Unit 4: Completion

How long after exchange does completion traditionally take place, and what is common now?

Traditionally 4 weeks; 2 weeks is now common. Simultaneous exchange and completion is also possible.

What are the main pre-completion tasks?

The transfer deed, searches, practical arrangements and finances (after informing clients that exchange has happened and complying with any undertakings given on telephone exchange).

What does LPA 1925 s 52 require to transfer a legal estate?

It must be by deed: it must say it is a deed, be signed and be delivered. A seal is no longer needed.

How must an individual and a company execute a deed?

An individual needs an independent witness (undue influence concerns). A company can use a seal, a director and secretary, two directors, or one director with a witness.

Who executes the transfer deed, and when is delivery presumed?

The seller always executes; the buyer only if giving a covenant or declaration (indemnity covenant, trust). Delivery is presumed on execution, and can be rebutted by saying so in the covering letter.

Who usually drafts the TR1 (whole) / TP1 (part), and what must it reflect?

Usually the buyer's solicitor (the seller's solicitor may include it in the pre-exchange package). It must reflect the contract and title. For unregistered land (first registration) a Land Registry form is usually used.

TR1: what goes in panels 3, 6 and 8?

Panel 3: date, only on completion. Panel 6: the buyer's address for service. Panel 8: the price in words and figures.

TR1: what goes in panels 9 and 10?

Panel 9: title guarantee (full, per SC 4.6.2). Panel 10: co-owners only (joint tenants or tenants in common).

TR1: what goes in panels 11 and 12?

Panel 11: indemnity covenant for the charges register covenants (SC 4.6.4). Panel 12: execution (witness for the individual seller; the buyer also signs).

Who makes pre-completion searches, when, and why?

The buyer's solicitor, as close to completion as possible. To check: (1) the seller has not further encumbered the title; (2) the borrower's finances, for the lender; (3) priority for buyer and lender; (4) a company seller is not in liquidation.

Compare registered and unregistered title searches (form, made against, result, priority).

Registered: OS1 (whole) / OS2 (part, with plan), against title number, result OS1R / OS2R, 30 working days. Unregistered: K15, against owners' names, result K18, 15 working days.

For a registered title search, when does priority run from and what must the buyer do?

From the date of the official copies. Apply to register by 12 noon on the last day of the priority period. With a mortgage, the OS1 is made in the lender's name, protecting both lender and buyer.

On an unregistered title search, when should the K15 be repeated, and what if adverse entries appear?

Repeat against the current seller unless completing within the pre-exchange priority period (no need to search previous owners). Take up adverse entries with the seller immediately.

How is the buyer's solvency searched for the lender?

Individual buyer, registered title: K16 (bankruptcy only) against the buyer. Unregistered: add the buyer's name to the K15. Company buyer: no bankruptcy search, so do a company search.

What does a company search on a company seller show, and is there priority?

Whether the company exists, is solvent, and has any fixed or floating charges. There is no priority period, so search close to completion. For high-value deals, make a telephone search at the Registry of Winding Up Petitions on completion day.

What happened in Rabinet v Beckwith?

The solicitor applied for registration after the priority period expired. A later right of way was registered first, so the buyer took subject to it.

When is a bankruptcy search against an individual seller needed?

Unregistered: the K15 reveals bankruptcy. Registered: usually unnecessary because LRA 2002 s 86(5) protects a good faith buyer for value; consider one if the price is high or solvency is doubtful.

What is the TA13 and what does it cover?

Completion information and undertakings, sent by the buyer's solicitor. It covers keys, place and method of completion, documents, and the exact sum payable.

How are apportionments dealt with?

Outgoings are split (SC 6.3, SCPC 9.3) and a provisional apportionment is allowed. Better practice is to notify the council or water authority after completion.

What undertaking does the seller's solicitor give about the seller's mortgage?

To redeem it from the completion money and send evidence of discharge (a "Yes" on the TA13 counts).

What does the lender expect before completion?

A certificate of title, a solvency search, a clear OS1R in its name, and an executed (not completed) mortgage deed.

What does the financial statement to the client include?

Balance of price, SDLT/LTT, registration fee, disbursements, fees, and other items (e.g. restrictive covenant insurance).

What must the buyer's solicitor do with the funds on the completion side?

Receive the mortgage advance and the client's balance, send them to the seller's solicitor, and notify them.

How is money sent on completion, and in what order are documents dated?

Electronically in cleared funds from a conveyancer's account (SC 6.7, SCPC 9.7). The seller's solicitor dates the TR1 first, then the lender's solicitor dates the mortgage deed (the buyer must own the property before mortgaging it).

What are the in-person and postal methods of completion?

In person: one solicitor attends the other's office; the seller's solicitor hands over documents and arranges the keys. By post (Law Society Code): the seller's solicitor acts as the buyer's agent at no cost, under an implied undertaking enforceable in court; the buyer's solicitor must give precise written instructions.

What is the effect of completion on legal title?

Unregistered land: legal title passes on completion. Registered land: it passes only on registration, hence the priority search covering the "registration gap".

How is the seller's mortgage discharged post-completion?

By DS1, e-DS1 or the ED system. With ED or e-DS1, the seller's solicitor sends confirmation instead of a DS1.

What are the SDLT and LTT post-completion deadlines?

SDLT to HMRC within 14 days (SDLT1; proof is the SDLT5). LTT to the WRA within 30 days. Without the SDLT5/WRA certificate, the Land Registry application is rejected.

What must a lender's solicitor do at Companies House for a company borrower?

Register the charge within 21 days. The limit is absolute; failure makes the charge void against a liquidator or creditors. A certificate of registration of the charge is returned.

What is needed for the Land Registry application on registered land?

AP1 within the OS1 priority period, with a certified copy of the transfer, fee, SDLT certificate, DS1 (if used) and Form DI. For a company's mortgage, also the Companies House certificate.

What is needed for first registration of unregistered land, and what are the final steps?

FR1 within 2 months, with documents listed on form DL (originals now required). The Land Registry sends the TID: check it, deal with safe custody and close the file. Missing deadlines may amount to negligence.

What is the default completion date, and is time of the essence?

20 working days after the contract. Money is due before 2pm or completion is treated as the next working day (12 noon in chains). Time is not of the essence unless a notice to complete is served, so there is no immediate right to terminate.

Who can claim contractual compensation, and how is it calculated?

SC 7.2: buyer or seller can pay. SCPC 10.3: buyer only. Contract rate × (price less deposit, if the buyer is in default) ÷ 365 × days of delay.

Worked example: £270,000 at 8.5% for 3 days' delay?

£270,000 × 8.5% = £22,950; ÷ 365 = £62.88 per day; × 3 days = £188.64.

What common law damages are available for late completion?

Late completion is a breach (Hadley v Baxendale): losses naturally arising plus foreseeable consequential loss (storage, rent, bridging finance, removals). Contractual compensation is deducted from damages.

What is a notice to complete and what are its consequences?

Served by a party who is ready, willing and able, only after the contractual completion time. It makes time of the essence and gives 10 working days. If still not complete, the server may rescind: a defaulting buyer forfeits the deposit, a defaulting seller must repay it, and damages are also available.

When is rescission available?

After a failed notice to complete; or for seller misrepresentation only if fraudulent or reckless, or if the buyer would get a property substantially different (quantity, quality, tenure). Otherwise: damages only.