RE WS8 notes PDF

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Real estate workshop 8 full notes...

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RE WS8 - Completion Preparation To prepare for this Workshop you should: 1. Read 6.3 – 6.4 of chapter 6, chapters 25 ,26, 27, 28.1 – 28.5 and 28.7 – 28.15 of chapter 28, chapters 29 to 30, 31.1 – 31.8.2 and 31.8.5 – 31.8.6 of chapter 31, 32.1 – 32.4 and 32.4.3 – 32.5.2.2 and chapter 33 of the Property 0Law and Practice textbook, excluding those parts which relate to unregistered land and the Standard Conditions of Sale. 2. Complete Test & Feedback - Workshop 8 (Preparation). 3. Complete the Workshop Preparatory Task. The following pre-completion searches should be made: (a) for registered land, search against title number at the Land Registry (b) for unregistered land, including an unregistered reversion to a lease, search at the Land Charges Department against names of estate owners of the land (c) if acting for a lender, a bankruptcy search against the name of the borrower (d) such other of the searches listed in 28.8–28.11 as are relevant to the transaction. PREPARATORY TASK Part 1 Download a TR1 form from the Land Registry section of the website www.gov.uk and read it through in order familiarise yourself with the information required to complete it. Why is it the buyer’s solicitor who drafts the transfer?  the buyer’s solicitor is required to submit the draft transfer to the seller’s solicitor when he approves the draft contract, which may be well before exchange of contracts.  the choice of style and wording is the buyer’s prerogative.  Because the transfer must be a deed in order to transfer the legal estate in the land to the buyer. Because the transfer puts into effect the terms of the contract and so must reflect its term.  Also, the buyer would draft it because the TR1 gets sent along with the buyer’s Request for Completion Information Part 2 1. Download an OS1 form and complete the relevant details for the Kenulf House transaction. 2. Carrying out an OS1 search creates a priority period. What is the benefit that this priority period provides?  An official certificate of search made on this form confers on the searcher a priority period of 30 working days from the date of the certificate.  provides protection to the buyer (and lender, if the search was made on his behalf ) against any subsequent entries which may be placed on the register after the date of the search but before the buyer is registered as proprietor  The buyer will take free from any such entries, provided that he submits his application for registration within the priority period

3. What must be done before the expiry of the priority period to be entitled to that benefit?  Apply to Land Registry  A certificate of search must be issues by the LR following search made on Form OS1     

Pre-completion searches – look at register pre-contract, has anything changed? Complete OS1 form Company search – if company to check for existence of company, solvent, floating charges etc Bankruptcy search – K16 if individual Request for Pre completion information

4. What will you do if the OS1R search result reveals an adverse entry on the register that you were not expecting?  if after exchange the buyer’s solicitor discovers an undisclosed incumbrance or other defect, he will still be able to require it to be remedied or assert his remedies for nondisclosure  inform the buyer, find out exactly what the entry relates to, if the entry appears adversely affect the property then contact the seller’s solicitor to seek his confirmation that the entry will be removes  apply for an official copy of the entry using form K19 Part 3 1. Research how much SDLT will be payable on the transfer of Kenulf House to Arcadian.  

Price: £1,175,000 SDLT: £48,250

Purchase price (non-residential or mixed use) Up to £150,000

SDLT rate paid on the property amount within each tax band 0%

Between £150,001 and £250,000

2%

Over £250,000

5%

100,000 (250,000 – 150,000) @ 2% = 2000 925,000 (1,175,000 – 250,000) @ 5% = 46,250 48,250 2. Precisely what applications will you be making to the Land Registry? Locate the most recent Land Registry Fee Guide and find out the relevant fee(s).  AP1 3. Find out the fee for registering a charge at Companies House.  £23 paper  £15 online WORKSHOP TASK 1

Check the results of your Land Registry priority search and your company search on Winter. Consider whether you are happy with the results and identify any steps that need to be taken in light of them. OS1R:  What if we see anything come back on OSR1  Any incumbrance, would not have been in the contract…so the seller would be in breach of contract…so seller has to sort it out, and change the entry in contract. So something like a notice, and instigate cancellation procedure, but it is the sellers problem  What does the priority period do >> it freezes the register, if anyone did put in application to register notice, you will not take subject as buyer for anything that is applied for. The buyer will take free of interest. To take free of subsequent application > apply. Do not miss the priority period. 30 working days should be ample to get application  What to do if adverse entry > get seller to sort it out. Companies House search:  Charge 1 - Fixed charge with Barclays Bank mortgage was already disclosed  Floating charge– floats over the assets and crystallises if it isn’t paid back in the event of default. This would only be a concern if they were buying chattels.  It will be paid off upon completion – check if it hasn’t been crystallised (Letter of crystallisation)  Charge 2 - in favour of HSBC: Winter Estates Ltd has another mortgage on another property – shouldn’t be an issue as it doesn’t affect the buyer’s property. WORKSHOP TASK 2 Consider whether you are happy with the replies and identify any steps that need to be taken in light of them.  Buyer makes pre completion questions to the seller  1.1 - either seller should give precise details of correspondence, or they should remove qualification all together.  Part 2 completion o 2.1 - fine o 2.2 - incorrect deposit: they have given a 5% figure and therefore the balance is incorrect. Always check the sums. o 2.5 - no account number



o 2.6 - also want TR1, also want certificate from Ashton Gate for the CRC, and any other miscellaneous so are original planning permissions for the property. Also hand you their undertaking, in relation to the mortgage. 4.3 - needs to go and see sheet for changes.

WORKSHOP TASK 3 Advise Richard Tilling on behalf of Arcadian on the consequences of late completion.  Breach of contract because date of completion was a term SCPC 10.3 Late completion

  

10.3.1 if the buyer defaults in performing obligations under the contract and completion is delayed, the buyer is to pay compensation to the seller 10.3.2 calculated at the contract rate 1.1.1.(e) contract rate is Law Society’s interest rate: 4% above Barclays base rate (0.75 Barclays base rate + 4 = 4.75 law society rate )

1,175,000 (contract) -117,500 (deposit) 1,057,500 (remaining balance) X 0.0475 (contract rate) 50231.25 Divide 365 137.6119 to be paid a day        

9.1.1 Time isn’t of the essence = warranty not a condition Remedy is damages not breach of condition BUT seller could serve notice to complete, to then make time of the essence 9.8 completion must occur within 10 working days. After 10 days, time is of the essence. To make it a condition 10.5.5 additional option for failure to complete: seller can rescind contract and keep deposit Or specific performance For damages, loss must be proved. E.g. Loss of chance: losing out on buying another property.

In general, time isn’t of the essence But an express term can make time of the essence WORKSHOP TASK 4 Identify the steps that need to be taken on this transaction. Steps

Documents

Deadline

Discharge seller’s mortgage

DS1 sent by buyer’s solicitor to LR

Immediate (e-docs) on receipt of completion

Pay SDLT (buyer)

SDLT1 SDLT4

Register buyer as new owner

AP1 – app to register. DS1 – mortgage discharged. TR1 – land

30 days from completion (14 days from 1 March 2018) Within 30 working days (priority period) from date

Docs to come back Title info

fees

Certificate (SDLT5)

£48,250.

Fine + interest payable. Cant register buyer as owner with LR without SDLT5.

£455 electronic. £910 post

Loss of priority. Failure to transfer legal title. Lender won’t get mortgage. If

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consequence s Breach of contract. Breach of undertaking.

Register charge (buyer’s mortgage) with CH

transfer. SDLT5 – SDLT paid. ST4 – re easement.

OS1R search.

MR01

21 days from creation of mortgage dated on completion.

Bill client – send invoice.

Registration £15 online. certificate £23 paper/post.

miss priority period, we take subject to any entries registered after. Charge void against liquidator....