Learning Outcomes
After reading this article, you will be able to explain the legal and practical steps required to complete a property transaction, including the transfer of funds, execution of the transfer deed, compliance with SDLT requirements, and registration at the Land Registry. You will also understand the importance of priority periods, the discharge of existing charges, and the consequences of errors or delays in post-completion procedures.
SQE1 Syllabus
For SQE1, you are required to understand the key legal and procedural steps involved in completing and registering a property transaction. Focus your revision on:
- The legal effect and process of completion in property transactions
- The transfer of funds and execution of the transfer deed
- SDLT/LTT compliance and deadlines
- The application process for registration at the Land Registry, including required documents and priority periods
- Discharge of existing mortgages and undertakings
- The consequences of errors, delays, or non-compliance in post-completion steps
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 is the effect of failing to register a transfer of registered land within the OS1 priority period?
- What documents must be submitted to the Land Registry to register a completed transfer of registered land?
- Who is responsible for ensuring the discharge of the seller’s mortgage after completion, and how is this usually evidenced?
- What is the time limit for submitting an SDLT return and payment after completion?
Introduction
Completion and post-completion steps are the final stages in a property transaction, ensuring the buyer acquires legal title and the interests of all parties are protected. These steps involve the transfer of funds, execution of the transfer deed, compliance with tax obligations, and registration at the Land Registry. Errors or delays at this stage can have serious legal and financial consequences.
Completion: Legal Transfer of Ownership
Completion is the point at which the legal estate in the property is transferred from the seller to the buyer. The process involves several coordinated steps:
Transfer of Funds
The buyer’s solicitor must ensure that the balance of the purchase price is transferred to the seller’s solicitor, usually by same-day electronic transfer from a client account at a clearing bank. The seller’s solicitor confirms receipt, which triggers completion.
Key Term: completion
The moment when the balance of the purchase price is paid, the transfer deed is dated, and legal title passes (subject to registration).
Execution and Dating of the Transfer Deed
The transfer deed (usually form TR1 for registered land) must be properly executed by the seller, and by the buyer if required (e.g., if the buyer is giving new covenants or making a declaration of trust). The deed is dated on completion.
Key Term: transfer deed
The legal document (e.g., TR1) that transfers the legal estate in the property from seller to buyer.
Practical Arrangements
Arrangements for the release of keys, confirmation of vacant possession, and apportionment of outgoings (such as service charges or ground rent in leasehold transactions) are finalised. The seller’s solicitor provides undertakings to discharge any existing mortgages.
Key Term: undertaking
A binding promise (often by a solicitor) to perform a specific act, such as redeeming a mortgage after completion.
Post-Completion Steps
After completion, both solicitors must take further steps to finalise the transaction and secure the buyer’s title.
SDLT/LTT Compliance
The buyer’s solicitor must submit the SDLT (or LTT in Wales) return and pay any tax due within 14 days of completion (30 days for LTT). The SDLT5 certificate (or LTT certificate) is required for registration.
Key Term: SDLT5 certificate
The official receipt issued by HMRC confirming payment of Stamp Duty Land Tax, required for Land Registry registration.
Discharge of Existing Charges
If the property was subject to a mortgage, the seller’s solicitor must redeem the mortgage and provide evidence to the buyer’s solicitor. In registered land, this is usually done by electronic discharge (e-DS1) or by sending a completed DS1 form to the Land Registry.
Key Term: electronic discharge (e-DS1)
An electronic notification from the lender to the Land Registry confirming that a registered charge has been redeemed and should be removed from the register.
Registration at Land Registry
The buyer’s solicitor must apply to register the transfer (and any new mortgage) at the Land Registry. The application must be made within the 30-working-day priority period conferred by the OS1 search (or OS2 for a sale of part). Required documents include:
- Executed transfer deed (TR1 or TP1)
- SDLT5 certificate (or LTT certificate)
- Discharge of any existing mortgage (e-DS1 or DS1)
- Mortgage deed (if applicable)
- Any supporting documents (e.g., grant of probate, power of attorney)
Key Term: priority period
The 30-working-day period following an OS1/OS2 search during which the buyer’s application for registration takes precedence over any later applications.
If the application is not made within the priority period, the buyer risks losing priority to any intervening interests.
Companies House Registration (if applicable)
If the buyer is a company and has granted a mortgage, the charge must be registered at Companies House within 21 days of completion. Failure to do so renders the charge void against a liquidator or administrator.
Consequences of Delay or Error
Failure to comply with post-completion requirements can have serious consequences:
- If SDLT is not paid and the SDLT5 certificate is not obtained, the Land Registry will reject the application for registration.
- If registration is not completed within the priority period, the buyer’s title may be subject to intervening interests.
- If the seller’s mortgage is not discharged, the buyer’s title will remain encumbered.
- Late payment of SDLT/LTT incurs penalties and interest.
Worked Example 1.1
A buyer completes the purchase of registered land, but the solicitor submits the application to the Land Registry after the OS1 priority period has expired. In the meantime, a third party registers a charge against the property.
Answer: The buyer’s application for registration will lose priority to the third party’s charge. The buyer’s title will be subject to the intervening charge, which could have significant financial and legal consequences.
Worked Example 1.2
The seller’s solicitor gives an undertaking to discharge the seller’s mortgage after completion but fails to do so. The buyer’s solicitor discovers the charge is still registered when the Land Registry issues the updated title.
Answer: The buyer’s solicitor can enforce the undertaking against the seller’s solicitor, who may be personally liable to ensure the mortgage is redeemed and the charge removed.
Key Point Checklist
This article has covered the following key knowledge points:
- Completion is the legal transfer of ownership, triggered by payment of the balance purchase price and execution of the transfer deed.
- The buyer’s solicitor must ensure SDLT/LTT is paid and the SDLT5/LTT certificate is obtained within the statutory deadline.
- The seller’s solicitor must redeem any existing mortgage and provide evidence of discharge.
- Registration at the Land Registry must be completed within the OS1/OS2 priority period to protect the buyer’s title.
- Failure to comply with post-completion steps can result in loss of priority, unenforceable title, or financial penalties.
Key Terms and Concepts
- completion
- transfer deed
- undertaking
- SDLT5 certificate
- electronic discharge (e-DS1)
- priority period
