Pre-Completion, Completion and Post-Completion — SQE1 FLK2 Property Law and Practice

Your client completed three weeks ago. He has the keys, he has moved in, he has been sleeping there since. Then he obtains a copy of the register, and the seller's name is still on it as proprietor. He rings you, alarmed. Can the house still be taken away from him? No. But here is the part that unsettles clients. He is not the legal owner yet either.

This is Pre-Completion, Completion and Post-Completion, and both halves of that answer are in it. The work before the money moves, what actually happens when it does, and the formalities afterwards that turn your client into the owner on the register. Keep him in mind. We are coming back for him twice.

Here is the route. The transfer deed first: which form, who signs, who witnesses, and when it actually takes effect. Then the pre-completion searches, and what each of them is for. Then completion itself, how it is done and what it does. Then vacant possession. And then the post-completion clock: the tax return, the registration, and the discharge.

Completion is the moment ownership moves from seller to buyer. Or rather, it is the moment most of it moves, which is a distinction we will come back to. Before it there is a checklist that has to be worked through, and after it there are formalities that are time-limited and legally required. Miss either end and you are looking at a negligence claim.

Start with the deed. The TR1 is the standard form of transfer for the whole of a registered title, freehold or leasehold alike. Note that, because the exam likes the trap. TP1 is not the leasehold form. TP1 is used where only part of a registered title is being transferred.

It must be signed by all the sellers, meaning every proprietor on the register, and each signature must be made in the presence of a witness who attests it. That is s 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989. The witness signs, prints their name, and gives an address. And the witness must actually be there. Seeing the signature afterwards and acknowledging it is not attesting it.

Try one. A married couple own the house jointly and both have signed. One witness, a neighbour, has signed against each signature, giving her name and address each time. She was in the room when each of them signed. A trainee says the execution is defective because two signatories need two witnesses. Is he right?

No. Nothing requires a separate witness for each signatory. One person may attest both signatures, provided she was present when each of them signed and has attested each signature separately, which is exactly what she has done. The execution is good.

Where the seller is a company, execution follows the Companies Act 2006. Two directors sign, or a director and the company secretary, or one director signs in the presence of a witness. That is section 44. The company may still use a seal, though that is now uncommon, and an overseas company may have different requirements again.

Now a point about timing that catches people out. A seller signs the transfer two weeks early and sends it back, so nothing is left to chance. A trainee tells the other side that the property has legally changed hands already and the rest is paperwork. Has it?

It has not. Execution and effectiveness are different things. A deed takes effect on delivery, not on signature. A transfer signed in advance is held undated and in escrow, delivered conditionally, to take effect only at completion when the price is paid. On the day it is dated and released against the money. Signing early is sensible preparation. It is not completion.

Then the searches, made immediately before completion, and each answers a different question. First, the official search of the register with priority. Form OS1 for the whole of a registered title. Form OS2 where only part is being bought, a plot on a new-build estate say, and an OS2 must have a plan with it. They are alternatives, not a pair.

What does that search buy you? Two things. An up-to-the-minute statement of the entries, which the inspection at the outset cannot give, because months of dealings may have intervened. And, more importantly, a priority period of 30 business days. An application to register lodged by the searcher inside that period takes priority over an application by anyone else, even one lodged first.

Which is why the search is made shortly before completion rather than earlier. The period has to still be running when your own application reaches the registrar, and it cannot be extended or renewed for the same transaction. And it has a limit. It protects against entries made after it, so it does not defeat an application already pending at the date of the search. The result discloses those, and they must be investigated before you complete.

Second, a bankruptcy search against an individual seller, on Land Charges form K16, made immediately before completion. If the seller has been made bankrupt since the transaction began, the property may have vested in a trustee in bankruptcy and the seller cannot give good title. Where the buyer is borrowing, the lender wants a bankruptcy search against the borrower too, before it releases the advance.

Third, where the seller is a company, a company search, repeated on the morning of completion. The register tells you who owns the building. It tells you nothing about the state of the company. The search checks it has not been struck off, that no winding-up petition, resolution or administration has intervened, and that the people signing are current directors.

That insolvency point has teeth. A disposition of company property made after the commencement of a winding-up is void unless the court orders otherwise. Section 127 of the Insolvency Act 1986. Before the £900,000 leaves your client's account, you want to know none of that has happened.

Alongside the searches, the paperwork. The seller provides completion information before the day. If the buyer is borrowing you send the lender its instructions and the completion statement, showing how the funds are to be applied. The advance comes through on the day.

So how is completion actually done? Two methods, and one of them has all but disappeared. Completion in person is the traditional one: the solicitors meet, the documents are inspected, the keys change hands there. It still happens occasionally. It is now the exception.

The standard method is completion by post, under the Law Society's Code for Completion by Post, which the parties adopt by agreement, normally through the contract. The solicitors never meet. The buyer's solicitor sends the money electronically, and the seller's solicitor acts as the buyer's solicitor's agent for the purpose of completing.

On receiving the money he completes. He holds the executed transfer and the other completion documents to the buyer's solicitor's order, sends them out the same day, and authorises release of the keys. That agency is the whole point of the Code. The buyer's solicitor is not there and inspects nothing, so what he relies on is undertakings, enforceable against the seller's solicitor personally.

One practical thing worth knowing, because clients ask. Keys are a separate arrangement. On a postal completion they can still be handed over at the property, usually through the estate agent. So a seller who wants to meet the buyer, or collect something from the garage on the day, is not a reason to complete in person.

Which brings up what the seller must actually deliver, where the sale is with vacant possession. Try this one. Completion is at one o'clock. On a final inspection that morning the sellers are gone and the keys are with the agent. But the garage is stacked to the ceiling with their furniture, the attic is full of boxes, and there is a rusting car on the drive. Their solicitor says the house itself is empty, so completion must go ahead. Must it?

No. Vacant possession requires more than an empty house. The property must be free of people and of adverse claims to possession. And free of chattels whose presence substantially interferes with the enjoyment of the right of possession of a substantial part of it. That is Cumberland Consolidated Holdings Ltd v Ireland, from 1946, where a cellar left full of rubbish meant vacant possession had not been given. A stacked garage, a filled attic and a car on the drive comfortably cross that line.

Now the effect of completion, and your client from the cold open. The money is paid, the seller's mortgage is redeemed out of the price, the transfer is dated, the keys are released. What has he got? The equitable interest, and the right to possession, which is why he can move in that afternoon.

What he has not got is the legal estate. A transfer of a registered estate is a registrable disposition, and it does not operate at law until the registration requirements are met. Section 27 of the Land Registration Act 2002. So the seller remains the registered proprietor, holding the legal estate on trust for the buyer, until the registrar deals with the application. That interval is the registration gap, and it is why the seller's name is still on the register.

It also explains what worried him. During the gap the seller is, on the face of the register, still the owner, and could in principle purport to sell or charge the property again. The answer is the priority search. His application was lodged inside the priority period, so it takes precedence over anything lodged in the meantime. The registrar's backlog does not erode that, because priority was fixed when the application was lodged, not when it is processed.

What would destroy the protection is lodging late, after the period has run out. That is why the application goes in promptly rather than at leisure. His occupation is a further layer, weaker, an interest belonging to a person in actual occupation being capable of overriding a registered disposition. And note that completion itself cannot be undone. A mistake is put right by a fresh transaction, never by reversing the one that happened.

So, post-completion, and it runs on a clock. The land transaction return must be filed and any tax paid within 14 days of completion. Electronically, and even where no tax is due because the price is under the threshold, the return still has to go in. The penalty for late filing is at least £100 whether or not any tax was owing, and it grows.

File it on completion day, because there is nothing to gain by waiting. You need the unique transaction reference number for the registration application anyway, so delay simply holds up the next step and risks the penalty for nothing.

Then registration. Form AP1, with the executed transfer, the certificate showing the return has been filed, the fee, and anything else required, a power of attorney or company documents for instance. Lodge it inside the priority period. Registration is what makes your client the legal owner, and it is what the whole post-completion exercise is for.

And the discharge. If the seller had a mortgage, the seller's solicitor redeems it out of the completion money and then submits form DS1 to remove the charge from the register. Promptly, because a charge left showing on the title is a requisition waiting to happen.

Last, the file. There is no prescribed retention period for conveyancing files. The profession sets no number: the firm decides and must be able to justify the decision. Limitation is the starting point rather than the answer. Six years in contract or tort. Twelve years on a claim on the transfer, which is a deed. And a longstop of fifteen years for negligence where the damage is latent. So a flat six-year policy is shorter than some of the exposures it is meant to cover.

Beyond limitation, a firm doing lender work must meet the retention requirements in the lenders' handbook, and indemnity insurers commonly stipulate their own. Adopt a documented policy, apply it consistently, and tell the client in the client care letter how long the file is kept and what happens to it afterwards. Then report to the client, with the certificate, the updated register once it comes, and a reminder about the insurance.

A word on how SQE1 tests this. You will not be asked to recall a case name or a form number in the abstract. You get a scenario, five answers, and one instruction: pick the best. But the forms in this topic are worth knowing, because a question can turn on picking the right one.

If you keep only three. Section 27 of the Land Registration Act 2002, because it is why the registration gap exists at all. The priority period of 30 business days, because it is what makes the gap safe. And Cumberland Consolidated Holdings Ltd v Ireland, for what vacant possession actually requires.

Five traps. One: TP1 is not the leasehold transfer. TR1 covers the whole of a registered title, freehold or leasehold. TP1 is for a transfer of part. Get that pair the wrong way round and a whole question goes with it.

Two: risk has already passed. Under the Standard Conditions the buyer takes the property in the state it is in at the date of the contract. So risk passed on exchange, and the seller is under no obligation to insure. The buyer needs his own cover on risk from exchange, not from completion.

Three: completion does not make your client the legal owner of registered land. Registration does. Four: the priority search does not freeze the register. It confers priority for your own application, and it does not defeat an application already pending when you searched.

And five: the 14 days for the return runs from completion, not from when the register is updated, and the return goes in even where no tax is payable. The penalty bites on the filing, not on the tax.

Quick check. A woman is buying a registered freehold house. Completion takes place. The money is sent, the seller's mortgage is redeemed out of the price, the transfer is dated, and the keys are released. She moves in that afternoon. The application to register her will not be lodged until next week, and the registrar will take time over it. She asks whether the house is now hers.

What is her position between completion and registration? Three candidate answers. One: she has no interest of any kind until the registrar completes her registration. Two: she holds the legal estate, and registration merely records a transfer already made. Three: she holds the equitable interest, the legal estate passing when she is registered. Pause here if you want a moment.

The answer is three. A transfer of a registered estate does not operate at law until the registration requirements are met. What she acquires on completion is the equitable interest and the right to possession. That is exactly why she can take the keys and move in. The seller remains the registered proprietor, holding the legal estate for her.

Why the others fail. Option one says completion is legally empty, and it is not: the equitable interest and the right to possession both pass. Option two states the position for unregistered land, where the deed itself moves the legal estate. On a registered title registration is constitutive, not a record.

Five things to take away. One: your client is safe, and he is not yet the legal owner. Completion gives the equitable interest and possession; registration gives the legal estate. Two: the priority search is what makes the gap survivable, so lodge the application inside the period, and remember the period cannot be renewed.

Three: a transfer signed early is held undated and in escrow, and takes effect on delivery at completion against the money. Four: the return is filed and paid within 14 days of completion, whether or not any tax is due. Five: vacant possession is not just about people. Chattels that substantially interfere with enjoyment of a substantial part mean it has not been given.

That is Pre-Completion, Completion and Post-Completion. Next time, Remedies for Delayed Completion.

Practise this topic with exam-style questions at sqe1prep.co.uk. This episode is for education and exam revision only, not legal advice, and we are not affiliated with or endorsed by the SRA or Kaplan.