Completion and post-completion steps - Methods and effect of completion

Learning Outcomes

After reading this article, you will be able to explain the main methods of completion in property transactions, describe the legal effect of completion, and outline the essential post-completion steps required to finalise a transfer of title. You will be able to identify the key documents, statutory deadlines, and practical requirements for completion and registration, and apply these principles to SQE1-style scenarios.

SQE1 Syllabus

For SQE1, you are required to understand the practical and legal steps involved in completing a property transaction and the consequences of completion. Focus your revision on:

• The main methods of completion (personal attendance, by post, electronic)
• The legal effect of completion (transfer of title, risk, and obligations)
• Post-completion steps (SDLT/LTT, registration, discharge of mortgages)
• The Law Society Code for Completion by Post and its significance
• The consequences of failing to comply with post-completion requirements

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What are the main methods by which completion can take place in a property transaction?
2. When does legal title pass to the buyer in registered land?
3. What is the effect of failing to pay Stamp Duty Land Tax (SDLT) within the statutory deadline?
4. What is the purpose of Form DS1 in the post-completion process?

Introduction

Completion is the critical stage in a property transaction where the contract is fulfilled, the purchase money is paid, and the legal title is transferred. Understanding the methods of completion, their legal effect, and the mandatory post-completion steps is essential for SQE1. This article explains the main procedures, the consequences of completion, and the practical steps required to ensure a valid and effective transfer of property.

Methods of Completion

Completion can be effected in several ways, depending on the nature of the transaction and the parties' preferences.

Key Term: completion
The process by which the balance of the purchase price is paid, documents are exchanged, and the legal title is transferred from seller to buyer.

Personal Attendance

Traditionally, solicitors for both parties meet in person to exchange documents and funds. This method allows for immediate resolution of issues but is now rare in routine transactions due to logistical challenges.

Completion by Post

Most residential and many commercial transactions are completed by post, following the Law Society’s Code for Completion by Post. The seller’s solicitor acts as agent for the buyer’s solicitor, holding documents and funds on trust until completion is confirmed.

Key Term: Law Society Code for Completion by Post
A set of professional undertakings and procedures governing postal completion, ensuring security and clarity in the exchange of documents and funds.

Electronic Completion

Increasingly, completion is achieved using electronic funds transfer and digital document exchange. This method is efficient and secure, provided that robust verification and anti-fraud measures are in place.

Legal Effect of Completion

Completion has several immediate legal consequences:

• The buyer becomes entitled to the legal estate (in unregistered land, title passes on completion; in registered land, title passes on registration).
• The seller is obliged to hand over the executed transfer deed and any other agreed documents.
• The risk in the property passes to the buyer (unless otherwise agreed).
• The buyer becomes responsible for outgoings (e.g., council tax, utilities) from the date of completion.
• The seller’s mortgage must be discharged, and the property is transferred free of charges unless otherwise agreed.

Key Term: transfer deed (TR1)
The legal document used to transfer title in registered land from seller to buyer, executed as a deed and submitted to HM Land Registry.

Key Term: DS1
The form used to confirm the discharge of a registered charge (mortgage) at HM Land Registry.

Post-Completion Steps

After completion, both solicitors must carry out several critical steps to finalise the transaction and protect their clients’ interests.

Payment of SDLT/LTT

The buyer’s solicitor must calculate and pay Stamp Duty Land Tax (SDLT) in England or Land Transaction Tax (LTT) in Wales within 14 days of completion. A certificate of payment (SDLT5 or LTT certificate) is required for registration.

Key Term: SDLT5
The certificate issued by HMRC confirming payment of Stamp Duty Land Tax, required for registration of the transfer at HM Land Registry.

Registration at HM Land Registry

The buyer’s solicitor must submit an application to HM Land Registry to register the transfer of title (using Form AP1), the executed transfer deed (TR1), the SDLT/LTT certificate, and, if applicable, the mortgage deed. This must be done within the priority period of the pre-completion search (usually 30 working days).

Key Term: AP1
The application form used to register a transfer or other disposition of registered land at HM Land Registry.

Discharge of Seller’s Mortgage

The seller’s solicitor must use the sale proceeds to redeem any existing mortgage. Evidence of discharge is provided by submitting Form DS1 (or electronic equivalent) to HM Land Registry, which removes the charge from the register.

Notices and Compliance

If the property is leasehold, the buyer’s solicitor must serve notice of transfer and any new mortgage on the landlord or management company, paying any required fees. Failure to do so may breach lease obligations.

Other Post-Completion Actions

• The seller’s solicitor pays the estate agent’s fees (if authorised).
• Both solicitors report completion to their clients and close their files once all steps are complete.

Worked Example 1.1

A buyer completes the purchase of a registered freehold property. The buyer’s solicitor pays the purchase price, receives the signed TR1, and the keys are released. What must the buyer’s solicitor do next?

Answer: The buyer’s solicitor must pay SDLT within 14 days, submit Form AP1 with the TR1 and SDLT5 to HM Land Registry within the priority period, and, if there is a mortgage, register the lender’s charge. If the property is leasehold, notice of transfer and charge must be served on the landlord.

Worked Example 1.2

The seller’s solicitor receives the redemption figure for the seller’s mortgage and, on completion, pays off the mortgage using the sale proceeds. What evidence must be provided to the buyer’s solicitor?

Answer: The seller’s solicitor must provide evidence of discharge by submitting Form DS1 (or electronic discharge confirmation) to HM Land Registry and notifying the buyer’s solicitor once the charge has been removed from the register.

Exam Warning

Failing to pay SDLT or LTT within the statutory deadline will result in penalties and prevent registration of the buyer’s title. Registration must be completed within the priority period to avoid loss of priority to third-party interests.

Revision Tip

Diarise all statutory deadlines for SDLT/LTT payment and registration. Use a checklist to ensure all post-completion steps are completed promptly.

Summary

Completion is the point at which the contract is fulfilled, the purchase price is paid, and the legal title is transferred. The main methods of completion are personal attendance, by post (using the Law Society Code), and electronically. The legal effect of completion is the transfer of title, passing of risk, and the buyer’s responsibility for outgoings. Post-completion, the buyer’s solicitor must pay SDLT/LTT, register the transfer and any mortgage, and serve any required notices. The seller’s solicitor must discharge any mortgage and provide evidence of discharge. Failure to comply with post-completion requirements can result in penalties, loss of title, or breach of contract.

Key Point Checklist

This article has covered the following key knowledge points:

• The main methods of completion are personal attendance, by post, and electronic completion.
• Completion effects the transfer of legal title, passing of risk, and fulfilment of contractual obligations.
• In registered land, legal title passes on registration; in unregistered land, on completion.
• The buyer’s solicitor must pay SDLT/LTT within 14 days and register the transfer within the priority period.
• The seller’s solicitor must redeem any existing mortgage and provide evidence of discharge (Form DS1).
• Notices of transfer and charge must be served in leasehold transactions.
• Failure to comply with post-completion steps can result in penalties, loss of priority, or unenforceable title.

Key Terms and Concepts

• completion
• Law Society Code for Completion by Post
• transfer deed (TR1)
• DS1
• SDLT5
• AP1