Completion and post-completion steps - Post-completion steps

Learning Outcomes

This article outlines post-completion steps in property transactions, including:

• Mandatory tasks and the interlocking required to perfect title and security
• SDLT/LTT return requirements, effective-date calculations, filing and payment deadlines, and certificates enabling registration
• Land Registration rules for completing registration, including AP1 and FR1, OS1/OS2 priority periods, and first registration time limits
• Redemption and removal of existing mortgages, undertakings, DS1/DS3 discharges, and electronic discharges (END1)
• Protection of lender interests through prompt registration of charges at HM Land Registry and at Companies House within 21 days for companies/LLPs
• Leasehold-specific post-completion steps, including notices of transfer and charge and compliance with restrictions
• Consequences of non-compliance: financial penalties, loss of priority, defective or void legal title, unenforceable or equitable-only security, and potential professional liability
• Application of these principles to typical SQE1 factual scenarios

SQE1 Syllabus

For SQE1, you are required to understand the post-completion procedures that follow completion of a property transaction, with a focus on the following syllabus points:

• the legal requirements and deadlines for payment of Stamp Duty Land Tax (SDLT) or Land Transaction Tax (LTT)
• the process and time limits for registration of title at HM Land Registry (including first registration)
• the discharge of existing mortgages and the removal of charges from the register
• the steps required to protect a lender’s interest, including registration of the new mortgage
• the consequences of failing to comply with statutory deadlines and procedural requirements.
• use of pre-completion priority searches (OS1 for whole; OS2 for part) and operation of the 30-working-day priority period
• completion of AP1 (registered titles) and FR1 (first registration), including identity verification requirements for unrepresented parties
• registration of charges at Companies House (MR01) within 21 days for corporate borrowers
• leasehold-specific post-completion tasks, including notices of transfer/charge and compliance with title restrictions.

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 is the statutory deadline for submitting an SDLT return and paying SDLT after completion of a property purchase in England?
2. What is the effect of failing to register a property transfer at HM Land Registry within the priority period of the pre-completion search?
3. Who is responsible for discharging an existing mortgage after completion, and what document is used to remove the charge from the register?
4. Why must a lender’s charge be registered promptly after completion?

Introduction

Post-completion steps are the final, critical procedures that ensure the legal transfer of property is effective and that all parties’ interests are protected. These steps include paying any SDLT or LTT due, registering the new owner’s title, removing existing mortgages, and registering new charges for lenders. Each step is subject to strict statutory deadlines and procedural requirements. Failure to comply can result in penalties, loss of priority, or defective title.

Key Term: Law Society’s Code for Completion by Post (‘the Code’)
The 2019 Code governs completions conducted without physical attendance. The seller’s solicitor acts as the buyer’s solicitor’s agent for completion and undertakes to redeem any existing charge and to send completion documents on the day of completion. The Code frames the undertakings that underpin post-completion tasks, especially mortgage redemption and provision of discharges.

SDLT/LTT: Payment and Deadlines

After completion, the buyer’s solicitor must submit the SDLT (or LTT in Wales) return and pay any tax due. This must be done within 14 days of the effective date for SDLT (usually completion) or within 30 days for LTT. The return is generally required even if no tax is payable, as most transactions are not notifiable. A small number of transactions are not notifiable (for example, a low-value transfer below the statutory notification threshold), but do not assume an exemption without checking the current HMRC or WRA rules.

Key Term: Stamp Duty Land Tax (SDLT)
SDLT is a tax payable on land transactions in England and Northern Ireland, calculated on chargeable consideration and due within 14 days of the effective date.

Key Term: Land Transaction Tax (LTT)
LTT is the equivalent tax payable on land transactions in Wales, due within 30 days of the effective date.

Key Term: effective date
The date from which the filing/payment deadline runs. It is generally completion, but may be earlier if the transaction is substantially performed (for example, by taking possession or paying most of the consideration before completion).

On submission and payment, HMRC issues an SDLT5 certificate, and the Welsh Revenue Authority issues an LTT certificate/unique reference. HM Land Registry will not complete registration of most notifiable transactions without the relevant certificate or reference. Any delay in paying SDLT/LTT therefore knocks on to title registration and, where applicable, registration of the lender’s charge.

Practical points:

• calculate the deadline from the effective date and diarise it immediately on completion
• ensure the correct buyer details and property description are used, matching the transfer deed, to avoid Land Registry requisitions
• where a lease is granted, ensure returns account both for any premium and the rent (using NPV for rent) and that VAT treatment is correct if the landlord has opted to tax.

Worked Example 1.1

A buyer completes the purchase of a freehold house in England for £400,000. When must the SDLT return be submitted, and what is the consequence of missing the deadline?

Answer:
The SDLT return must be submitted, and any tax paid, within 14 days of completion (the effective date). Missing the deadline triggers penalties and interest, and delays registration because HM Land Registry needs the SDLT5 certificate/reference.

Registration of Title

The buyer’s solicitor must apply to HM Land Registry to register the transfer of title. For registered land, the application must be made within the 30-working-day priority period of the pre-completion OS1/OS2 search to preserve priority over later applications. For unregistered land, an application for first registration must be made within two months of completion; until registration, the legal estate does not pass.

Key Term: priority period
The period (usually 30 working days) during which the buyer’s application to register has priority over later applications, provided it is lodged within that period.

Key Term: class of title
The quality of title granted on first registration (for example, absolute, possessory, qualified), which determines the scope of the state guarantee.

Key Term: AP1
The form used to apply to change the register of a registered title (for example, to register a transfer and a charge). It must be lodged within the OS1/OS2 priority period.

Key Term: FR1
The form for an application for first registration of title (such as after a transfer of unregistered land or grant/assignment of a registrable lease out of unregistered land). The application must be lodged within two months of completion.

Key Term: OS1/OS2
Official Searches with priority. OS1 protects an application affecting the whole of a registered title; OS2 protects an application for a disposition of part (for example, a transfer or lease of part), generating a new title.

If registration is not completed within the priority period, the buyer risks losing priority to third-party interests that are lodged in the meantime, such as a later charge or restriction. For first registration, failure to apply within two months renders the transfer void as regards the legal estate; the buyer acquires only an equitable interest until registration and may need a fresh transfer to complete legal title.

The application must include:

• the executed transfer (TR1/TP1), any required consents and any certificate of compliance to satisfy restrictions
• SDLT5/LTT certificate reference
• any new lender’s charge and corresponding deed
• evidence of discharge of existing charges (DS1, DS3 or electronic discharge)
• identity evidence for unrepresented parties or a conveyancer’s certification of identity (see HM Land Registry Practice Guide 67)
• the correct fee and up to date addresses for service for the new proprietor (consider providing multiple addresses, including email).

Key Term: certificate of compliance
A certificate from the person specified in a restriction (for example, landlord/management company) confirming that conditions for registration of a disposition have been met. HM Land Registry cannot complete registration of the transfer without it where such a restriction applies.

Title registration for leases:

• leases granted for a term of more than seven years are substantively registrable; for a registered landlord, apply by AP1; for an unregistered landlord/freehold, apply by FR1 within two months
• assignments of registered leases must be registered within the OS1 priority period, regardless of the term remaining
• assignments of unregistered leases with more than seven years left trigger first registration within two months; shorter leases are generally not registrable, but check the lease for notice requirements to the landlord.

Worked Example 1.2

A buyer’s solicitor completes a purchase of unregistered land on 1 June. By what date must the application for first registration be submitted?

Answer:
The application for first registration must be submitted within two months of completion, so by 1 August. If not lodged in time, the transfer is void as regards the legal estate until registration.

Discharge of Existing Mortgages

If the seller’s property is subject to a mortgage, the seller’s solicitor must use the sale proceeds to redeem the mortgage immediately after completion. This obligation will usually have been given by undertaking (commonly within the Code-compliant replies to requisitions and on the Completion Information and Undertakings form). Once redeemed, the lender will provide evidence of discharge, usually by electronic notification direct to HM Land Registry or by a DS1/DS3 form for registered land. The seller’s solicitor must send confirmation of discharge (or the lodged DS1/DS3) to the buyer’s solicitor to obtain a release from the undertaking.

Key Term: DS1 form
A Land Registry form executed by the lender confirming that a registered charge over the whole of the title has been discharged.

Key Term: DS3 form
A Land Registry form used where a registered charge is released as to part only of the land charged (for example, on a sale of part).

Key Term: undertaking
A binding professional promise given by a solicitor, enforceable by the court and regulators, to perform specified steps such as redeeming a charge and providing evidence of discharge.

Where lenders operate electronic discharge, they lodge an END1 message directly with HM Land Registry. The seller’s solicitor should confirm lodgement to satisfy the undertaking and to enable the buyer’s application to proceed.

Key Term: END1
Electronic notification by the lender to HM Land Registry that a registered charge has been discharged, replacing the need for a paper DS1 in many cases.

Common issues and practical steps:

• obtain an up-to-date redemption statement pre-exchange, covering all accounts secured by the charge and showing the daily interest rate
• if two or more charges exist, ensure sufficient funds to redeem all and identify the order of discharge
• for leasehold titles, check and satisfy any title restrictions requiring the lender’s consent to the transfer or charge
• diarise to chase discharge evidence promptly post-completion; until the discharge is processed, the buyer’s application may be delayed or result in requisitions.

If the mortgage is not discharged, the buyer may be unable to register free of the charge and may need to consider enforcement of the undertaking.

Worked Example 1.3

On completion, the seller’s solicitor undertakes to redeem the mortgage and provide a DS1. What should the buyer’s solicitor do if the DS1 is not received within a reasonable time?

Answer:
Chase the seller’s solicitor for evidence of discharge or confirmation of an END1 lodgement. The buyer’s application may be delayed or requisitioned without it, risking expiry of the OS1/OS2 priority period.

Registration of the Lender’s Charge

If the buyer has purchased with a mortgage, the lender’s charge must be registered at HM Land Registry at the same time as the transfer (in the same AP1 application). For registered land, a charge is a registrable disposition that does not take effect at law until registered. An unregistered charge leaves the lender with, at best, an equitable security that is vulnerable to later registered interests and insolvency events.

Key Term: charge
A security interest over land to secure repayment of a loan. In registered land, it must be completed by registration to take effect at law.

Where the buyer is a company (or LLP), the charge must also be registered at Companies House within 21 days of creation (usually the date the borrower signs the mortgage deed). Registration is made by delivering the prescribed particulars and a certified copy of the instrument (for example, on form MR01) with the fee. If not registered in time, the charge is void against a liquidator, administrator, and creditors on any insolvency of the company; the debt remains, but the lender becomes unsecured and may need to seek a replacement security, losing priority.

Key Term: Companies House registration
The process by which a company (or LLP) registers a charge within 21 days of creation to preserve its enforceability against a liquidator, administrator, and creditors. A registration certificate is issued on timeous filing.

Interaction with SDLT/LTT and title registration:

• HM Land Registry will not complete registration of the charge unless the transfer is registrable and supported by the SDLT5/LTT certificate/reference
• any delay in filing SDLT/LTT can therefore postpone registration of the charge, increasing lender risk
• many lenders require evidence of completed registration (updated title and a copy of the registered charge) post-completion under the UK Finance Mortgage Lenders’ Handbook.

For leasehold property, remember additional steps:

• serve notice of transfer and notice of charge on the landlord/managing agent with the required fees to comply with lease covenants
• satisfy any restriction requiring a certificate of compliance from the landlord/management company before registration can be completed.

Worked Example 1.4

A company buys a property with the aid of a mortgage. The solicitor forgets to register the charge at Companies House within 21 days. What is the consequence?

Answer:
The charge is void against a liquidator, administrator, and creditors if the company becomes insolvent. The lender’s security is effectively lost against third parties, leaving only an unsecured debt.

Consequences of Non-Compliance

Missing statutory deadlines for SDLT/LTT, registration, or mortgage discharge can result in:

• financial penalties and interest (for late tax payment/filing), and an inability to complete title registration without the tax certificate
• loss of priority to third-party interests if the application is made outside the OS1/OS2 priority period, potentially allowing later charges, notices or restrictions to take precedence
• defective or void legal title: for first registration cases, failure to apply within two months leaves the transferee with only an equitable interest until registration
• unenforceable or equitable-only lender security: failure to register a registered-land charge at HM Land Registry leaves the lender with an equitable charge; failure to register a company charge at Companies House within 21 days renders it void against an insolvency office-holder and creditors
• requisitions from HM Land Registry and prolonged delays if required documents (discharge evidence, certificate of compliance, ID verification) are missing or inconsistent
• professional negligence exposure for solicitors who miss deadlines or fail to protect priority or lender security.

Risk management and remedial steps:

• if the OS1/OS2 priority period is close to expiry, re-search to obtain a fresh priority period before lodging the application
• if a company charge is missed, urgent advice is needed; an application to court for late registration is possible in limited circumstances, but priority may be lost and lender consent may be required to restructure security
• if first registration was not applied for in time, obtain a fresh transfer or appropriate confirmatory documentation and lodge the FR1 urgently.

Worked Example 1.5

A buyer’s solicitor fails to register the transfer within the priority period, and a third party registers a charge against the property. Who has priority?

Answer:
The third party’s charge takes priority if the buyer’s application is not protected by a valid priority period. The buyer’s title and lender’s charge may be registered subject to that third-party interest.

Worked Example 1.6

A lease of commercial premises for 15 years is granted by a registered landlord. The tenant’s solicitor files SDLT in time but forgets to apply to register the lease within the OS1 priority period. What are the risks and the corrective step?

Answer:
The lease is substantively registrable and does not take effect at law until registered. Missing the priority period risks intervening interests taking priority. The solicitor should submit an AP1 immediately, consider obtaining a fresh OS1 to secure a new priority period, and check for any intervening entries.

Worked Example 1.7

The seller’s title contains a restriction: “No disposition by the proprietor is to be registered without a certificate signed by ABC Management Ltd that the provisions of clause 7 of the Transfer have been complied with.” What must the buyer’s solicitor include with the AP1?

Answer:
A certificate of compliance from ABC Management Ltd (in the form required by the restriction) confirming the condition is satisfied, typically obtained after serving leasehold/freehold estate notices and paying any required fees. HM Land Registry will not complete registration without it.

Key Point Checklist

This article has covered the following key knowledge points:

• SDLT (England) must be paid and the return submitted within 14 days of the effective date; LTT (Wales) within 30 days.
• The SDLT5 or LTT certificate/reference is required for registration of title at HM Land Registry.
• The buyer’s solicitor must apply to register the transfer within the 30-working-day OS1/OS2 priority period (registered land) or lodge FR1 within two months (first registration).
• An AP1 application should include transfer, lender’s charge (if any), SDLT/LTT evidence, discharge(s), any certificate of compliance, identity verification, correct fee, and addresses for service.
• The seller’s solicitor must redeem any existing mortgage and provide evidence of discharge (DS1/DS3 or END1) to satisfy undertakings.
• The lender’s charge must be registered at HM Land Registry to take effect at law, and at Companies House within 21 days if the borrower is a company or LLP.
• Leasehold post-completion steps typically include serving notices of transfer and charge on the landlord/managing agent and satisfying any title restrictions.
• Loss of priority, penalties, void or equitable-only title, and unenforceable security are typical consequences of missed deadlines or incomplete applications.
• The Law Society’s Code for Completion by Post underpins key undertakings at completion and informs post-completion obligations.
• Diarising deadlines, re-searching for priority where needed, and prompt chasing of discharges mitigate common risks.

Key Terms and Concepts

• Stamp Duty Land Tax (SDLT)
• Land Transaction Tax (LTT)
• effective date
• priority period
• class of title
• AP1
• FR1
• OS1/OS2
• certificate of compliance
• DS1 form
• DS3 form
• END1
• undertaking
• charge
• Companies House registration
• Law Society’s Code for Completion by Post (‘the Code’)