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SGS 4 - completion, pre completion and remedies
Terms in this set (23)
What is the important step in relation to obtaining finance pre-completion step does the buyer solicitor carry out (for the buyer) in the pre-exchange steps?
Sending the draft CLLS certificate of title to the solicitors acting for lender (the buyer's lender).
The final version of the certificate of title is signed and sent on the day of completion.
set out a short summary of what the completion and information undertakings form covers
- where to collect keys
- location for completion and whether or not the Law society's code for completion by Post will be used.
- List of documents the seller's solicitor will send to the buyer's solicitor after completion
- Balance due from the buyer on completion (completion statement)
- undertaking from the seller's solicitor re the seller's mortgage that it will be discharged.
the seller's solicitor should take particular care. This is because O(11.2) requires a solicitor to perform all undertakings within the agreed timescale/within a reasonable time.
- confirmation that there have been no chnages to the CPSE replies to enquiries (or details of those changes)
what are the two functions of the OS1 search?
- To check there have been no changes to the official copies of the register since the date of the official copies which the buyer's solicitor investigated title with, i.e. the 'search-from' date.
- To obtain a priority period within which the buyer's solicitor has to apply to register the transfer at the Land Registry.
what is the significance of the 'search from date' when submitting an OS 1 search where would you find it?
It is the date from the official copies the buyer solicitor investigated title with.
what is the purpose of a company search in the pre-completion stage?
The Company search against the seller is carried out to check the company still exists, is still solvent and has not registered any further charges over Elton Hall.
true or false: is it true that you must sent the completion and undertakings form TA13 to the seller's solicitor or you will not be able to obtain an undertaking from seller's solcitor in relation to the discharge of the charge?
This statement is incorrect. Whilst it is correct that a Form TA13 (published
by the Law Society) COULD be used to request the seller's solicitors'
undertaking, the Form TA13 is not an obligatory format for a commercial
property purchase and many firms have their own in-house forms or use
similar forms published by other legal stationers.
True or false: The Charge must be discharged by the seller before completion
This statement is incorrect for two reasons. First a charge can only be
discharged by the lender, not the seller or the seller's solicitors. Secondly,
while a charge can, in theory, be discharged prior to completion (if the
seller were in funds), usually a seller will only be in a position to procure a
discharge of a charge over the property once it is in receipt of the proceeds
of sale of the property- i.e. on or immediately after completion.
true or false: The seller will be obliged to discharge the Charge because Special Condition 4 of
the contract reads "The property is sold with vacant possession."
Selling with 'vacant possession' means selling the property free of
occupiers/not subject to tenancies, whereas it is SCPC 4.1.2(d) which
requires the seller to sell the property free of charges.
true or false: If the Charge is to be discharged on completion using a Form DS1, the seller's
solicitor should either send the completed Form DS1 to the buyer's solicitor on
completion or give an undertaking to pay to the chargee bank the amount
required to discharge the Charge immediately after completion, once the sums
have been received from the buyer's solicitor, and to send the buyer's solicitor
the Form DS1 as soon as the seller's solicitor receives it.
Care must be taken by the seller's solicitor when giving the undertakings.
You may be expected to demonstrate an accurate knowledge of the form
and mechanics of the undertakings re: a seller's charge by way of legal
mortgage over the property in the PLP exam.
what are the two searches required against the seller at the pre-completion stage?
The searches required do include the OS1 search AND a company search
against the seller to check for solvency which should be done on the
morning of completion.
true or false: If the OS1 search result ('OS1R') indicates 'no adverse entries', you can safely
complete even if the 'priority period' of the search has already expired.
Even though 'no adverse entries' means nothing adverse has been
registered since your 'search from date' (the date of your official copies), it
is not safe to complete and lodge the Land Registry application outside the
priority period because you risk a third party applying to register an
interest after the date of your OS1R. If the priority period has expired or will
expire too soon, you will need to carry out another OS1 search, obtain a
new priority period and ensure that you complete and apply to register
within that new priority period.
true or false: If the OS1R indicates that a further charge has been registered in the Charges
Register (since the date of the official copies you received), you should ask the
seller's solicitor to give an appropriate undertaking on or before completion
relating to the discharge of that further charge.
Any charge disclosed must be discharged on or before completion or the
buyer will be taking a transfer of the property subject to it.
true or false: A Form TR1 must always be executed by or on behalf of the seller and the buyer
(as Transferor and Transferee respectively).
A TR1 must always be executed by or on behalf of the Transferor (the
seller). However, the Transferee (the buyer) does not always need to
execute the TR1.
Whilst many Transferees (buyers) like to execute the TR1, the Land
Registry notes on the TR1 set out when the Transferee must execute,
examples include when the Transferee is:
entering into new restrictive or positive covenants;
giving the transferor an indemnity covenant (for example, pursuant to
SCPC 7.6.5); or
declaring a trust (for example, where joint purchasers declare whether
or not they will hold the property as tenants in common or joint
For the purposes of the LPC, if an exclusion of the Contracts (Rights of
Third Parties) Act 1999 is included
A Form TR1 should be dated as soon as it is signed by the Transferor.
The Transfer is merely signed 'in escrow' at this stage and should only be
dated once completion actually takes place (usually over the phone), when
it is dated immediately.
A plan is not usually required to be attached to a Form TR1
In all cases where there is a transfer of the whole of a registered title the
TR1 does not need a plan. This is because a TR1 deals with all of the land
comprised in that registered title, the extent of which is already set out in
the title plan registered at the Land Registry.
The name of the Transferor on the Form TR1 must be the same as the name
which appears on the Proprietorship Register of the seller's title.
There are several situations where the names may be different. For
example, the seller(s) may:
have changed their name; or
be personal representatives of a deceased registered proprietor.
what is the general time for completion, if the contract incorporates the SCPC?
By 2.00pm. SCPC 9.1.2 provides for 2.00pm as 'the latest time' for completion. Be sure to check if this has been varied by way of a special condition in the contract.
what are three remedies available to the seller if the buyer does not complete on time?
- contractual compensation
-common law claim for damages
- notice to complete and rescission
when considering remedies available to the seller, what is contractual compensation?
Compensation can be claimed for each day of delay including the contractual
completion date (but not the day on which completion
actually occurs (SCPC 10.3.1 - 10.3.2), provided the money is received in full by
the 'latest time' i.e. 2pm (unless the contract varied SCPC 9.1.2) on the day on
which completion actually occurs. Note that compensation is payable for all days
from and including the contractual completion date and NOT just working days. (you should never complete on a friday)
when considering remedies available to the seller, what is common law claim for damages?
The seller can also claim damages for breach of contract in respect of any
additional loss if contractual compensation is not sufficient (SCPC 10.3.3).
when considering remedies available to the seller, what is a notice to complete and rescission?
what is the formula for calculating the amount of compensation payable per day if completion is to be delayed? what information do you need to know?
- the contract rate
- the base rate (of the bank)
-balance (purchase price minus the deposit)
contract rate (contract rate + base rate) x (Purchase price minus deposit)
to calculate per day divide the figure by 365 (to two decimal places)
what should be borne in mind when counting the number of days to calculate compensation?
- if completion takes place after 2.00pm or the time agreed then completion is deemed to take place the following working day
-all days including weekends are included.
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