## **Learning Outcomes**

This article examines the remedies for delayed completion in property transactions, including:

- The contractual framework governing completion dates under the Standard Conditions of Sale and Standard Commercial Property Conditions.
- The purpose, legal effect, and formal requirements of serving a valid notice to complete.
- How and when time becomes of the essence, and how this alters the parties’ rights and obligations.
- The distinction between late completion attracting contractual compensation and a failure to complete justifying service of a notice.
- Calculation of compensation at the contract rate, including the 2 pm “deemed next working day” rule and its impact on interest.
- The meaning of being ready, willing, and able to complete, and how lack of readiness can invalidate a notice.
- The remedies available following non-compliance with a notice, including rescission, forfeiture of deposit, resale, and damages.
- Post-termination steps such as withdrawing or cancelling protective entries and dealing with Land Registry applications.
- The buyer’s obligation to top up a reduced deposit to 10% on service of a notice to complete and the consequences of failing to do so.
- Common SQE1 exam pitfalls, typical fact patterns, and techniques for structuring clear, issue-led answers on delayed completion questions.

## **SQE1 Syllabus**

For SQE1, you are required to understand the remedies available for delayed completion in property transactions, including the operation and effect of a notice to complete, with a focus on the following syllabus points:

- The contractual position on completion dates and when time is of the essence.
- The requirements and effect of serving a notice to complete.
- The consequences of non-compliance with a notice to complete, including rescission, forfeiture of deposit, and damages.
- The relevant provisions of the Standard Conditions of Sale (SCs) and Standard Commercial Property Conditions (SCPCs).
- Practical considerations and common exam traps regarding readiness to complete and proper service of notices.
- The 2 pm completion time and the “deemed next working day” rule.
- The differences between SCs and SCPCs on contractual compensation liability.
- The buyer’s obligation to top up a reduced deposit to 10% immediately on service of a notice to complete.
- The option to elect rental income (where there is a tenant in situ) instead of compensation until completion.
- Post-termination steps, including withdrawing/cancelling any protective entries (e.g., notices or land charges) lodged to protect the contract.

## **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 effect of serving a valid notice to complete in a property sale contract?
2. Under the Standard Conditions of Sale, how many working days does the defaulting party have to complete after a notice to complete is served?
3. What remedies are available to a seller if the buyer fails to comply with a notice to complete?
4. What must the party serving a notice to complete be able to demonstrate at the time of service?

## **Introduction**

Delays in completion are a common risk in property transactions. The law provides a structured remedy: the notice to complete. This mechanism allows a party who is ready, willing, and able to complete to set a strict deadline, making time of the essence and enabling termination and other remedies if the deadline is missed. Understanding how and when to use a notice to complete, and the consequences of non-compliance, is essential for SQE1.

In standard sale contracts, money must be received by the contractual completion time (commonly 2 pm) on the completion date. If funds arrive after 2 pm, completion is treated as having taken place on the next working day for compensation purposes. This interacts with the contract rate of interest and can materially increase the compensation due. It is therefore critical to distinguish a late completion (which still completes, attracting compensation) from a failure to complete at all (which may trigger service of a notice to complete and, ultimately, rescission).

> **Key Term: time of the essence**
> A contractual requirement that an obligation (such as completion) must be performed strictly by a specified date, so that failure to do so entitles the innocent party to terminate the contract.

## Contractual Position on Completion Dates

In most property contracts, the completion date is not "of the essence" unless expressly stated. This means that a delay in completion is a breach of contract, but does not automatically entitle the innocent party to terminate the contract. Instead, the innocent party may be entitled to compensation for the delay.

Under the standard forms, if completion monies are received after the specified time (usually 2 pm), completion is deemed to have occurred on the next working day for the purpose of calculating compensation at the contract rate. This deemed timing can add weekend days into the calculation where the delay crosses a Friday, significantly increasing the daily interest payable.

- Under Standard Conditions of Sale (SCs), either party may (depending on fault and timing) be liable to pay compensation at the contract rate on the balance of the price (less any deposit, if the buyer is in default) for the period of delay.
- Under Standard Commercial Property Conditions (SCPCs), only the buyer is required to pay compensation at the contract rate where completion is delayed.

Compensation is calculated as interest on the appropriate principal for the relevant period. There is no double recovery: any contractual compensation is deducted from any common law damages claimed for additional losses caused by delay (such as removal, storage, re-booking, or short-term accommodation costs).

> **Key Term: notice to complete**
> A written notice served by one party to a contract, requiring the other party to complete the transaction within a set period (usually 10 working days), after which time is of the essence.

## The Role and Effect of a Notice to Complete

A notice to complete is the formal step that transforms the contractual position. Once served, it makes time of the essence for completion. If the defaulting party does not complete within the specified period, the innocent party may terminate the contract and seek further remedies.

A notice to complete is appropriate where completion has not taken place on the contractual completion date/time and the innocent party wishes to trigger termination and other remedies. It is not required where completion has already occurred (albeit late); in that case, the contract continues, and compensation is the primary remedy.

Serving a notice to complete gives the defaulting party a final chance: 10 working days (excluding the day of service) to complete. This period creates certainty for both parties and avoids arguments about whether a short delay is material. It also triggers specific contractual effects, including the buyer’s obligation to bring any reduced deposit up to the full 10% immediately upon receipt of the notice.

## Requirements for Serving a Notice to Complete

A party may serve a notice to complete only if:

- The contractual completion date has passed and completion has not occurred.
- The party serving the notice is ready, willing, and able to complete.
- The contract contains a clause permitting service of a notice to complete (as in the SCs and SCPCs).

The notice must:

- Be in writing.
- Clearly state it is a notice to complete.
- Specify the period for completion (10 working days, excluding the day of service, under the SCs and SCPCs).
- Be served in accordance with the contract’s notice provisions (e.g., by post, email, or as otherwise specified). If service by email is intended, the contract must permit it; otherwise, use the agreed methods and correct addresses.

Readiness to complete requires that the serving party can complete contemporaneously: it has executed documents, has access to cleared completion funds (or proceeds sufficient to redeem any existing mortgage on completion), can discharge its obligations (including providing any undertakings, replies to completion information, and authority to redeem charges), and is not itself in breach preventing completion. For a seller with a mortgage, readiness may be satisfied where the sale proceeds are sufficient to redeem the mortgage on completion and appropriate undertakings are in place.

> **Key Term: ready, willing, and able to complete**
> The party serving the notice must be in a position to complete the transaction themselves, except for the default of the other party.

## Effect of a Notice to Complete

Once a valid notice to complete is served:

- Time for completion becomes of the essence.
- The defaulting party has 10 working days (excluding the day of service) to complete.
- If the defaulting party fails to complete, the innocent party may rescind (terminate) the contract and seek further remedies.

Under both SCs and SCPCs:

- Where the buyer has paid less than a 10% deposit, receipt of a notice to complete obliges the buyer to pay the top-up to a full 10% immediately. Failure to do so is treated as continuing default.

- The party serving the notice has the option (not the obligation) to rescind after expiry. If rescission is chosen, additional consequences follow (deposit forfeiture for buyer default; deposit repayment for seller default; damages claims).

### **Worked Example 1.1**

A buyer is unable to complete on the agreed date due to a delay in mortgage funds. The seller, who is ready to complete, serves a notice to complete. The buyer still cannot complete after 10 working days.

> **Answer:** The seller may rescind the contract, forfeit the deposit (if the buyer is in default), resell the property, and claim damages for any loss suffered.

## Consequences of Non-Compliance

If the defaulting party fails to complete within the notice period:

- The innocent party may rescind the contract.
- If the buyer is in default, the seller may forfeit and keep the deposit and accrued interest.
- The innocent party may claim damages for losses caused by the delay or non-completion (subject to deduction of any compensation already paid).
- The innocent party may resell the property.
- The defaulting party must return any documents received and cancel any registration of the contract (e.g., withdraw any notice or land charge protecting the contract). Any OS1/OS2 search priority related to that abortive completion expires; protective entries lodged to secure the contract should be discharged.

Rescission is not automatic upon expiry of the 10-day period. It is an election. The innocent party should consider whether completion is now possible on acceptable terms and, if not, promptly notify rescission and take steps to mitigate loss (e.g., marketing for resale). Any subsequent resale profit must be credited against damages; conversely, a resale loss may be claimed (subject to causation and mitigation principles).

> **Key Term: rescission**
> The right to terminate the contract and restore the parties to their pre-contract positions, available after non-compliance with a notice to complete.
>
> **Key Term: forfeiture of deposit**
> The seller’s right to retain the deposit paid by the buyer if the buyer fails to complete after a notice to complete.

## Calculation of Compensation for Delay

Under the SCs and SCPCs, compensation for late completion is calculated at the contract rate of interest on the balance of the purchase price (less the deposit, if the buyer is in default) for the period of delay. Under the SCs, either party may be liable for compensation; under the SCPCs, only the buyer is liable.

Important calculation points:

- If funds are received after 2 pm on the completion date, completion is deemed to occur on the next working day for compensation purposes. This can add extra days to the calculation (including weekends after the completion date, as once the date has passed every day counts).
- Under SCs, fault apportionment can operate where earlier procedural delays by one party contributed to later delay, but compensation ultimately reflects the period between contractual and actual completion (subject to any adjustments for earlier default periods).
- The parties may elect that, where there is a sitting tenant, rental income until completion substitutes for compensation (on notice to the other party). This election can be useful in investment transactions.

- Common law damages may also be recoverable for reasonably foreseeable consequential losses, but there can be no double recovery. Contractual compensation acts as a credit against damages.

### **Worked Example 1.2**

The purchase price is £500,000. The buyer paid a 10% deposit. The contract rate is 4%. Completion is delayed by 5 days due to the buyer’s default.

> **Answer:** Compensation = (£500,000 - £50,000) × 4% ÷ 365 × 5 = £246.58, payable by the buyer to the seller.

### **Worked Example 1.3**

Completion is due on Friday. The buyer’s funds arrive at 2:15 pm. The contract incorporates the SCs with a contract rate of 4.5%. The price is £600,000 and a full 10% deposit was paid.

> **Answer:** For compensation purposes, completion is deemed to have taken place on the next working day (Monday). Compensation runs for three days (Saturday, Sunday, Monday) on £540,000 (price less deposit): £540,000 × 4.5% ÷ 365 × 3 = £199.18.

### **Worked Example 1.4**

Under SCPCs, a commercial buyer pays only a 5% deposit at exchange. The buyer misses the completion date. The seller serves a notice to complete.

> **Answer:** On receipt of the notice to complete, the buyer must immediately top up the deposit to the full 10%. If the buyer fails to complete within 10 working days, the seller may rescind, keep the 10% deposit (forfeiture), resell, and claim damages. Under SCPCs, only the buyer pays contractual compensation for delay.

## Practical Considerations and Common Pitfalls

- The party serving the notice must be genuinely ready, willing, and able to complete. If not, the notice is invalid. Readiness includes having executed documents, funds or reliable access to them, and undertakings in place (e.g., to redeem a mortgage).
- The notice must be served in accordance with the contract’s requirements. Incorrect service may render the notice invalid. Check the contract’s addresses for service, permitted methods (postal, hand delivery, email), and deemed service timings.
- A notice to complete can be served only where completion has not taken place on the contractual date/time. It is unnecessary (and inappropriate) where completion has already occurred (even if late); the remedy there is compensation.
- Under SCs, either party may be liable for compensation; under SCPCs, only the buyer will be. Do not assume symmetry across the two sets—always identify which conditions apply.
- If the buyer paid a reduced deposit, a notice to complete triggers an immediate obligation to top up to the full 10%. Ensure the buyer has access to funds for this top-up.
- Consider whether the innocent party would benefit from electing to receive rental income in lieu of compensation where there is a tenant in situ. This can avoid complexities of interest calculation and align with commercial objectives.
- Post-rescission, ensure any protective entries lodged to secure the contract (e.g., a unilateral notice or Class C(iv) land charge) are withdrawn, and any lodged applications at HM Land Registry are cancelled or allowed to lapse.

### **Exam Warning**

> If a party serves a notice to complete but is not ready, willing, and able to complete themselves, the notice is invalid and cannot be relied upon to rescind the contract.

A further common trap is confusing “late completion” with “failure to complete.” If funds arrive after the contractual time (e.g., after 2 pm) but on the same date, completion is deemed the next working day for compensation purposes and a notice to complete is not necessary. Conversely, where completion does not occur by the date/time, a notice to complete is the proper mechanism to make time of the essence and open the door to rescission.

### **Revision Tip**

> Always check the contract for specific notice provisions and the required method of service before serving a notice to complete.

Also confirm the applicable standard conditions (SCs vs SCPCs), the contract rate, and whether any special conditions modify the default positions on completion time, compensation, deposit handling, or service.

## **Summary**

A notice to complete is the formal remedy for delayed completion in property transactions. It makes time of the essence and sets a strict deadline for completion. If the defaulting party fails to comply, the innocent party may rescind the contract, forfeit the deposit (if the buyer is in default), and claim damages. The process is governed by the Standard Conditions of Sale and Standard Commercial Property Conditions, and strict compliance with their requirements is essential.

Key practical points include readiness to complete, correct service, the 2 pm completion time and deemed next working day, the buyer’s obligation to top up a reduced deposit to 10% on notice, and the distinction between late completion (compensation only) and failure to complete (notice to complete and potential rescission). Following rescission, ensure any protective entries lodged to secure the contract are withdrawn.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- A notice to complete is used to make time of the essence for completion in property transactions.
- The party serving the notice must be ready, willing, and able to complete.
- The notice must be in writing, specify the period for completion, and be served correctly.
- The defaulting party has 10 working days (excluding the day of service) to complete.
- If the defaulting party fails to complete, the innocent party may rescind the contract and seek further remedies.
- Under the SCs, either party may be liable for compensation for delay; under the SCPCs, only the buyer is liable.
- Forfeiture of the deposit and damages are available if the buyer is in default after a valid notice to complete.
- Completion funds received after 2 pm are treated as completion on the next working day for compensation purposes.
- If a buyer has paid a reduced deposit, they must immediately top up to a full 10% on receipt of a notice to complete.
- Where the property is tenanted, the innocent party may elect to receive rental income until completion instead of compensation.
- After rescission, withdraw/cancel any protective entries or applications lodged to secure the contract.

## **Key Terms and Concepts**

- time of the essence
- notice to complete
- ready, willing, and able to complete
- rescission
- forfeiture of deposit


Remedies for delayed completion - Notice to complete