#4826 - Completion And Post Completion - Property Law and Practice

• Draft purchase deed – it must be a deed (s.52 LPA) in order to transfer the legal estate.

  • In registered land this is a TR1 form.

• Submit requisitions on title – these are queries on the title sent to the seller’s solicitor.

  • A series of standard questions which obtain practical information about the completion arrangements (e.g. keys, which bank account to put money into, any new information, confirmation of mortgage discharge upon completion).

    • SCS 4.3.1/SCPC 6.3.1 – the seller’s solicitor must reply in 4 working days.

• Pre-Completion Searches – these essentially ask whether there have been any changes to the title. They have the effect of freezing the title for 30days.

  • Registered Land:

    • Do a Form OS1 search at the Land Registry to see if any further entries have been made since the date the official copies were supplied (the ‘search from date’). NOTE: if the buyer is taking out a mortgage, the application is in the NAME OF THE LENDER.

      • Sending this form gives a 30 day priority period from the date of the search result. This means the buyer will take priority over any entries placed on the register during the period, provided the buyer applies to register the purchase within the period.

    • Do a bankruptcy search: if an individual use Form K16. If the seller is a company, do a companies house search against it to confirm it exists. The OS1 search will catch out any bankruptcy issues.

  • Unregistered Land: send Form K15 to the Central Land Charges Department to enquire against the seller and all previous known owners of the land. This gives a protection period of 15 working days in which to complete.

• Draft purchase deed – form TR1

• Finance – CHECK THEY ARE IN PLACE

  • Completion Statement – buyer’s solicitor receives from seller’s solicitor showing the amount the seller requires to complete.

  • Financial Statement – send to buyer showing the total sum due (inc. your fees) in order to complete.

Completion

• Personal attendance

• By post or by telephone – means completion on the phone with original documents to follow by post

• Ensure purchase deed executed by the buyer

• Ensure requisitions answered satisfactorily

• Check title documents upon receipt

• Pay completion monies

• Get an undertaking from seller’s solicitor that the mortgage has been redeemed (this is usually via simple confirmation from the lender or a DS1 form).

Post-Completion

• One mortgagee – the LR will remove the mortgage on the registration of the purchase without the need for any documentary evidence.

• More than one mortgagee – it may be necessary to provide evidence to the LR that another mortgage has been repaid. If there is another mortgage registered before that of the selling mortgagee, the proceeds of sale must be used as laid out below in accordance with s.105 LPA:

  • To pay off the first registered mortgage

  • Pay any costs incurred in carrying out the sale

  • Pay off the selling mortgagee’s mortgage

  • Residue goes to seller

In such cases, the selling mortgagee needs to provide evidence that it has paid off the mortgage which had priority.

Remedies

• This occurs where completion doesn't take place on the completion date set out in the contract but does eventually take place.

• If there is no completion date on the contract SCS 6.1.1 specifies that the matter will be completed 20days after exchange.

• Further, if completion takes place after 2pm on the relevant day, it is deemed to occur on the next working day (SCS 6.1.2/SCPC 8.1.2)

• The standard conditions provide for the buyer to make payment to the seller of specific compensation for delay – SCS 7.

• The amount of compensation is based on a penalty interest rate set out in the contract (the contract rate).

  • If no amount is specified SCS/SCPC 1.1.1(e) state it will be the law society’s interest rate which is currently equivalent to 4% per annum above the base rate of Barclays.

  • The contract rate is paid on:

    • If the seller is paying compensation – the whole purchase price

    • If the buyer is paying compensation – the amount outstanding (less the deposit)

• Compensation is payable each day of delay. When calculating, include the day on which completion was meant to occur but exclude day finally paid.

• SCS 6.8/SCPC 8.8 states this may be served on or after the day of completion. However, SCS 6.8.1 states it must be served after completion (**SCPC 8.8.1 says it can be served any time – so could be on the morning of completion even if the specified time (e.g. “1 pm”) hasn't passed).

• SCS 6.8.2 – requires the completion to occur within 10 WORKING DAYS.

  • SCS 1.3.5 – if notice is received after 4pm, it is deemed as having been received the next working day.

  • SCS 1.3.7 governs the deemed times of service.

• FAILURE TO COMPLY with a notice to complete – SCS 7.4 & 7.5: the SELLER can rescind, forfeit the deposit, resell the property and claim damages, and the BUYER can rescind and demand repayment of deposit + interest.

• Only where time is of the essence. SCS 6.1.1 states it is not of the essence unless specifically provided for in contract.

• Time will only be of the essence:

  • After correct service of a notice to complete – SCS 6.8 OR

  • By surrounding circumstances (i.e. business would fail)

This will occur if the seller has misrepresented something to the buyer (Gordon v Selico – concealing physical defects).

• If there’s a material difference between the property & representation then buyer gets damages only. Basically, can the difference be solved...