breach of contract for the sale of land will be assessed under the contractual principles established in Hadley v Baxendale.
*Under SCS AND SCPC, credit towards damages MUST be given for any contractual compensation payable for delayed completion.
Contractual compensation:
*Contractual compensation CAN be payable IF there is a delay in completion beyond the time AND date specified in the contract.
*Pursuant to the SCS, either party CAN be held liable for compensation.
*Pursuant to the SCPC, only the buyer is liable for compensation.
*Compensation will be calculated at the contract rate (which is the rate of interest payable IF a party is late in completing) as follows:
Purchase price – deposit paid * contract rate% (specified in contract) = annual rate.
Annual rate/365 days = daily rate.
Daily rate * (number of days in default) = compensation payable.
Notice to complete:
Pursuant to SCS AND SCPC, where completion has been delayed beyond the agreed completion date, party who is ready to complete CAN serve a notice to complete on the defaulting party.
Service of a notice to complete makes time of the essence AND gives the other party 10 working days to complete the transaction.
Failure to comply with the 10 working day deadline WILL result as follows:
*Defaulting party is the buyer, the seller CAN rescind the contract AND keep the deposit.
*Defaulting party is the seller, seller MUST return the deposit to the buyer AND buyer CAN claim damages for any loss suffered.
Recission:
Pursuant to the SCS AND SCPC, right to rescind is available for:
Misrepresentation
Where a license is NOT forthcoming in a leasehold transaction.
Either party has failed to comply with a notice to complete.
Recission WILL result in the return of deposit monies paid (with any accrued interest),
return of all documents AND the cancellation of any registration of the contract.
