Learning Outcomes
After reading this article, you will be able to explain the legal and practical steps required to notify all relevant parties during completion and post-completion of a property transaction. You will understand the procedures for discharging mortgages, registering title, and communicating with lenders, clients, and third parties. You will also be able to identify the consequences of failing to notify parties or complete post-completion steps correctly.
SQE1 Syllabus
For SQE1, you are required to understand the completion and post-completion processes in property transactions, with a focus on notifying all relevant parties and fulfilling statutory and contractual obligations. As you work through this article, remember to pay particular attention in your revision to:
- The steps required to notify parties (including lenders, clients, agents, and authorities) at completion and after completion.
- The procedures for discharging existing mortgages and providing evidence of discharge.
- The requirements for registration of title and charges at HM Land Registry and Companies House.
- The importance of timely communication and documentation to ensure a valid transfer of legal title and compliance with lender and regulatory 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.
- What evidence must a buyer’s solicitor obtain to confirm that the seller’s mortgage has been discharged after completion?
- Who must be notified after completion of a property purchase, and what documents are typically required for registration?
- What are the consequences if the buyer’s solicitor fails to register the transfer of title within the priority period?
- When acting for a lender, what steps must you take to ensure the lender’s charge is properly protected post-completion?
Introduction
Completion and post-completion are critical stages in a property transaction. At completion, legal title is transferred, funds are settled, and keys are released. Post-completion, solicitors must notify all relevant parties, discharge any existing mortgages, and register the new owner’s title and any new charges. Failing to complete these steps correctly can lead to serious legal and financial consequences for clients and solicitors.
Completion: Notifying Parties and Discharging Mortgages
At completion, the buyer’s solicitor transfers the purchase funds to the seller’s solicitor, who in turn authorises the release of keys and hands over the executed transfer deed. If the property is subject to a mortgage, the seller’s solicitor must use part of the sale proceeds to redeem the mortgage and provide an undertaking to the buyer’s solicitor to obtain evidence of discharge.
Key Term: completion
The stage in a property transaction when the legal title passes from seller to buyer, funds are settled, and the buyer is entitled to take possession.Key Term: undertaking
A binding promise, usually given by a solicitor, to carry out a specific act (such as redeeming a mortgage) within a specified time.Key Term: discharge of mortgage
The process by which a lender confirms that a mortgage has been repaid in full, usually evidenced by a DS1 form or electronic notification to HM Land Registry.
Notifying the Lender and Other Parties
If the buyer is purchasing with a mortgage, the lender must be notified that completion has taken place. The buyer’s solicitor will date the mortgage deed and ensure the lender’s charge is registered at HM Land Registry. The seller’s lender must also be notified that the mortgage has been redeemed, and the lender will provide evidence of discharge.
Other parties to notify at completion include:
- The estate agent (to confirm completion and authorise key release).
- The client (to confirm completion and next steps).
- Any occupiers or tenants (if applicable).
Worked Example 1.1
A buyer’s solicitor receives confirmation that completion funds have been received by the seller’s solicitor. The property is subject to an existing mortgage. What must the seller’s solicitor do to ensure the buyer receives clear title?
Answer: The seller’s solicitor must use the completion funds to redeem the existing mortgage and provide an undertaking to the buyer’s solicitor to obtain and send evidence of discharge (such as a DS1 form or electronic discharge confirmation) as soon as it is received from the lender.
Post-Completion: Registration and Notifications
After completion, the buyer’s solicitor must take several steps to protect the client’s legal title and the lender’s security. These include registering the transfer at HM Land Registry, registering any new charge, and notifying relevant parties.
Key Term: registration
The process of recording a change of ownership or a new charge at HM Land Registry to give legal effect and public notice of the transaction.Key Term: priority period
The period (usually 30 working days) during which the buyer’s application to register a transfer or charge at HM Land Registry has priority over any subsequent applications.Key Term: DS1 form
The standard Land Registry form used to confirm the discharge of a registered charge (mortgage) over a property.
Steps for Registration
- Prepare and submit the AP1 application to HM Land Registry within the priority period obtained from the pre-completion search (OS1 or OS2).
- Include required documents: the executed transfer deed (TR1), the SDLT5 certificate from HMRC, the mortgage deed (if applicable), and evidence of discharge of any existing mortgage (DS1 or electronic discharge).
- Pay the Land Registry fee and ensure all documents are properly executed and dated.
- If the buyer is a company and a mortgage has been granted, register the charge at Companies House within 21 days of completion.
Notifying Other Authorities and Service Providers
After completion, the following parties should be notified:
- Local authority (for council tax and electoral roll purposes).
- Utility companies (to transfer accounts for gas, electricity, water, and telecommunications).
- Insurers (to update or initiate property insurance).
Worked Example 1.2
A buyer’s solicitor completes the purchase of a property with the aid of a mortgage. What documents must be submitted to HM Land Registry, and what is the consequence of missing the priority period?
Answer: The solicitor must submit the AP1 form, the executed transfer deed, the SDLT5 certificate, the mortgage deed, and evidence of discharge of any existing mortgage. If the application is not made within the priority period, the buyer risks losing priority, and another party could register an interest against the property before the buyer’s application is completed.
Evidence of Discharge and Lender Protection
The buyer’s solicitor must ensure that any existing mortgage has been properly discharged. This is usually evidenced by a DS1 form or electronic notification from the lender to HM Land Registry. The buyer’s solicitor should not rely solely on the seller’s undertaking and must follow up to obtain evidence of discharge.
Key Term: evidence of discharge
Documentary proof (such as a DS1 form or electronic confirmation) that a mortgage or charge has been repaid and removed from the register.
Worked Example 1.3
After completion, the seller’s solicitor is slow to provide evidence of discharge of the seller’s mortgage. What should the buyer’s solicitor do?
Answer: The buyer’s solicitor should remind the seller’s solicitor of their undertaking and request prompt delivery of the DS1 or electronic discharge confirmation. If there is a significant delay, the buyer’s solicitor may consider further action, such as reporting the matter to the SRA or seeking indemnity.
Communication and Compliance
Timely and accurate communication is essential throughout completion and post-completion. Solicitors must keep clients, lenders, and other parties informed at each stage, and ensure all undertakings are fulfilled. Failure to notify parties or complete post-completion steps can result in loss of legal title, financial penalties, or professional misconduct.
Exam Warning
Failing to register the transfer or charge within the priority period can result in loss of priority, meaning another party could register an interest before your client. Always diarise the deadline and submit the application promptly.
Revision Tip
After completion, always check the updated title register to confirm that your client is shown as the registered proprietor and that any new charge is correctly registered.
Key Point Checklist
This article has covered the following key knowledge points:
- Completion is when legal title passes, funds are settled, and keys are released.
- The seller’s solicitor must redeem any existing mortgage and provide evidence of discharge.
- The buyer’s solicitor must register the transfer and any new charge at HM Land Registry within the priority period.
- Notification of completion must be given to clients, lenders, agents, and authorities.
- Failure to complete post-completion steps can result in loss of title, financial penalties, or professional misconduct.
Key Terms and Concepts
- completion
- undertaking
- discharge of mortgage
- registration
- priority period
- DS1 form
- evidence of discharge
