#4877 - Pre Completion, Completion And Post Completion Diagram - Property Law and Practice

Pre-Completion Steps 1) Report exchange Buyer's solicitor Reports that exchange has taken place to the buyer 2) Drafting the transfer Buyer's solicitor 1) Drafts the transfer - Standard Commercial Property Conditions 6.3.2 / Standard Conditions for Sale 4.3.2 * Sends it to the seller's solicitor for approval * The transfer must be done by deed to transfer the legal estate to the buyer - s.52 LPA 1925 Registered land Forms * TR1 (for the transfer of the whole of the land) * TP1 (for the transfer of part of the land) * TR5 (for the transfer of a portfolio of reg. titles) Unregistered land Forms * No prescribed form of wording * TR1 - Is often used 3) Submitting a Completion Information form Is used to obtain practical information about the completion arrangements so it can run smoothly. Seller's solicitor Approves / amends the transfer deed * Once approved the transfer from will be sent to the buyer's solicitor * Buyer's solicitor will then forward the final version an "engrossment" back to the seller's solicitor Buyer's solicitor 1) Sends the Completion Information to the seller's solicitor Either: * TA13 - Law Society's Transaction form * 'In house' form - The tailored form used by the buyer's solicitor's firm Seller's solicitor 1) Sends the Completion Information form back including: SCPC 6.3.1 / SCS 4.3.1 * Must be done within 4 working days after receiving the questions from the buyer's solicitor 1) An Undertaking to discharge outstanding mortgages 1) An undertaking confirming that any outstanding mortgages will be repaid (discharged) prior to, on or affer completion. 2) Seller's completion statement Seller's completion statement setting out the balance of funds outstanding and required for completion 3) Seller's solicitor's bank details So the buyer's solicitor knows where to send the completion money 4) Details of where the keys for the property can be collected Will also be details of how the title deeds will be sent to the buyer 4) Financial arrangements Buyer's solicitor 1) Sends his own client (the buyer) a financial statement * States the sum due from the buyer to complete including: 2) Sorts out, confirms and obtains the funding from: * The funds will have to have cleared through the solicitor's accounts so will need to be sent in advance 1) The lender (mortagee) * Will need to send to the lender the Certificate of Title (if not already done) * Will need to advise the bank of the completion date to request funds in time for completion * Mortgage deed will have to be drafted then signed by buyer 2) The buyer themselves * Might be through personal savings or from company profits both of which may have notice periods Seller's solicitor 1) Sends a Completion Statement to the buyer's solicitor * This shows the total amount due from the buyer on completion and how this sum is made up. 2) Sends his own client (the seller) a financial statement showing both a bill of costs and the amount due to the seller 5) Pre-completion searches Buyer's solicitor Registered land 1) Checks if further entries have been made to the Official Register * Is a Land Registry search using the form - OS1 * For sale of part of the land, the form used is an OS2 * Checks to see if further entries since the date of the official copies (the "search from date") which were supplied at the beginning of the transaction If the buyer is using a mortgage, the search is made in the name of the lender * This gives protection to the borrower 2) The buyer's solicitor carries out solvency searches on the buyer only where he is acting for both the buyer and the lender * When the buyer and lender are separately represented, the lender's solicitor will do these searches The buyer is a company buying with a bank loan - Company search on buyer * Will establish if the company is still in existence The search gives the searcher a 30 day priority period * The buyer takes priority over any other applications made during the priority period * If the priority period expires with no completion any third parties interests that were tried to be registered during the period will take effect immediately on expiration of the period. * If the priority period expires, the buyer must do another search to get a new priority period The buyer is an individual buying with a bank loan - Bankruptcy search on buyer * Form used is a - K16 * Done at the Central Land Charges Department 3) The buyer's solicitor carries out solvency searches on the seller The seller is a corporate seller whether or not a lender is involved- Company search * As a seller's floating charges and pending solvency will not be revealed on the land registry title. * Not strictly necessary but done in practice The seller is an individual * No requirement to carry out a separate bankruptcy search * It would already have shown up as the seller's trustee in bankruptcy would be noted on the seller's registered title, which would be shown up by the OS1 search. Unregistered land 1) Updates / checks the CLC search * Is a search to investigate land charges using form K15 If the buyer is using a mortgage, the search is made in the lender's name * This gives protection to the borrower The search gives the searcher a 15 working day protection period * The buyer must complete the purchase within 15 working days 2) The buyer's solicitor carries out solvency searches on the buyer only where he is acting for both the buyer and the lender * When the buyer and lender are separately represented, the lender's solicitor will do these searches The buyer is a company buying with a bank loan - Company search * Will establish if the company is still in existence 3) The buyer's solicitor carries out solvency searches on the seller The seller is a corporate seller whether or not a lender is involved - Perform a Company search * As a seller's floating charges and pending solvency will not be revealed by the CLC searches * Not strictly necessary but done in practice The buyer is an individual buying with a bank loan - Bankruptcy search * Form used is a - K16 * Done at the Central Land Charges Department The seller is an individual - No requirement to carry out a separate bankruptcy search * It would already have shown up on the K15 CLC searches Execution of the Transfer 1) Execution of the Transfer (TR1 / TP1 / TR5) Parties How to execute Buyer's solicitor 1) MAY get his client to execute the Transfer * Buyer will execute if: 1) Entering into new covenants or an indemnity covenant 2) Declaring a trust (co-ownership) Seller's solicitor 1) WILL get his client to execute the Transfer 1) Execution by individuals * Must: o Indicate clearly that it is a deed o Be signed in the presence of a witness o Be delivered 2) Execution by companies * S.44 (1) and (2) Companies Act 2006 - The company can execute the deed either by: o Two authorised signatories (with or without a company seal as stipulated by the company's articles); or o By a director of the company in the presence of an independent witness 3) Execution by foreign companies * The solicitor acting for the foreign company should check with counsel in the relevant jurisdiction to verify the company has power to enter into a deed and how to validly execute the deed Timing Deal with the TR1 (or other transfer document) well in advance of completion * A company may have internal procedures to follow before signing a document * Signatories may not be immediately available