Property Practice 9 - Pre-Completion

Question 1

What must the seller’s solicitor do in the pre-completion / stage 4 ?

Answer 1

1. Completion Statement
   - includes legal fees, cost of indemnity insurance premiums
2. Completion Information and Undertakings
   - standard Protocol form completed by the seller’s solicitor prior to completion
   - details the client’s account to send the purchase money to
   - confirms the amount due on completion, where the property keys are etc
3. Seller’s signing of Purchase Deed

Question 2

What is a completion statement?

When is it done?

Answer 2

Shows the seller how much money will be left from the completion money (net sale proceeds)

If the seller has an existing mortgage, their solicitor asks the lender for an updated redemption figure (how much is left to pay off the mortgage) - once they know this figure, they prepare the completion statement

Question 3

What is engrossment?

Answer 3

The final version of a lease for signature
2 parts:
1. The original signed by the landlord
2. Counterpart signed by the tenant

Question 4

What must the buyers solicitor check about the seller’s solicitor when the Completion Information and Undertakings form is sent?

Answer 4

Must check that the seller’s solicitor is undertaking to pay off all known charges from the purchase money on completion

Question 5

Does a buyer’s solicitor have to carry out searches in the pre-completion stage?

When must the search results come?

Answer 5

Yes, to ensure that all information received about the property remains correct and protects the buyer

Search results must be received and considered before completion

Question 6

What are the 2 stages in the land registration system?

Between the 2 stages, what kind of interest do the parties have in the proeprty in question?

Answer 6

1. The disposition itself
2. The registration

The buyer, lessee or mortgagee have an EQUITABLE INTEREST which requires registration of a NOTICE in the CHARGES REGISTER for protection

Question 7

What is the Official Search and Priority?

What are the 2 types?

Answer 7

After exchange, the buyer’s solicitor carries out an official search of the register using the property’s title number

1. Official Search with Priority Against the Whole of a Regisered Title (form OS1)
2. Official Search with Priority Against Part of a Registered Title (form OS2)
   
   • used for new builds from developers

Question 8

What is the purpose of the priority search?

Answer 8

1. Updating the register
   - search is carried out from the ‘search from’ date on the header section
   - require the seller’s solicitor to deal/undertake with removing any adverse entries before completion
2. Priority Period
   - 30 working days from the time the official search starts
   - any register entry applications during this period is held until the period expires and will fall away if the buyer completes and registers the transaction
   - if they can’t complete, a new search with a new priority period must be carried out

Question 9

Key Stages of the Conveyancing Transaction

Answer 9

Pre-exchange : contract and seller’s title are sent

Pre-completion : contracts exchanged and the transaction has become legally binding
- Gap Protection : buyer submits OS1 Search

Completion : purchase money is paid over

Post-Completion : application to register disposition made at HMLR

Registration at HMLR

Question 10

What is the Registration Gap?

Answer 10

When the buyer has paid over their money but title has not yet passed to them so buyer is at risk

Question 11

What happens if an error is made in the official search certificate?

Answer 11

Buyer is bound even if unaware
However, they can claim indemnity from HMLR for any loss sustained

Question 12

What is the priority period for unregistered land?

If you’ve done such searches before exchange, do you have to do it again?

Answer 12

15 working days

Yes, before completion

Question 13

Which searches will the buyer’s solicitor repeat during the pre-completion stage?

Answer 13

Bankruptcy search

Company search (if seller is a company)

Physical inspection

Question 14

What is a completion statement?

What are the rules regarding the buyer’s mortgage?

Answer 14

Buyer’s solicitor completes this showing the sum required from the buyer to complete
- should include Stamp Duty Land Tax, HMLR fees, legal fees and search fees

Buyer’s solicitor submits the Certificate of Title to the lender in time to request drawdown of the mortgage advance prior to the completion date

Question 15

What is the process in making the purchase deed?

What is its purpose?

Answer 15

Drafted by the buyer’s solicitor who sends 2 copies of the draft document to the seller’s solicitor
- seller’s solicitor approves and amends the docs
- sends the final engrossment back
- buyer must sign if the transfer includes covenants/multiple buyers

Transfers the legal estate to the buyer pursuant to the contract

Question 16

What are the types of purchase deed?

Answer 16

Conveyance
- for unregistered land but no longer used

Transfer
- most common
- registered and unregistered land
- TR1 Form (the whole of the land is being transferred)
- TP1 Form (part of the land is being transferred)

Assignment
- unregistered leasehold
- rare since TR1 would be used

Assent
- personal rep transfers land to a beneficiary
- freehold and leasehold, registered and unregistered
- AS1 form

Question 17

Must an assent be by deed?

Answer 17

No but it must be in writing
UNLESS
Contains a covenant by the assentee (indemnity covenant)

Question 18

What is the purchase deed process for leaseholds and assignment?

Answer 18

• buyer’s solicitor prepares the purchase deed (TR1 Form)
• conducts the same pre-completion searches as a freehold conveyance
• seller’s solicitor may need to provide evidence of the landlord’s consent to assignment with a LICENCE TO ASSIGN

Question 19

What is the purpose of a pre-completion official search for registered land?

Answer 19

Prevents new interests from being registered after the search if the conveyance is completed and registered within the priority period (30 working days)

Question 20

If land is unregistered, a solicitor should carry out an official search with priority and, as a result, the solicitor will gain a 15-working-day priority period in which to complete the conveyance. True or False?

Answer 20

False, the search is LAND CHARGES SEARCH AGAINST THE FULL NAME OF THE CURRENT OWNER

Question 21

What are the Pre contract searches?

What are the pre-completion searches?

Answer 21

• Local search
• Drainage search
• Environmental search
• location specific searches (coal mining)
• official search with priority (registered)
• full land charges search (unregistered)
• bankruptcy search (if mortgage)
• company search (if seller is a company)
• advise buyer to carry out a physical inspection