Completing on your property sale or purchase

| 4 min read

What happens at completion?

Completion is the final stage of buying or selling a property.

At the most simple level, the buyer transfers the purchase price to the seller (or authorises it to be transferred if held with an intermediary), and the seller gives the buyer the keys to the property, Form TR1 (which authorises change of ownership on the title deeds at the Land Registry), the lease (if the property is leasehold) and any other title documents.

It used to be the case that to complete, the buyer would come to the property, or if the buyer was using a mortgage, then the seller would go to the offices of the lender or its solicitors.

Here, the parties would exchange deeds for payment and the keys in person.

Nowadays, the ability to transfer cash through the Internet and these of telephoning each other allows completion to be much easier and at a distance.

For example, the seller may have left the keys to the property with his estate agent or a neighbour to be handed over on his approval.

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 “possession is nine tenths of the law” applies as much today as ever and should something go wrong so that your buyer doesn’t complete on his own property on time, you may have problems having given possession but not having received payment.

Even if the new buyer asks for the key purpose of redecorating or repairing the property - in other words, he will not be living there - he may still have obtained possession.

The buyer’s solicitor may try to persuade you that this is a common thing to ask for, and he may 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 solicitor’s personal indemnity underwriting his client’s actions. If the solicitor refuses, in other words, isn’t willing to trust his client, it is not unreasonable for you not to trust him either.

Giving the buyer possession before completion can have implications for Stamp Duty Land Tax (“SDLT”). SDLT is payable within 30 days of what is known as the effective date.

The effective date is the date at which 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 receives 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 hand to pay the SDLT.

What can delay completion?

Payments

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 solicitor on the day before so that they can be transferred immediately on completion.

Documents

Completion is the handing over of possession. This used to be done by giving the deeds 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 Registry.

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 doesn't 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 hadn't transferred money or payments.

What happens if you are not able to complete on the 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 is cost and stress involved in bringing and defending a case. It may be easier to accept some delay or claim (despite the inconvenience and additional cost to you), knowing that in the longer run, you won’t have the stress and costs of a court case to fight.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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