Workshop 5 Real Estate Preparatory tasks PDF

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Workshop 5 Real Estate Preparatory tasks and workshop task...

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Preparatory task 2: Identify the types of pf pre-completion searches you would carry out on this transaction and explain why you would make them: - For this transaction you would carry out a search against the title number at the Land Registry as the land is already registered (form OS1). Firstly, the reason for this is to make sure the title has not been further incumbered by the seller, thus the buyer will not be bound for unknown charges. The second reason is for the buyer and lender to gain priority for 30 days over other parties seeking to make an application when the buyer is registering their title – ‘protection priority period’ – registration of the buyer will take priority over the entries applied to be registered between result of that search and ate that the buyer becomes the registered owner. - The second search would include a K16 bankruptcy search. This is a land charges search against the name of the buyer, this will be required of the buyer’s lender where the buyer is looking to apply for a mortgage, as is the case here. - Completion Information form (practical arrangements)

Explain where the sources of the money are coming from for completion and identify the steps you need to carry out to ensure you have this money in the firm’s client bank account ready for completion: The Patel’s are taking out a mortgage for the balance of the purchase price with the bank. The client will then have to provide extra fees in respect of the chattels which have been priced at £2,500 and any other monies needed to pay post-completion such as Land Registry fees and Stamp Duty land Tax. MORTGAGE MONIES = MORTGAGE ADVANCE. Before release of mortgage monies, lender will expect to receive a report on title by way of confirmation that the property will be good security for the loan if in the event the buyer defaults on the loan then the seller can sell it to receive what was lost, this is done with the form OS1. They will also want a bankruptcy search against the borrowers under form K16 and finally, that the mortgage deed has been executed, at this point is does not need to be signed. Certificate of Title – will report back on due diligence and confirmation to lender that it is good security. The clients will need us to send a statement which outlines the amount to be transferred to the client account, in consideration of all fees, this should be calculated in the financial statement and be sent in good time for completion.

Both standard conditions call for payment to be made by a direct transfer of cleared funds and an unconditional release of a deposit held by a stakeholder (SC 6.7/ SCPC 9.7). THE FUNDS MUST COME FROM A SOLICITOR’S ACCOUNT HELD AT A CLEARING BANK. The bank will have a computerised transfer system to allow funds to be transmitted electronically from one bank account to another on the same day – ‘telegraphic transfer’ (TT).

Seller’s solicitor should inform buyer’s solicitor the amount needed to complete the transaction and the account details for the fund to be transferred to, usually given in answer to buyer’s Request for Completion Information and a standard enquiry on the TA13 Completion Information and Undertakings Form used in all transactions. Then buyer’s solicitor will instruct their bank to remit the sum from the buyer’s solicitor’s client account to the account given by the seller’s solicitor. Bank will charge a fee for this. These instructions should be given early in the day on the date of completion to ensure the funds arrive before the time limit for receipt of funds specified in the contract. There may be some delay in the transmission of funds from one bank account to a different bank. Seller’s bank should telephone seller’s solicitor to inform of the receipt of funds as they arrive. Completion will commence as soon as the seller’s solicitor is satisfied about the funds in their client account. If the transmission of funds is facilitated by the solicitor having. A direct computer link with their bank then the transmission can be affected on their own time.

Preparatory task 3: SC 6.1.1 states time if not of the essence in completing the contract. Therefore, late completion does not give the seller an automatic right to rescind the contract. Our contract uses the Standard Conditions. The potential remedy to be given to the seller is a claim for damages. This situation constitutes a breach of contract as the buyer is not completing on the contractual completion date. Damages are awarded on normal contractual principles where there is delayed completion, thus under the principle of Hadley v Baxendale, with the aim of putting the seller in the position they would have been in had the breach not occurred, compensating only for those losses which arise naturally from the breach. Does the contract provide for any specific remedies for the seller? SC 7.2.1 provides that contractual compensation is payable in the event where one party does not complete on the completion date, causing delay. SC 7.2.2 allows us to calculate how much compensation is payable, and this is at the ‘contract rate on the amount equal to the purchase price, less any deposit paid’, as the buyer is the defaulting party, for the period of delay caused by that party or whichever party has caused the most delay. The contract rate used is the ‘Law Society’s interest rate from time to time in force’ (SC 1.1.1(e)), which is 4% above Barclay’s Bank base rate. Which gives the contract rate of 4.5%. The figure on which to calculate interest on is £306,000, with 4 days of late completion the amount per day to pay would be £.

SC 7.2.3 clarifies that should the seller bring a claim for damages, any damages awarded will be reduced by the compensation paid under the contract. The seller may also serve a notice to complete, this may become the main risk here. It should be noted the rule under SC 6.1.1. SC 6.8 allows certain circumstances where a notice to complete can be served, namely that a party can serve such a notice when they are ready, able and willing to complete at any time after the date of completion, under the contract this will be after 2pm on such a date. Once this is served, parties must complete the contract within 10 working days of service of the notice, this then makes time of the essence of the contract, the possibility of recission beings here as under SC 7.4 if the buyer fails to complete in accordance with the notice to complete, the seller may rescind the contract and keep the deposit with any accrued interest, they can also resell the property to a different party, and claim damages. Preparatory task 5:...