## **Learning Outcomes**

This article covers the contractual framework for delayed completion in freehold conveyancing, including:

- The principal remedies: contractual compensation at the contract rate, service of a notice to complete, and rescission following notice expiry
- Accurate calculation of compensation on a daily pro‑rata basis, the 2 pm completion cut‑off, inclusion/exclusion of days, and calendar versus working days
- Key distinctions between the Standard Conditions of Sale (SC) and Standard Commercial Property Conditions (SCPC), particularly liability for compensation
- The requirement to be “ready, able, and willing” to serve a valid notice to complete and timing differences under SC and SCPC
- Deposit top‑up obligations on service of a notice to complete and the consequences of non‑compliance
- The mechanics and consequences of rescission, including forfeiture or repayment of the deposit, and the availability of damages
- The interaction between contractual compensation and common law damages, applying the “no double recovery” principle
- Practical application to SQE2 scenarios, common pitfalls in chain transactions and code‑based completions, and strategies to advise clients effectively

## **SQE2 Syllabus**

For SQE2, you are required to understand remedies for delayed completion in the context of freehold real estate transactions. You must be able to identify contractual solutions, calculate compensation for late completion, and explain when and how to serve a notice to complete and pursue rescission, with a focus on the following syllabus points:

- the main contractual remedies available if completion is delayed in a freehold conveyance
- how contractual compensation is calculated and paid (including SC vs SCPC differences and default contract rate)
- circumstances and implications of serving a notice to complete and deposit top‑up obligations
- the process and consequences of rescission after a notice to complete
- the effect of these remedies on parties' contractual rights and obligations, including common law damages and the “no double recovery” principle.

## **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 contractual remedy is immediately available to a seller if a buyer does not complete a freehold purchase on the agreed date?
2. How is compensation for delayed completion typically calculated under standard conditions of sale?
3. What is the effect of serving a notice to complete if the completion date has passed?
4. After a notice to complete has expired without completion, what right may become available to the non-defaulting party?

## **Introduction**

In freehold property transactions, delayed completion is a common risk. Standard conditions of sale prescribe precise contractual remedies if either party fails to complete on time. For the SQE2 exam, it is essential to understand not just the legal but practical impact and operation of these contractual remedies. This ensures you can advise clients or apply the rules clearly in exam scenarios. Pay particular attention to the 2 pm completion cut‑off (after which completion is deemed the next working day), the daily basis on which compensation is calculated, and the steps needed to be “ready, able, and willing” to serve a valid notice to complete. In chain transactions and those adopting the Law Society’s Code for Completion by Post, these points often determine which remedy is viable and how quickly timelines run.

## Remedies for Delayed Completion

### Contractual Compensation

When completion is not effected on the contractual date, the non-defaulting party is generally entitled to claim contractual compensation at a specified rate (the contract rate). This applies automatically under standard conditions once the date for completion has passed and actual completion takes place later.

> **Key Term: contract rate**  
> The rate of interest specified in the contract, used to calculate daily compensation for delay. It may be set in the contract or a default rate applies.

- The compensation is calculated daily on the purchase price (less any deposit already paid if the buyer is in default). Under SC, either party may be liable; under SCPC, only the buyer may be liable to pay contractual compensation.
- Payment is due on actual completion and is usually settled through the completion statement.
- Compensation is intended to incentivize completion and to compensate for financial loss during the period of delay (e.g. additional financing costs, lost interest).
- If the completion funds arrive after 2 pm on the contractual completion date, completion is treated as having taken place on the next working day for compensation purposes.
- The default contract rate under standard conditions is the Law Society’s Interest Rate (commonly expressed as a margin above a major bank base rate) where no special rate is specified.
- Counting rules: the first day of default is included; the day of actual completion is not. Compensation is calculated on calendar days, not working days, unless the contract stipulates otherwise.

> **Key Term: contractual compensation**  
> The financial remedy for delayed completion of a contract, calculated using the contract rate and ordinarily payable upon completion; it is not automatic if completion never occurs.
>
> **Key Term: contract rate**  
> The rate of interest specified in the contract or determined by default provisions, applied daily to the sum outstanding in calculating compensation.

Double recovery is prohibited. If common law damages are also claimed for delay-related losses (e.g. storage, removal, bridging interest, extra legal fees), any contractual compensation must be deducted from the overall damages award to ensure the claimant does not recover the same loss twice.

### **Worked Example 1.1**

Amir contracts to buy freehold land from Imogen for £700,000, completion set for April 10. The buyer fails to complete until April 15. The contract rate is 4.5%. How much compensation is due?

> **Answer:** Delay is 5 days. Compensation = £700,000 × 4.5% ÷ 365 × 5 ≈ £431.51.

A note on SC vs SCPC: under SC, either party could theoretically be liable to pay compensation for delay (depending on fault). Under SCPC, only the buyer pays compensation if completion is delayed beyond the contractual date.

### Notice to Complete

If completion is not effected by the contractual time, either party who is ready, able, and willing to complete can serve a notice to complete. The notice makes time “of the essence”, requiring the defaulting party to complete within a set period (usually ten working days from service of the notice). This transforms a mere delay into a firm deadline with clearly stated consequences.

> **Key Term: notice to complete**  
> A formal notice served by the non-defaulting party requiring completion within a set period (typically ten working days), after the agreed completion date has passed.
>
> **Key Term: ready, able, and willing**  
> The state of preparedness required for a party to validly serve a notice to complete; the serving party must have fulfilled all their obligations and be capable of completing immediately.
>
> **Key Term: rescission (contractual, for failure to complete)**  
> The termination of the contract following expiry of a notice to complete, entitling the non-defaulting party to recover or retain the deposit and pursue damages.

Differences in service timing:

- Under SC, a notice to complete is served after the contractual completion time has passed (commonly after 2 pm on the completion date, or the next working day).
- Under SCPC, a notice to complete can be served at any time on the contractual completion date (even before 2 pm), provided the serving party is ready, able, and willing to complete.

Deemed service provisions in the standard conditions govern when a notice is treated as served; the ten working days run from the day after deemed service. Once served, the buyer must immediately top up any reduced deposit to reach a full 10% if less than 10% had been paid at exchange.

### **Worked Example 1.2**

Queenie sells freehold land to Derek. Completion is set for 20 September. Derek fails to complete. On 21 September Queenie serves a notice to complete. Ten working days pass with no completion. What remedy does Queenie have?

> **Answer:** After expiry of the notice, Queenie may rescind the contract, forfeit the deposit, and may also claim damages in excess of the deposit for any additional loss.

### Operation of Rescission

If the defaulting party does not complete within the period specified by a valid notice to complete:

- The non-defaulting party may choose to rescind the contract.
- Rescission is not automatic but must be elected by the non-defaulting party—usually by written notice.
- Upon rescission:
  - If the buyer is in default, the deposit is forfeited to the seller (with interest accrued where appropriate). If the deposit is held as stakeholder, the stakeholder must release it to the seller in accordance with the contract terms once rescission is properly effected.
  - The seller may resell the property without further obligation to the defaulting buyer.
  - The seller can also seek common law damages for any further losses, subject to deduction for forfeited deposit and any compensation already paid.

Where the seller is the defaulting party and the buyer rescinds, the buyer is entitled to repayment of the deposit (with interest at the contract rate) and may claim damages for loss suffered due to the breach.

Common law damages must be assessed applying general contractual principles: causation, remoteness, mitigation, and the “no double recovery” rule. Common heads of loss include wasted removal and storage costs, additional accommodation costs, extra professional fees, and bridging finance costs where reasonably incurred.

### **Exam Warning**

> Be careful: contractual compensation is not awarded if the contract is rescinded before completion occurs. In that situation, the deposit and additional damages are the available remedies.

### Remedies Available to Buyer

If the seller defaults and fails to complete after a valid notice to complete:

- The buyer may rescind the contract and reclaim the deposit (with interest).
- The buyer may pursue damages for breach of contract.
- In appropriate circumstances, the buyer may seek specific performance (an equitable order requiring the seller to complete). Specific performance is discretionary; it will be refused where damages are adequate or the claimant is not “ready, able, and willing” to complete.

### Practical Considerations

- Once a notice to complete is served, time is of the essence—failure to complete by the end of the notice period is treated as a repudiatory breach, opening the door to rescission and damages.
- The party seeking to serve notice to complete must ensure they have clear evidence of being ready, able, and willing to complete; otherwise, the notice may be invalid. For a seller, this typically means being able to complete immediately (including redemption undertakings for any charges, agreed completion information and undertakings, and no unresolved title defects). For a buyer, this usually means having funds available (advance requested in time per lender’s requirements), executed documents, clear pre-completion searches, and the ability to complete by immediate payment.
- Accurate calculation of the compensation period is important: the first day of default is counted, but the day completion actually takes place is not. Compensation is calculated per calendar day unless the contract specifies otherwise.
- The 2 pm cut-off is critical. Funds received after that time mean completion is treated as having taken place on the next working day for compensation. Weekend days and bank holidays ordinarily count in the delay period unless special conditions provide otherwise.
- Under SCPC 9.8.3, if the buyer has paid less than a 10% deposit at exchange, the buyer must immediately pay the balance to make up the full 10% upon service of a notice to complete.
- In income-producing properties, parties commonly address rents and profits during a period of delay by agreement or under the contract terms. Where applicable, the innocent party may elect to receive net rental income in lieu of compensation for the period until completion, but this depends on the contract wording.

### **Worked Example 1.3**

On Friday, both parties are ready to complete but funds are received by the seller after the 2pm cut-off, so completion rolls to Monday. How is delay calculated?

> **Answer:** Compensation is charged for Friday as delay occurred that day; Saturday and Sunday (non-working days) are included if the contract so stipulates and will depend on contract-specific provisions.

### **Worked Example 1.4**

Under a contract incorporating SC, completion is delayed for four days. Under a contract incorporating SCPC, the buyer delays by the same period. The purchase price is £600,000, deposit 10%, contract rate 4.75%. Who pays compensation, and how much?

> **Answer:** Under SC, either party may be liable depending on fault. If the buyer is at fault, compensation = (£600,000 − £60,000) × 4.75% ÷ 365 × 4 ≈ £311. Under SCPC, only the buyer pays if completion is late, so the same calculation applies where the buyer is at fault.

### **Worked Example 1.5**

A buyer exchanged with a 5% deposit due to lender conditions. Completion is missed; the seller serves a valid notice to complete. What must the buyer do about the deposit?

> **Answer:** The buyer must immediately pay the balance to bring the deposit up to a full 10% on receipt of the notice to complete. Failure to do so risks further breach and may strengthen the seller’s position on rescission and forfeiture.

### **Worked Example 1.6**

Ella, the seller, serves a notice to complete at noon on the contractual completion date under SCPC. At that time, her solicitor has not yet obtained a current redemption statement and cannot confirm sufficient funds to discharge the charge. Is the notice valid?

> **Answer:** No. The serving party must be “ready, able, and willing” to complete when serving the notice. Without being in a position to redeem the existing charge or give a proper redemption undertaking, Ella is not ready to complete; the notice risks being invalid.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- The principal contractual remedies for delayed completion are compensation (contract rate), notice to complete, and rescission.
- Compensation for delay is calculated at the contract rate on the balance outstanding, pro rata for the days of delay; the first day is counted and the day of actual completion is excluded.
- Standard conditions differ: under SC, either party may be liable for compensation; under SCPC, only the buyer pays contractual compensation for delay.
- Service of a notice to complete is necessary to make time of the essence if completion is not forthcoming; either party can serve if ready, able, and willing. Under SCPC, notice may be served at any time on the completion date; under SC, it is served after the contractual time for completion has passed.
- Following expiry of a notice to complete, the non-defaulting party can rescind the contract, forfeit or recover the deposit (with interest where relevant), and pursue further damages.
- The party serving a notice to complete must themselves be ready, able, and willing to complete; otherwise the notice may be ineffective.
- Rescission does not occur automatically; the non-defaulting party must elect to rescind.
- Contractual compensation is not payable if the contract is rescinded before completion; common law damages and deposit remedies apply.
- No double recovery: contractual compensation must be deducted from any damages claimed for the same delay.
- The 2 pm completion cut‑off affects compensation timing; late funds trigger deemed completion on the next working day.

## **Key Terms and Concepts**

- contract rate
- contractual compensation
- notice to complete
- ready, able, and willing
- rescission (contractual, for failure to complete)

Freehold real estate law and practice - Remedies for delayed completion