Whether you’re buying or selling a property, navigating the market and sales process can be tedious and exhausting. You’ll have gone through a plethora of viewings, read, interpreted, and negotiated numerous contracts and legal documents, and probably even had a few false starts where you thought the process was over and done with, only for one party to back out of the agreement.
But this time, a contract has finally been signed, and both parties are ready to go! The next step is for the buyer and seller to agree upon a date for completion day.
What is completion day?
Completion is legal transfer of the property - that is, the day that the seller receives the money and the buyer receives the keys.
Completion day is the day on which that transfer happens.
Completion day is determined by both parties beforehand, usually occurring 1 to 4 weeks after the contract is signed.
Often, completion day will be in the middle of your work week, as many banks and estate agents only operate on business days.
Though completion day is relatively simple for the buyer, there’s actually a lot happening behind the scenes, as the seller and solicitor or conveyancer have some legal obligations to take care of.
The solicitors involved will already have begun working on their aspect of the sale days or even weeks in advance.
What happens on the day of completion?
Final checks on finances or mortgage conditions
To start things off, sometime between the signing of the contract and completion day, the buyer’s solicitor must request money from the lender, as well as make sure all mortgage conditions have been met.
If there is a mortgage to sell, the seller’s solicitors will need to have its value calculated up until completion day and then request a redemption certificate (proof of how much of the mortgage the seller has paid).
Next, the solicitors involved will create a completion statement - a document that shows the amount of money still owed by the buyer - as well as request that all outstanding invoices be paid by completion day.
On completion day itself, both solicitors will double-check documents, then the buyer’s solicitor will let the lender know they can transfer the money to the seller.
Confirmation of payment
Upon confirmation of the balance transfer and after ensuring all fees are paid (including the cost of solicitors and estate agents), the seller’s solicitor will let the estate agent (or the seller) know that he or she can give the keys to the buyer, and the buyer can move in!
People often wonder why the time period between the signing of contracts and receiving the keys is so long, and the process above is your answer.
Should you exchange contracts and complete the sale on the same day?
Though it’s technically possible to sign contracts and exchange funds for keys on the same day (if all parties involved allow it, including the lender), it takes a lot of careful planning to ensure things go smoothly.
Since many of the steps when it comes to transferring ownership are a part of a chain, one slip-up or delay can stall the whole process. For example, the estate agent can’t hand over the keys until the seller’s solicitor lets them know that funds have been transferred, and the solicitor can’t confirm that the funds have been transferred until they are sent by the lender, and the lender can’t send them until a completion statement has been created…and so on and so forth.
Having an agreed upon the completion day in the future makes things much easier for all parties involved, as it gives everyone time to plan and get their affairs in order.
If you are hiring a moving company, you will likely need an exact date to ensure that they can fit you in their schedule. A delay of even one day due to a slight slip-up could cause you to pay for two days of moving when you only used one. If you are currently renting, you may need to move out of your home by a certain date and may need somewhere to stay or to store your furniture, bed, and other larger items.
If you’re getting anxious waiting for completion day, there are still many things you can do to prepare in advance.
Pack as much as possible beforehand
When it comes to moving, there’s almost always an unforeseen circumstance that causes delay, whether it’s an item you need to disassemble because it won’t fit through your door or a piece of furniture that’s too heavy to lift on your own.
Measure your larger items to make sure they will fit through your front door and move everything you can somewhere that’s easily accessible for completion day.
Keep unpacking in mind
You’re not just packing to physically move your things, you’re also packing to unpack as well.
Keep things organised and labelled in different boxes, and make sure to distinctly label boxes with fragile items (especially if you are hiring movers).
You’ll be eager to start unpacking and decorating your new home as soon as you get the keys, and having everything neat and organised will make things a lot easier and more fun!
Keep in contact
Check in with the estate agent and your solicitor to make sure things are going well and that there’s nothing you need to sign or do.
Also make sure that these people can reach you when you do need to sign a contract or go over some documents. Keep your phone charged and on full volume, be diligent about checking your email, and try not to go anywhere without your mobile phone or Internet access. This will help ensure you’re not the weak link the chain.
Have your funds in order
Make sure the money for the purchase and any other applicable fees is all in the same account so it can be transferred quickly and easily.
Keep all documents relevant to the purchase in one place, and make digital backups by emailing them to yourself or using online storage. Double check with your solicitor, estate agent, and the seller as to what time you will be meeting up and when they need certain documents by.
Documents the buyer should receive upon completion
Property sale or purchase invovles a lot of paperwork. To make the job easier for you we have complied a list of documents you should ensure to recieve on completion:
- Transfer of ownership form - Make sure you get the TR1 form that authorises transfer of ownership at the Land Registry.
- Copy of the lease - If the property is a leasehold, ensure that your conveyancer gives you a copy of the lease and service charge accounts or forecasts.
- Notice of Assignment - If you are buying a leasehold, you will be served with a notice of assignment by the seller's conveyancer informing you of your obligations towards the lessor.
- Management Information Pack - If you are purchasing a leasehold or have opted for a shared ownership scheme, you should make sure you recieve the Management Information Pack.
- Report on the title - You conveyancer or solicitor should provide you with a report on the title. If not, make sure you ask. This is an important document that provides a summary of the legal title and property search results.
- Property Information Form - This document contains important practical information regarding the property such as the location of water stop cock, electricity and gas meters.
- Fitting and Contents Form - This document is filled out by the seller and it lists precisely what fittings and content of the property are included in the purchase.
- Warranties - You need to ensure that you have a copy of your Buildmark or other new home policy or warranty documents if you purchase a new build or property that is less than 10 years old.
- Proof of stamp duty payment - If applicable, you should recieve a confirmation from your solicitor that the Stamp Duty Land Tax has been paid within 30 days of completion.
- Indemnity Insurance Policy - The property you are purchasing may be subject to chancel report (your conveyancer will inform you) or the previous owener may have been in breach of a restrictive covenant. Depending on the circumstances, you can ask the owner to arrange the insurance polcy and recieve a copy of the same.
- Energy Peformance Certificate - It is mandatory for every property to have an Energy Performance Certificate when it is being sold. Make sure you recieve a copy on completion.
Access to the property before completion
Sometimes, the buyer will ask to be given the keys to the property before completion.
This may not seem like a difficult request to agree to, particularly if the property is vacant already, but it should be avoided. The adage, "poessession is nine tenths of the law" applies as much today as ever and should something go wrong so that your buyer does not complete on his own property on time, you may have problems having given possession but not having recieved payment.
Even if the new buyer asks for the the key for the purpose redecorating or repairing the property - in other words, he or she will not be living there - he may still have obtained possession.
The buyer's conveyancer may try to persuade you that this is a common thing to ask for, and he also give you an undertaking signed by the buyer that the buyer does not intend to take possession. However, to be safe, you should ask for the conveyancer's personal indemnity underwriting his client's actions. If the solicitor refuses, in other words, is not willing to trust his own client, it is not unreasonable for you not to trust him either.
Tax implication if you give possession before completion
Giving the buyer poession before completion can have implications for Stamp Duty Land Tax which is payable within 30 days of what is know as the effective date.
The effective date is the date that the transaction is 'substantially performed'. This is usually the date of completion, but if you let a purchaser have possession before completion, the date at which he reieves the keys could be argued to be the date to which the contract is substantially performed.
Whether this is a problem for you or not depends on whether you have the cash to pay Stamp Duty Land Tax.
What can delay completion?
If the buyer has taken out a mortgage, then the mortgage lender may not be efficient in transferring the money to the seller. This leaves both the purchaser and the vendor waiting on the lender.
The solution is to insist that funds are transferred to the purchaser's conveyancers on the day before so that they can be transferred immediately on completion.
Completion is the handing over of possession. This used to be done by giving the deed themselves, but since all land ownership is now recorded at the land Registry, it is done nowadays by giving a signed transfer form (TR1), which authorises change of ownership at the Registery.
If you are the seller, then your solicitor should have sent you a completed TR1 Form to sign and return. If you have not received this, or not sent it back, your solicitor will not be able to give this to the buyer's solicitor and the completion will be delayed.
Not giving vacant possession
If your contract states that vacant possession must be given and you do not (perhaps your removal company does not move all the furniture on the day for some reason, leaving larger items behind), then you are in breach of contract, just as if you had not transferred money or payments.
What happens if you are not able to complete on completion date?
If, for whatever reason, the conveyancing process cannot be completed on the decided date, for example vacant possession was not given or the funds were not transferred, then the party at fault is liable for the costs of the other.
That may mean paying for rescheduled removal fees, hotels, or bank interest. However, these costs must be reasonable. One night in a nearby luxury hotel may be justifiable, but it is unlikely that dinner in the hotel's restaurant with multiple bottles of vintage wine would also be.
You should also be aware, like in any situation of litigation that there s cost and stress involved in bringing and defending a case. It may be easier to accept some delay or claim (despite the inconvenience and addtional cost to you), knowing that in the longer run you won't have the stress and costs of a court case to fight.
A few last words
All in all, completion day is exciting for both buyer and seller. It is also the culmination of a lot of hard work from all parties involved.
By keeping on top of things, being present, and checking in with your solicitor and agent now and again, you’ll help ensure everything is firing on all cylinders and that completion day is one to celebrate.