Completion 2 - Workshop Answers PDF

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Completion 2, workshop guide with sculpted answers to specific scenarios as well as definitions and relevant authorities....

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PREPARATORY TASK 1 You are a trainee in the firm of Gibson & Weldon LLP (“G&W”). You are currently sitting in the Real Estate Department and your supervising solicitor is Teresa McKillop. Teresa has asked you to assist her in acting for SK Property Investments Limited (“SKP”) on its purchase of 3 Portland Place in Bristol from David Jenkins. Assume that exchange of contracts has taken place and that completion is due on the date agreed in Unit Workshop 7. The contract is in the form that you were given as part of Task 2 of Unit Workshop 7. In this Unit Workshop you will be considering when and how to make an application to register SKP as the new owner of 3 Portland Place. 1.

Locate the most recent Land Registry Fee Guide and find out the relevant fees.

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Find and print copies of the following forms (or download the word versions from Elite if you want to complete them in a word-processed form in the Unit Workshop): Forms: TR1 and AP1 In addition find the following forms and make sure that you can explain the purpose of each of these forms and whether they are relevant to this transaction: Form RX1; Form RX1 is a form used to apply to the Land Registry for the entry of a restriction on title. This could be used, for example, where there is a mortgage over the property and a restriction is required to prevent dealing without the consent of the bank. Form RX3; Form RX1 is a form used to apply to the Land Registry for the entry of a restriction on title. This could be used, for example, where there is a mortgage over the property and a restriction is required to prevent dealing without the consent of the bank. Form RX3 is the form that is used when a restriction is to be cancelled. The form requires the applicant or its conveyancer to state why the restriction is no longer required and to provide any supporting documentation. Having dealt with form RX1 and form RX3 we will now feedback on form AP1, which you should have completed.

The seller's solicitor also needs to write to the buyer's solicitor enclosing the dated contract signed by the seller. This is in order to comply with the undertaken given under formula B on exchange. Turning to the buyer's solicitor on the right-hand side you will see that immediately following exchange the buyer's solicitor also completes a memorandum of exchange. The buyer's solicitor then informs the buyer client, the lender and the insurer. The buyer has the risk of the property from exchange of contracts and therefore obtaining insurance is essential. The buyer's solicitor will write to the seller's solicitor enclosing the dated contract signed by their client, again, in order to comply with the undertaken given under formula B on exchange. Note that because of standard commercial property condition 3.2.2 the deposit will have been paid by electronic transfer, so there will be no money passing through the postal system. After these initial procedures are complete the buyer's solicitor will then raise a request for completion information and draft the TR1. These are both matters that we considered in Workshop 8. Also considered in Workshop 8 is the next stage for the buyer's solicitor, the carrying out of pre-completion searches. You will be aware that the search needed in this case is an OS1 search of whole. With this transaction there is no need for a company search against the buyer client because the lender's solicitors will do this. You were told in the task details that Western Star Bank Limited were 2020_LPC_Real Estate_LG9 ©The University of Law

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separately represented. Turning back to the seller's solicitor on the left-hand side, the seller's solicitor will obviously reply to the request for completion information and will then approve the TR1 form, both matters again which we considered in Workshop 8. The seller's solicitor will then obtain a redemption statement from the seller's lender, so that they know exactly how much remains on their client's mortgage. They will have to give an undertaking to discharge the mortgage on completion. At the bottom of page 1 in the centre of the page you will see that both parties then draft completion statements and bills go to their clients. It is important for the solicitors to be in funds for their costs prior to completion. Turning to page 2 of the grid, both parties arrange for execution of the TR1. You will see that it says by the seller and the buyer. The seller must always execute the transfer deed, and here the buyer will also need to execute the transfer deed because they will be giving a covenant. We will see later in the workshop the details of this covenant, but perhaps you could think about why a covenant will be required in this particular case. Take a look at the officials copies which may give you a clue. Moving now on to page 3, you will see from the bar at the top of the page that completion has occurred, so we are now considering post completion matters on the form. After completion the buyer's solicitor on the right-hand side of the grid will send completion monies to the seller. Completion monies will be calculated as follows. The purchase price of £585,000 less a deposit of 10%. 10% will be £58,500, which will leave a balance of £526,500. The buyer's solicitor will then confirm completion of the purchase to the lender's solicitor who will date the mortgage deed. At the same time in turning to the seller's solicitor the TR1 form will be dated. The seller's solicitor will then need to send documentation to the buyer. The documentation that needs to be sent will be the TR1 form, the signed undertaking for discharge of the seller's mortgage, restrictive covenant indemnity policy. Consider the restricted covenant referred to in Workshop 3, this is why a policy is required. You may need to look back at earlier notes to remind yourself of this.

There may also be some miscellaneous documents such as old planning permissions and old searches which it is also appropriate to send the buyer's solicitor. The buyer's solicitor will then check the documentation on receipt and at some point afterwards the seller's solicitor will send the DS1 form and request confirmation that their undertaking to discharge the mortgage is now fulfilled. The buyer's solicitor will finally confirm the undertaking is fulfilled. PREPARATORY TASK 2 SKP will not be able to purchase 3 Port la nd Pl ace unless it receives the necessary funding from Western Star Bank Limited (“Western Star”). It is therefore very important that you also keep the lender's requirements in mind when preparing for completion. If there is a document which the lender wants to see but is not available, it will not lend the money and the transaction cannot take place. Trainees are usually responsible for liaising with the lender's solicitors and ensuring that they have everything they need well in advance of completion. Compile a list of all of the documents and other information that you think W e s t e r n S t a r will need to have (or will need to know will be forthcoming in due course) before it makes the funds available for completion. You will find it helpful to refer back to Unit Workshops 5 and 7 when preparing your list 2020_LPC_Real Estate_LG9 ©The University of Law

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At panel 1 you have the title number which will obviously be found on the official copies. Similarly, panel 2 has the full address of the property, 3 Portland Place, Pritchard Road, Bristol. Please note the postcode must also be included. Panel 3 is undated. It is a draft TR1 at this stage and so should not be dated until completion occurs. Panel 4 contains details of the transferor or seller. You will see the name David Jenkins as seller. He is the seller named on the official copies. You may also recall that his co-owner, Laurence Booth, has died. Ian Tomlinson is therefore named on the transferor as a newly appointed trustee. If you look back in Workshop 3 and Workshop 7 you will see that the seller's solicitor agreed to appoint a new trustee to overreach any equitable interests arising as a result of the trust. Turning to panel 5 you will see the details of the transferee. The name SK Property Investments Limited is written in full and their company number also appears. In panel 6 it is necessary to put the transferee's intended address for service. Please note this should be the registered office of the company rather than the actual property address. Panel 7 is the operative part of the TR1 form and actually states that the transferor transfers the property to the transferee. You see on the slide a copy of the second page of the TR1 form. Turning to panel 8, this is the panel that deals with the consideration for the property. You will see that the consideration appears first in words and then in figures. This is to avoid any confusion. Panel 9 states that the transferor is transferring or selling with full title guarantee, but then also there is a cross appearing in the limited title guarantee box. This relates to Ian Tomlinson only, who is transferring with limited title guarantee. Ian Tomlinson is a partner is the seller solicitor's firm. He has no prior knowledge of the property and has obviously never occupied it. His appointment as trustee is therefore only to facilitate the transfer. Limited title guarantee is therefore appropriate in these circumstances. Panel 10 is left blank. It is not relevant in this case as it relates to situations where the transferee is more than one person. Panel 11 builds on work that we did in Workshop 8. You will see 11.1 is an indemnity covenant. The indemnity covenant is needed here because if you look back at Workshop 3 it is clear that the seller gave an indemnity covenant that appears in the proprietorship register of the official copies. The seller will therefore insist that the buyer continues the chain of indemnity by giving this indemnity covenant in this transfer document. 11.2 relates to the appointment of Ian Tomlinson as trustee. Finally, turning to page 3 of the transfer, you will see the execution clause. Note the execution clause of an individual and how that differs to the execution clause of SK Property Investments Limited. Unit 9 UNIT WORKSHOP TASK 3

Assume that completion of the purchase of 3 Portland Place by SKP has taken place. Teresa has asked you to be responsible for the post-completion arrangements. You submitted the Stamp Duty Land Tax forms SDLT1 and SDLT4 and payment to HM Revenue & Customs and yesterday you received back Form SDLT 5. You have also received the certificate of registration of the charge from Companies House and the DS1 from the seller’s solicitor. 2020_LPC_Real Estate_LG9 ©The University of Law

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The only thing left to do is the Land Registry application. Complete panels 1- 5 of the Form AP1 which you were asked to bring to the Unit Workshop Task 3 deals with post completion matters. You are told in the task that you already have form SDLT5 having paid the Stamp Duty Land Tax. You already have the certificate of registration of charge from Western Star Bank's mortgage from Companies House. And you have the DS1 from the seller's solicitor. You are asked to complete form AP1 to enable you to register the relevant transactions at HM Land Completing an AP1 form is a very typical trainee task. It is largely mechanical, but you need to have some thought to certain panels, in particular panels 4 and 5. Taking each panel in turn. Panel 1 deals with the local authority serving the property, in this case it will be Bristol. You will also need to insert the full postcode of the property which you can obtain from the official copies. Panel 2 means that you need to state the title number which, again, can be found in the official copies. In panel 3 you need to state whether the application relates to a whole title or a part of a title. Here it relates to the whole of the title so the top box should be crossed. Panel 4 is a little bit more complicated. It says it deals with application, priority and fees. The applications should be stated in priority order. The first application should be cancellation of a charge. This relates to the discharge of the seller's mortgage. The next application will be for transfer, and the final application will be for the charge to Western Star Bank. All of these require applications to be made to the Land Registry. Please note that the cancellation of the tenants in common existing restriction is done automatically by the Land Registry so you do not need to make a separate application for this. All of these applications must be made before the expiry of the priority period of 30 working days, which was given by the OS1 search. Taking each of the applications in order, the cancellation of charge relating to the seller's mortgage does not attract any fee, so you would put a zero in the price paid box and a zero in the fees paid box. The fee for the transfer to the buyer relates to the purchase price. The price paid for the property by the buyer is £585,000. This attracts a fee in the final box of £270 at scale 1. This fee is discounted by 50% already because the application is being made electronically. The final application, as I have already said, will be for the legal charge to Western Star Bank. In the price paid column the figure should be £438,750. We know this is the correct figure because the bank, Western Star, are providing a mortgage of 75% of the overall purchase price. In the final box, fees paid, there is no fee payable for the new mortgage as it will be lodged before the completion of the application for registration of the transfer. There is also no fee for the appointment of the second trustee, as this has been done in the transfer. Turning to page 2 and the documents lodged with the form. You will see in panel 5 you are required to provide certified copies of the following documents. The documents that should appear in panel 5 are as follows: the DS1 form. This could be done electronically using ED or EDS1, but if not the DS1 form or a certified copy needs to be enclosed with the AP1 form. The second certified copy document is the TR1 form. Then SDLT5 proving that Stamp Duty Land Tax has been paid needs to be sent. Document 4 will be the legal charge. And document 5, Companies House Certificate of Registration, proving that the legal charge has been registered at Companies House. Finally, in this particular case, a certified copy of the Death Certificate for Laurence Booth will need to be included. 2020_LPC_Real Estate_LG9 ©The University of Law

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Panel 6 relates to the applicant. The applicant is SK Property Investments Limited as the purchaser in this case. SK Property's company number also needs to be incorporated. Panels 7 and 8 relate to information concerning individual parties and their representatives. Signing of documents: as a result of AI mortgage deeds can be signed by way of electronic facility, which is already up and running and will replace the paper mortgage deed. There will no longer be a need for paper signature or a witness as they will be digitally signed. Blockchain technology is also being looked at in relation to Land Registries. Land Registries around the world are being developed using blockchain technology. These are often in areas where there is no trust in the existing Land Registry system due to corruption and inefficiencies, but it is also being looked at in countries such as Sweden, which has a very well established and competent Land Registry. In the UK, HM Land Registry is carrying out research through its digital street programme in collaboration with technical partners and all members of the Real Estate process. So far the Land Registry has made it clear that it is not intending to adopt the emerging technology any time soon and has given itself a long window until 2030 to familiarise itself with technologies the industry might adopt. So this is a case of watch this space. The final point relates to robot auctioneers. In December 2018 the UK's first property to be sold by an automated auctioneer took place. The benefits of this include bidders can participate from all over the world and know the procedure is complete secure and transparent. It is easier to comply with anti money laundering regulations as the participants are pre-verified. These are just some of the technological advances in AI. You may well find others during your research. That is the end of Workshop 9. Please now make sure that you logon to your individual online session with your own tutor. The tutor will reinforce the key learning points of this session and will deal with any questions that you may have. Thank you.

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