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FLK 2: Property Practice > Topic 6 - Completion > Flashcards

Topic 6 - Completion Flashcards

(88 cards)

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1
Q

What is the role of the seller in the completion process?

A

Draft/approve Transfer Deed (TR1), rely on Completion Information, prepare for completion

The seller’s responsibilities also include arranging the execution of the transfer.

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2
Q

What is the role of the buyer in the completion process?

A

Draft/approve Transfer Deed (TR1), request Completion Information, perform Pre-Completion Searches, prepare for completion

The buyer’s responsibilities include ensuring all necessary documents are in order.

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3
Q

What is a key difference between exchange and completion?

A

Exchange is tense; completion is often more relaxed

Completion can feel anti-climactic, especially in complex transactions.

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4
Q

What should be included in the buyer’s solicitor’s checklist before completion?

A

Draft transfer deed, arrange buyer’s signature, execute legal charge if applicable, send requisitions, carry out searches, send certificate of title, request loan advance, provide statement of money needed, approve Stamp Duty Land Tax form

Each step is crucial to ensure a smooth completion process.

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5
Q

What should be included in the seller’s solicitor’s checklist before completion?

A

Approve transfer deed, execute transfer, reply to requisitions, request redemption statement, take final meter readings

These steps help finalize the seller’s obligations.

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6
Q

Who traditionally drafts the transfer deed?

A

The seller’s solicitor drafts the contract; the buyer’s solicitor drafts the transfer deed

This is the default position in Standard Conditions of Sale.

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7
Q

What is the required form of a transfer of land?

A

It must be in the form of a deed as per s52, Law of Property Act 1925

This applies to both registered and unregistered land.

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8
Q

What is the TR1 form used for?

A

It transfers the whole of a freehold or leasehold title

TR1 is the most common Land Registry transfer form.

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9
Q

What is the purpose of the OS1 or OS2 search?

A

To update official copies and confer a priority period of 30 working days

This search protects the buyer’s ability to obtain title.

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10
Q

What does a land charges search (Form K15) identify?

A

Incumbrances or adverse matters registered against the owner/seller

It is crucial for unregistered land transactions.

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11
Q

What happens if the buyer’s solicitor does not carry out the OS1 search?

A

It may lead to professional negligence and potential financial loss

The buyer’s solicitor could face litigation if issues arise post-completion.

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12
Q

What is the significance of the priority period in a land charges search?

A

It is 15 working days, and priority is obtained by completing the transaction within that time

This is different from registered land where priority is obtained by applying for registration.

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13
Q

What must an individual do to execute the transfer deed?

A

Sign in presence of an independent witness who also signs and prints their name and address

This is required under s1(3)(a)(i), Law of Property (Miscellaneous Provisions) Act 1989.

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14
Q

What are the options for a company executing a deed?

A
  1. Company seal with signatures
  2. Two directors or one director and secretary
  3. One director with witness
  4. Senior employee with power of attorney

Company policies on executing deeds may vary.

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15
Q

What is included in the transfer wording of the TR1?

A

The wording ‘The transferor transfers the property to the transferee’

This wording is standard and cannot be amended.

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16
Q

What is the purpose of pre-completion searches?

A

To check and protect the buyer’s ability to obtain title to the property

They differ from pre-exchange searches which investigate property issues.

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17
Q

What does Panel 8 of the TR1 form address?

A

Consideration for the transfer, with options for monetary and non-monetary transfers

It includes tick box options for different types of consideration.

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18
Q

What does Panel 10 of the TR1 form address?

A

Declaration of trust for the transferees

It specifies how legal and beneficial titles are held.

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19
Q

What happens if the seller does not disclose adverse issues before completion?

A

The buyer may have a claim for damages or rescind the contract

Disclosure is crucial to avoid legal repercussions.

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20
Q

What is the maximum number of transferees that can be named in the TR1?

A

Four transferees

This limits the number of parties involved in the transfer.

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21
Q

What does a land charges search prioritize?

A

The buyer completing the transaction within a priority period of 15 working days

This priority is distinct from applying for registration.

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22
Q

When should a land charges search against the seller be carried out?

A

Just before completion

This gives a sufficient priority period to complete the purchase.

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23
Q

What is the purpose of a bankruptcy search (Form K16)?

A

To protect the lender when acting for the buyer and lender

It checks for the buyer’s insolvency status.

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24
Q

What type of search is required if the buyer is a company?

A

A company search to check for pending insolvency or crystallisation of a floating charge

This search should be carried out as late as possible.

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25
What are requisitions on title?
Questions raised by the buyer’s solicitor about the title before completion ## Footnote They ensure all necessary information is obtained for completion.
26
What form do requisitions on title usually take for residential transactions?
Law Society TA13 ## Footnote This form is also known as 'Completion information and undertakings'.
27
What does the TA13 form ask regarding vacant possession?
Arrangements for collecting the keys and authority for rent payment if there is a tenant ## Footnote This ensures the buyer can access the property immediately.
28
What is the seller's solicitor's undertaking regarding mortgages?
To redeem the mortgages on completion ## Footnote The undertaking ensures mortgages are cleared for the buyer's transfer to be registered.
29
What does the Law Society Code for Completion by Post facilitate?
Completion without the need for solicitors to meet in person ## Footnote It treats the seller's solicitor as an agent for the buyer's solicitor.
30
What must happen immediately after completion according to the Code?
The seller’s solicitor must send the transfer deed and other documents to the buyer’s solicitor ## Footnote This must be done by the end of the next working day.
31
What is the typical order of events on completion day?
Payment of the purchase price balance and transfer of legal title ## Footnote Completion often happens by post now.
32
What happens if a party fails to complete on time?
The defaulting party is liable to pay interest for each day of delay ## Footnote This is under the Standard Conditions of Sale (SCS).
33
How is interest calculated in case of delay in completion?
Based on the purchase price less any deposit paid ## Footnote The interest rate is either specified in the contract or follows the Law Society's current rate.
34
What is rescission in the context of contract law?
A remedy where the contract is set aside and parties revert to their pre-contract position ## Footnote It is not automatically available and requires notice to complete to be served.
35
What is required for a party to serve notice to complete?
Completion must not have taken place by the date and time specified in the contract ## Footnote The notice makes time of the essence for completing the contract.
36
What is the priority period for a land charges search?
15 working days ## Footnote This is the time frame in which the buyer must complete the transaction for priority.
37
What is the main function of requisitions on title?
To cover necessary information for completion ## Footnote They are simpler than pre-exchange enquiries.
38
What must a buyer’s solicitor do before completion?
Ensure enough funds are collected to transmit to the seller’s solicitor ## Footnote This is in accordance with the Law Society Code.
39
What does a company search check for?
Pending insolvency or crystallisation of a floating charge ## Footnote This is critical for lenders when the buyer is a company.
40
What happens if the seller fails to complete?
The seller's solicitor cannot date the executed transfer ## Footnote This can occur if the seller has not returned the executed transfer.
41
What does the standard condition specify for interest if the buyer is late?
Interest is paid on the purchase price less any deposit ## Footnote This applies under both SCS and SCPC.
42
What is the typical completion day for most residential transactions?
Friday ## Footnote This allows buyers to settle in over the weekend.
43
What is the purpose of a redemption statement?
To show the amount needed to repay the seller's mortgage ## Footnote This is ordered by the seller's solicitor before completion.
44
What happens if either party fails to complete on time?
The non-defaulting party can serve notice to complete on the other ## Footnote This makes time of the essence and requires completion within ten working days.
45
What is the completion time stated in the standard conditions if not amended?
2pm ## Footnote This is the default completion time for property transactions.
46
How long do parties have to complete after receiving a notice to complete?
Ten working days ## Footnote The first day is the day after the notice is served.
47
What must a buyer do if they are the defaulting party and have not given a full 10% deposit?
Make it up to 10% without delay.
48
What remedies does the seller have if the buyer fails to complete?
* Rescind the contract * Forfeit the deposit and any interest accrued * Resell the property and any contents * Claim contractual damages
49
What remedies does the buyer have if the seller fails to complete?
* Rescind the contract * Demand return of the deposit with interest * Claim contractual damages or specific performance
50
What should a buyer's solicitor do post-completion?
* Settle Stamp Duty Land Tax * Register the buyer's title at Land Registry
51
What is Stamp Duty Land Tax (SDLT) based on?
The purchase price paid for the property.
52
What is the SDLT rate for residential transactions up to £250,000?
No SDLT payable.
53
What SDLT rate applies to a purchase price over £250,000 up to £925,000?
5% SDLT.
54
What SDLT rate applies to a purchase price over £925,000 up to £1.5 million?
10% SDLT.
55
What SDLT rate applies to a purchase price over £1.5 million?
12% SDLT.
56
What happens if contents are allocated a separate value in a transaction?
The value does not form part of the SDLT/LTT calculation.
57
What is the SDLT relief for first-time buyers?
No SDLT for the first £425,000 and 5% on any part over £425,000 (up to £625,000).
58
What additional SDLT is charged on second properties?
An additional 3% on the whole purchase price.
59
What is the SDLT rate for non-residential transactions up to £150,000?
No SDLT payable.
60
What SDLT rate applies to non-residential transactions over £150,000 up to £250,000?
2% SDLT.
61
What SDLT rate applies to non-residential transactions over £250,000?
5% SDLT.
62
What is Land Transaction Tax (LTT)?
The equivalent of SDLT in Wales with different charging methods.
63
What is a key requirement for registering a charge at Companies House?
Must register within 21 days of creation.
64
What happens if the registration deadline for a charge at Companies House is missed?
The charge is void against any liquidator or administrator.
65
What is the deadline for submitting a Land Registry application for unregistered land?
Two months from completion.
66
How long does it usually take for the Land Registry to process a transfer of registered land?
A couple of weeks.
67
What is a certified copy of a document?
A copy stamped and signed by a solicitor confirming it is a true copy of the original.
68
What happens if a Land Registry application is not submitted within 30 working days of the OS1 search?
Priority will be lost.
69
What must be included in an application for registration of registered title?
* Transfer deed (e.g., TR1) * SDLT5 or WRA certificate * Form DS1 (if appropriate) * Mortgage deed (if applicable) * Other relevant documents
70
What is the application form used for first registration of unregistered title?
Form FR1.
71
What must a buyer's conveyancer disclose regarding overriding interests?
Complete a Form DI or tick the relevant box on AP1 or FR1.
72
What is the rate of SDLT on the remaining £500,000?
5% ## Footnote The total SDLT is £27,000 for the given example.
73
What is Land Transaction Tax (LTT)?
The equivalent of SDLT in Wales with differences in rates and reliefs ## Footnote LTT does not provide relief for first-time buyers.
74
What is the LTT rate for residential transactions above £225,000 up to £400,000?
6% ## Footnote There is no LTT payable on the first £225,000.
75
What is the LTT rate for residential transactions above £750,000 up to £1.5 million?
10% ## Footnote LTT increases to 12% for amounts above £1.5 million.
76
What is the LTT rate for non-residential transactions above £225,000 up to £250,000?
1% ## Footnote No LTT is payable on the first £225,000.
77
What is Capital Gains Tax (CGT)?
A tax on the profit when you sell an asset that has increased in value ## Footnote Not every profit on every asset will incur CGT.
78
What are the four elements that must be satisfied for a CGT liability?
* Chargeable disposal * Chargeable asset * Chargeable person * Chargeable gain
79
What is an example of a chargeable disposal?
The sale of an asset ## Footnote A gift during the person's lifetime is also a chargeable disposal.
80
What is a chargeable asset?
All property assets except the main home qualifying for Private Residence Relief ## Footnote Certain personal possessions and non-physical assets are also chargeable.
81
Who qualifies as a chargeable person for CGT?
An individual who is a UK taxpayer for the relevant tax year ## Footnote Companies do not pay CGT.
82
What is a chargeable gain?
The increase in value of a chargeable asset ## Footnote It must be realized through a chargeable disposal.
83
What can be considered as allowable expenditure in calculating chargeable gain?
* Costs of acquiring the asset * Costs that add value to the asset * Costs of disposing of the asset
84
What is an example of allowable expenditure?
Conveyancing fees for purchase and sale ## Footnote Costs for repairs are not considered allowable.
85
How is the chargeable gain calculated for Akeyo's restaurant sale?
Disposal value (£180,000) - acquisition value (£140,000) - allowable expenditure (£10,000) = £30,000
86
What is the annual exemption amount for Capital Gains Tax?
£3,000 ## Footnote This is tax-free and can offset gains.
87
What are the conditions for Private Residence Relief?
* Main home for all time lived * Not let out (except a lodger) * Not used for business purposes * Grounds less than 5,000 square metres * Not bought to make a gain
88
True or False: Married couples can treat multiple properties as their main home.
False ## Footnote They can only treat one property as their main home.

FLK 2: Property Practice (10 decks)

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