W5

Question 1

What is the purpose of pre-completion searches?

Answer 1

Pre-completion searches are mainly conducted to check and protect the buyer’s (and lender’s, if applicable) ability to obtain title to the property as per the contract. They are concerned with verifying information about the property and the parties involved.

Question 2

What are the different Land Registry forms used for transferring land?

Answer 2

For registered land, the most common form used is the TR1, which transfers the whole of a freehold or leasehold title. For unregistered land, a conveyance can be used, but it is usual to use the Land Registry form TR1. Other forms like TP1 and TR5 are used for specific circumstances.

Question 3

Who typically drafts the transfer deed in a property transaction?

Answer 3

Traditionally, the seller’s solicitor drafted the contract, and the buyer’s solicitor drafted the transfer deed. However, it has become common for the seller’s solicitor to draft the transfer deed at the same time as the contract, and for the draft transfer to be annexed to the contract in approved form.

Question 4

How is the transfer deed executed by individuals and companies?

Answer 4

An individual signs the transfer deed in the presence of an independent witness who also signs and prints their full name and address. For companies, there are different options for executing a deed, such as using a company seal and having it signed by two directors or one director and the company secretary.

Question 5

What is the purpose of the attestation clauses in the transfer deed?

Answer 5

The attestation clauses in the transfer deed allow the parties to execute the deed as a deed. The transferor must always execute the deed, and the transferee(s) must execute it if they are tenants in common, agree to hold the property on trust for someone else, or provide an indemnity covenant or any other obligation.

Question 6

What are the key panels that need to be completed in the TR1 form?

Answer 6

The key panels that need to be completed in the TR1 form include the title number, property description, transferor(s), transferee(s), address for service, transfer wording, consideration, title guarantee, declaration of trust (if applicable), additional provisions, and execution.

Question 7

What are the tick box options for consideration in the TR1 form?

Answer 7

The tick box options for consideration in the TR1 form are: the transferee is paying a sum of money for the property (the figure is inserted), the transferee is giving no monetary consideration or anything that has a monetary value (e.g., a gift or transfer from existing trustees to new trustees), and other receipts (less frequently used, such as property swaps or transfers to pay off debts).

Question 8

What are the options for title guarantee in the TR1 form?

Answer 8

The options for title guarantee in the TR1 form are full title guarantee and limited title guarantee. The choice is generally governed by the contract.

Question 9

What is the purpose of conducting an OS1 search in a property transaction?

Answer 9

The purpose of conducting an OS1 search in a property transaction is to ensure that there are no adverse issues that may have resulted in changes to the official copies originally provided. This search helps identify any potential issues that may affect the property’s title.

Question 10

What happens if a seller fails to disclose adverse issues that have resulted in changes to the official copies in a property transaction?

Answer 10

If a seller fails to disclose adverse issues that have resulted in changes to the official copies in a property transaction, the buyer may have a claim for damages for breach of contract and/or misrepresentation. In some cases, the buyer may even have the right to rescind the contract.

Question 11

Why is it important for a buyer’s solicitor to ensure that registration is protected by priority at the Land Registry?

Answer 11

It is important for a buyer’s solicitor to ensure that registration is protected by priority at the Land Registry because it guarantees that the buyer’s transfer takes priority over any intervening applications. This protects the buyer’s rights and ownership of the property.

Question 12

What are the potential consequences if an OS1 search is not carried out in a property transaction?

Answer 12

If an OS1 search is not carried out in a property transaction, it can cost time and money to rectify any entry errors. This can involve correspondence with the seller’s solicitor or even litigation against a seller who is unable to pay damages. Failing to conduct an OS1 search can be considered professional negligence on the part of the conveyancing solicitor.

Question 13

What is the significance of regular monitoring in a property transaction?

Answer 13

Regular monitoring by healthcare professionals ensures optimal control of blood pressure, which is crucial in managing hypertension and reducing the risk of heart disease and stroke.

Question 14

What is the purpose of a land charges search in a property transaction?

Answer 14

The purpose of a land charges search in a property transaction is to give priority to the buyer’s ability to register the transfer. It ensures that any entries against the landowner during the priority period do not affect the buyer’s right to register the transfer.

Question 15

Why should a buyer’s solicitor carry out a bankruptcy search against the buyer in a property transaction?

Answer 15

A buyer’s solicitor should carry out a bankruptcy search against the buyer in a property transaction to protect the lender. This search helps ensure that there is no pending insolvency or crystallization of a floating charge that may affect the buyer’s ability to fulfill their financial obligations.

Question 16

What is the purpose of a company search in a property transaction?

Answer 16

The purpose of a company search in a property transaction is to check for any pending insolvency or crystallization of a floating charge against the buyer if they are a company. This search helps protect the lender’s interests and ensures that the buyer is financially stable.

Question 17

What is the role of requisitions on title in a property transaction?

Answer 17

Requisitions on title are simple questions used to elicit specific information needed by the buyer’s solicitor to complete the transaction. They cover various aspects such as vacant possession, deeds and documents, completion arrangements, money matters, mortgages and charges, and seller’s solicitor’s undertaking to redeem mortgages.

Question 18

What is the purpose of the seller’s solicitor’s undertaking to redeem mortgages in a property transaction?

Answer 18

The purpose of the seller’s solicitor’s undertaking to redeem mortgages in a property transaction is to ensure that the mortgage is cleared from the property promptly after completion. This allows the buyer’s transfer to be registered without any encumbrances.

Question 19

What happens during the completion process in a property transaction?

Answer 19

During the completion process in a property transaction, the balance of the purchase price is paid to the seller, and the legal title of the property is passed to the buyer. This is usually done by post, with the seller’s solicitor acting as an agent for the buyer’s solicitor.

Question 20

What are the expectations and undertakings outlined in the Law Society Code for Completion by Post?

Answer 20

The Law Society Code for Completion by Post sets out the expectations and undertakings of solicitors involved in a property transaction. It ensures that completion can take place smoothly and includes provisions for the transfer of deeds and documents, confirmation of completion, and other necessary actions.

Question 21

What happens after completion in a property transaction?

Answer 21

After completion in a property transaction, the seller’s solicitor holds the transfer deed and other deeds and documents to the buyer’s solicitor’s order. The buyer’s solicitor can direct what happens to them, and the seller’s solicitor undertakes to send them to the buyer’s solicitor as soon as possible after completion.

Question 22

What is the process of completion in a property transaction?

Answer 22

The process of completion in a property transaction involves the payment of the balance of the purchase price to the seller and the transfer of legal title to the buyer. Traditionally, solicitors would physically attend each other’s offices to complete the transaction, but it is now commonly done by post.

Question 23

What are the implied undertakings when using a Law Society Code in a property transaction?

Answer 23

When using a Law Society Code in a property transaction, there are implied undertakings between solicitors. The seller’s solicitor provides various undertakings under the Code, such as receiving the purchase money on completion and redeeming mortgages. These undertakings ensure a smooth and secure completion process.

Question 24

What happens if one of the parties fails to complete on time or at all?

Answer 24

If either party does not complete on the contractual completion date, it is considered a breach of the contract. The non-defaulting party is entitled to damages and contractual interest under the standard conditions. They can also serve notice to complete, making time of the essence and giving both parties ten working days to complete.

Question 25

What are the consequences of a seller's failure to complete?

Answer 25

A seller's failure to complete means that the seller's solicitor is unable to date an executed transfer. This can happen if the seller has not returned the executed transfer or instructs the solicitor not to date it.

Question 26

What are the consequences of a buyer's failure to complete?

Answer 26

A buyer's failure to complete means that the seller's solicitor has not received the money needed to complete from the buyer's solicitor, or has received the money but the buyer instructs the buyer's solicitor not to release it to the seller's solicitor (for example, if the buyer changes their mind at the last moment).

Question 27

What is the purpose of serving notice to complete?

Answer 27

The purpose of serving notice to complete is to make time of the essence and give both parties ten working days to complete the transaction. If either party fails to complete within this period, the non-defaulting party can rescind the contract and keep the deposit.

Question 28

What is the calculation for compensation interest in case of delayed completion?

Answer 28

Compensation interest is calculated at the interest rate specified in the contract. If none is specified, the Law Society interest rate applies. The daily rate of interest is calculated by multiplying the purchase price less the deposit by the interest rate and dividing it by 365 (or 366 in a leap year). The total interest is then calculated by multiplying the daily rate by the number of days of delay.

Question 29

What are the remedies available to the non-defaulting party if either party fails to complete?

Answer 29

If either party fails to complete, the non-defaulting party can rescind the contract and keep the deposit. The seller may also forfeit the deposit and any interest accrued on it, resell the property and any contents included in it, or claim contractual damages. The buyer may demand return of the deposit with any interest accrued on it, claim contractual damages, or even seek specific performance.

Question 30

What are the post-completion steps that the buyer's solicitor must attend to?

Answer 30

After completion, the buyer's solicitor must attend to various tasks, including notifying and paying Stamp Duty Land Transaction Tax (SDLT) or Land Transaction Tax (LTT), registering charges created by companies at Companies House, and making the Land Registry application within the specified timeframes.

Question 31

What is the consequence of missing the deadline for registering a charge at Companies House?

Answer 31

If the deadline for registering a charge given by a company at Companies House is missed, the charge is void against any liquidator or administrator, and the lender is not protected. It may be necessary to apply for a court order to allow the filing out of time, which can involve time and expense.

Question 32

What is the difference between submitting a Land Registry application for registered title and unregistered title?

Answer 32

For registered title, the buyer's solicitor uses Land Registry form AP1 to set out the details of the application and the documents provided. For unregistered title, the buyer's solicitor uses form FR1, which contains additional boxes relevant to unregistered title. The documents included in the application vary depending on whether it is a transfer of registered land or a first registration.

Question 33

What is the Land Registry priority period and what happens if the application is not submitted within this period?

Answer 33

The Land Registry priority period is the time within which the application must be submitted. If the application is not submitted within the specified number of working days, the priority will be lost. A new search can be submitted, but it will start a new priority period, not extend the existing one.

Question 34

What are the consequences of missing the Land Registry priority period?

Answer 34

If the Land Registry application is not submitted within the specified number of working days, the priority will be lost. This can have implications for the protection of the buyer's interest in the property.

Question 35

What are the post-completion tasks that the buyer's solicitor needs to attend to?

Answer 35

After completion, the buyer's solicitor needs to settle Stamp Duty Land Tax (SDLT) or Land Transaction Tax (LTT), register the buyer's title at the Land Registry, and attend to other tasks such as reporting and paying the appropriate tax and registering charges at Companies House.

Question 36

What is the purpose of disclosing overriding interests in a Land Registry application?

Answer 36

The purpose of disclosing overriding interests in a Land Registry application is to expand the scope of entries that are on the register. This ensures that any relevant interests or rights are properly recorded and protected.

Question 37

What is the consequence of failing to disclose an overriding interest in a Land Registry application?

Answer 37

If an overriding interest is not disclosed in a Land Registry application, it may not be recorded on the register. This can have implications for the protection of the buyer's interest in the property.

Question 38

What are the consequences of a buyer's failure to give a full deposit when serving notice to complete?

Answer 38

If the buyer is the defaulting party and has not given a full 10% deposit, they must make it up to 10% without delay. Failure to do so may result in further consequences or penalties.

Question 39

What is the deadline for submitting a Land Registry application for registered land?

Answer 39

For registered land, there is no deadline for application other than the time limit for priority under the OS1 search. The Land Registry will allow an application to be submitted at any time after completion, but may query it if a long period has elapsed.

Question 40

What happens if the deadline for submitting a Land Registry application for unregistered land is not complied with?

Answer 40

For unregistered land, there is a deadline of two months from completion. If this deadline is not complied with, the transaction is void and an application must be made to the Land Registrar to extend the period.

Question 41

What are the consequences of failing to comply with the relevant post-completion steps and their deadlines following the purchase of a registered freehold property with the aid of a mortgage?

Answer 41

The consequences of failing to pay SDLT/LTT within the relevant deadline are penalties and interest. The consequences of failing to register a buyer's mortgage at Companies House within the relevant deadline are that the mortgage/charge is void against liquidators, administrators, and other creditors, the loan is repayable on demand, and it could be construed as negligence on the part of the solicitor. The consequences of failing to apply to the Land Registry to register the transfer and the buyer's mortgage within the relevant deadline are that the buyer would take the property subject to any third-party interests that may have been registered subsequent to its OS1 search, and the buyer will only have beneficial title (not legal title) to the property until they are registered as the registered proprietor of the title at the Land Registry.

Question 42

What documents must the buyer's solicitor send to the Land Registry with their application on Form AP1 after completing the purchase of a commercial freehold registered property in England with the aid of a mortgage?

Answer 42

The buyer's solicitor must send the TR1 (transfer), SDLT5 (acknowledgement of receipt of Stamp Duty Land Tax), the buyer's mortgage/charge, and the Certificate of Registration of the Charge to the Land Registry with their application on Form AP1.

Question 43

What steps must the buyer's solicitor carry out post-completion of the purchase of a registered freehold property in Wales with the aid of a mortgage?

Answer 43

The buyer's solicitor must register the buyer's mortgage at Companies House, send the LTT Return and pay LTT to the WRA (Welsh Revenue Authority), and apply to the Land Registry using Form AP1.

Question 44

What is the basis of the Capital Gains Tax charge in the context of property and Private Residence Relief?

Answer 44

Capital Gains Tax (CGT) is a tax on the profit when you sell (or dispose of) something (an asset) that has increased in value. CGT arises when there is a chargeable disposal of a chargeable asset by a chargeable person incurring a chargeable gain.

Question 45

What is the purpose of sending updated official copies to the client and the lender after completing a property transaction?

Answer 45

Sending the client the updated official copies ensures that they have the most current information about the property's registration. The copies also serve as proof of ownership. Similarly, sending the lender the updated official copies provides them with evidence of their legal charge against the property.

Question 46

What is the difference in processing time for a transfer of registered land versus first registrations of unregistered land at the Land Registry?

Answer 46

The Land Registry usually processes a transfer of registered land within a couple of weeks. However, first registrations of unregistered land take much longer and can take several months, depending on how busy the Land Registry is.

Question 47

What is the purpose of the title information document (TID) in a property transaction?

Answer 47

The title information document (TID) provides details about the property's title. Although the title is primarily stored in the Land Registry's electronic registers, the TID serves as a summary of the key information. The buyer's solicitor should check that all the details in the TID are correct before sending a copy to the buyer and the lender.

Question 48

What is the purpose of registering a buyer's mortgage at Companies House after completing the purchase of a property?

Answer 48

Registering a buyer's mortgage at Companies House is necessary for companies to protect their interests. If the mortgage is not registered, it may be void against liquidators, administrators, and other creditors. Registering the mortgage ensures that it is enforceable and provides evidence of the charge against the property.

Question 49

What is the deadline for paying Stamp Duty Land Tax (SDLT) after completing the purchase of a freehold residential registered property in England with the aid of a mortgage?

Answer 49

The deadline for paying SDLT is within 14 days of completion.

Question 50

What is the deadline for applying to the Land Registry to register the transfer and the buyer's mortgage after completing the purchase of a freehold residential registered property in England with the aid of a mortgage?

Answer 50

The deadline for applying to the Land Registry to register the transfer and the buyer's mortgage is within 30 working days of the OS1 priority search result.

Question 51

What is the most accurate list of documents that the buyer's solicitor must send to the Land Registry with their application on Form AP1 after completing the purchase of a commercial freehold registered property in England with the aid of a mortgage?

Answer 51

The most accurate list of documents that the buyer's solicitor must send to the Land Registry with their application on Form AP1 is the TR1 (transfer), SDLT5 (acknowledgement of receipt of Stamp Duty Land Tax), the buyer's mortgage/charge, and the Certificate of Registration of the Charge.

Question 52

What is the most accurate summary of the steps the buyer's solicitor will carry out post-completion of the purchase of a registered freehold property in Wales with the aid of a mortgage?

Answer 52

The most accurate summary of the steps the buyer's solicitor will carry out post-completion of the purchase of a registered freehold property in Wales with the aid of a mortgage is to register the buyer's mortgage at Companies House, send the LTT Return and pay LTT to the WRA (Welsh Revenue Authority), and apply to the Land Registry using Form AP1.