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SCR (version 3.5) Solicitor's completion requirements
Practical Law UK Standard Document w-036-7142 (Approx. 9 pages)
SCR (version 3.5) Solicitor's completion requirements
| Law stated as at 31 Aug 2022 • , England, Wales |
Use of this document is free, subject to the Conditions in GN/CPSE (version 3.3).
This document is part of the Commercial Property Standard Enquiries (CPSE) suite of documents, prepared by members of the Property Support Lawyers Group and endorsed by the British Property Federation.
For more information about the CPSE see GN/CPSE (version 3.3).
This document is available in three formats:
The web format incorporates guidance notes, which can be viewed or printed with, or separately from, the requirements (see Actions pane in the top right hand corner of the screen).
The Word format can be accessed from the Word link in the Actions pane in the top right hand corner of the screen. The Word format allows a user to insert replies to the requirements.
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If you have any comments, please e-mail [email protected].
For details of changes made between this document and its previous version, see Legal update, New version of SCR issued.
For the Word version of this document click here.
Commercial Property Standard Enquiries
SCR (version 3.5) Solicitor's completion requirements
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Conditions
This document may be used free of charge subject to the Conditions set out in GN/CPSE (version 3.3) Guidance notes on the Commercial Property Standard Enquiries.
Particulars
Seller:
Buyer:
Property:
Transaction:
Seller's solicitors:
Buyer's solicitors:
Date:
Notes
1. This document is designed for use with pre-contract enquiries in CPSE.1 and deals with arrangements, as between solicitors, for completion.
Interpretation
The section on Interpretation in CPSE.1 is incorporated in this document and the following interpretation also applies save that:
- "we" refers to the Buyer's solicitors and "you" refers to the Seller's solicitors; and
- the following interpretation also applies:
- Lease: means the lease proposed to be granted by the Seller to the Buyer or, as the case may be, the lease under which the Property is held and which is to be assigned by the Seller to the Buyer.
- Tenancy Documents: refers to the Lease (or, where the Transaction is the sale of a property subject to tenancies, the instrument creating each tenancy), and to any of the following that relate to it: charges, mortgages, surrenders, variations, side letters, undertakings, applications, consents, memoranda, registrations, notices, rent deposit deeds, orders, guarantees, concessions, franchise agreements, counsel's opinions and arbitrators' or experts' decisions.
Completion requirements
1.Completion by post
Close Drafting Note
Completion by post
In order to apply, the Law Society's code for completion by post (2019 version) (2019 Completion Code) must be expressly adopted by the parties, ideally in writing. Under the 2019 Completion Code, the Buyer's solicitor must give instructions to the Seller's solicitor as to documents to be examined and marked, memoranda to be endorsed, undertakings to be given, and deeds and other documents (such as rent authorities) to be handed over on completion. However, the 2019 Completion Code itself involves undertakings by the Seller's solicitor confirming the necessary authorities to receive the purchase price and redemption money from the Seller and any lenders respectively. A Seller's solicitor who does not have such authorities is required by the 2019 Completion Code to notify the Buyer's solicitor.
1.1We wish to complete by post. Please confirm:
(a)you will adopt the Law Society's code for completion by post (2019 version) (2019 Completion Code);
2.Completion statement
Close Drafting Note
Completion statement
Requirement 2.1
Although the Seller's solicitor normally provides a completion statement, there seems to be no obligation to do so, either under the Standard Commercial Property Conditions (Third Edition - 2018 Revision) (SCPC) (SCPC 9.4 deals with the amount payable on completion, but there is no express obligation on the Seller to produce a completion statement) or the 2019 Completion Code (which refers to the Seller's solicitor's completion statement, but does not contain an obligation to produce one). Where the calculation of the completion figure is likely to be complex or controversial (e.g. on a sale of an investment property subject to numerous tenancies) the Buyer's solicitor might want to provide in the contract that the Seller's solicitor will produce a completion statement sufficiently far in advance of completion to allow for checking the figures.
Requirement 2.2
Receipts for any payments which are being apportioned on completion should be provided. On the sale of a leasehold property, a rent receipt is evidence of the landlord's waiver of the right to forfeit for earlier breaches of the tenant's covenants (except to the extent that they are continuing breaches, where the right will revive the day after the receipt) and in all cases the Buyer wants evidence that it is not being asked to reimburse the Seller for payments which the Seller has not in fact made.
3.Undertakings
Close Drafting Note
Undertakings
For guidance from the Law Society on accepting an undertaking to discharge a mortgage, see Guidance on acceptance of undertakings (Law Society).
In Patel v Daybells [2001] EWCA Civ 1229, the Court of Appeal ruled that the acceptance of a solicitor's undertaking for a DS1 will not normally be negligent. The Court of Appeal left open the possibility that it could be negligent in "exceptional circumstances". These were not specified. The expert evidence in the case (set out in the judgment, but not expressly endorsed by the court) was that it would not be normal or advisable (and therefore might be negligent) to rely on an undertaking:
- Where the mortgagee was not a member of the Council of Mortgage Lenders (list of members on the CML's web site: http://www.cml.org.uk/cml/home); or
- Where the amount required to redeem the Seller's mortgage exceeded the minimum level of solicitors' indemnity insurance.
The court did state that the fact that the Seller's solicitor in the case was a sole practitioner was not relevant to the question of the acceptability of an undertaking.
If a DS1 (or DS3 on a sale of part) will not be available on completion and the Buyer's solicitor considers that the circumstances of the transaction might be regarded as exceptional (so that accepting an undertaking from the Seller's solicitor might be negligent), the Buyer's solicitor should consider:
- Arranging to send that part of the purchase price required to discharge the mortgage direct to the lender;
- Asking to see confirmation that the Seller's solicitor has the lender's authority to receive the redemption money;
- Where the amount of the mortgage debt exceeds the minimum indemnity insurance, only accepting an undertaking for the DS1 (or DS3) coupled with a warranty from the Seller's solicitor that its insurance cover exceeds the amount required to redeem the mortgage; or
- Refusing to accept an undertaking from the Seller's solicitor. There is no obligation to accept an undertaking in place of performance of the obligation. However, if that is the Buyer's solicitor's position, a condition to that effect will be necessary in the contract.
Before the Buyer's solicitor accepts an undertaking where it would not be normal practice to do so, it is essential to explain the risks to the Buyer and get clear instructions that the Buyer is willing to accept them.
Even where the lender is separately represented, the Buyer's solicitor should consider whether there are any exceptional circumstances making it unwise (or potentially negligent) to accept an undertaking (at least without evidence of the lender's solicitor's authority to accept the redemption money).
The use of EDs and e-DS1s is becoming more popular, although at present only in the residential field. As its name implies, no paper DS1 is produced and the Buyer's solicitor has to rely on an undertaking from the Seller's solicitor. In this situation acceptance of the Seller's solicitor's undertaking is inevitable and in exceptional cases the Buyer's solicitor will have to take such additional steps as are available (e.g. split payments, evidence of authority, evidence of sufficient insurance cover).
4.Other matters
5.Method of signing completion documents
Close Drafting Note
Method of signing completion documents
In practice, buyers and sellers have tended to agree arrangements for electronic or Mercury signatures without difficulty since these became commonplace from spring 2020. It is in everyone's interests to get this right. Nevertheless, a specific enquiry is included here as a reminder.
Both parties need to be satisfied that the completion documents will be executed correctly. However, this is of particular concern for the buyer, who will need to comply with the signature requirements in Land Registry Practice Guide 82 in order to register the disposition.
Enquiries 5.1 and 5.2 refer to "electronic signatures". As Practice Guide 82 explains, this broad term covers anything from (a) typing a name at the end of an email to (b) use of an e-signature platform with an audit trail certificate recording dates and times of signatures, email addresses, mobile phone numbers and IP addresses of devices used.
Enquiry 5.3 refers to "conveyancer-certified electronic signatures", which is the Land Registry's phrase for electronic signatures generated in accordance with the specific requirements of Practice Guide 82 paragraph 3.2.
Not all documents will require a conveyancer-certified electronic signature. Accordingly:
- Enquiry 5.2 is relevant whenever electronic signatures are to be used, whether or not the "conveyancer-certified" form is mandatory under Practice Guide 82. This question asks which e-signing platform will be used, so that the buyer can check there will be a suitable audit trail for the signatures.
- Enquiry 5.3 is relevant only where use of a conveyancer-certified electronic signature is mandatory under Practice Guide 82. This question asks the seller to confirm that the signature process will comply with the requirements of that Practice Guide.
The buyer's and seller's lawyers should liaise to ensure all parties execute correctly. A single certificate as referred to in enquiry 5.3(c) may of course cover several documents and signatories.
This enquiry does not ask for the audit trail certificate generated by the electronic signing platform. Sometimes a copy may be handed over, but there is no fixed practice in this respect and the PSLs responsible for these enquiries did not wish to be prescriptive. Practice Guide 82 paragraph 3.2 says that the audit trail certificate "must not be lodged with the application but should be retained". In normal circumstances we would expect the firm giving the conveyancer's certificate referred to in enquiry 5.3(c) to retain a copy of the audit trail certificate in their transaction file, whether or not also giving a copy to the other party's lawyers.
Enquiries 5.1-5.5 concern the dispositionary documents being signed at completion. If the buyer's solicitors require more detail about the execution method of existing title documents such as counterpart leases being handed over at completion, they should raise a separate enquiry supplemental to enquiry 9 of form STER (Solicitor's title and exchange requirements).
"Conveyancer-certified electronic signatures", "Mercury" and "Option 1" have the same meaning as in Land Registry Practice Guide 82;
"mortgagee" means any mortgagee or chargee discharging a mortgage or financial charge on completion.
5.1How will your client and any mortgagee sign the completion documents, i.e. will they be using wet ink, Mercury or electronic signatures?
5.2Unless we are controlling the signature process, if electronic signatures are to be used by your client or any mortgagee for any completion document, please state which e-signing platform will be used.
5.3Unless we are controlling the signature process, if electronic signatures are to be used by your client or any mortgagee for any completion document where use of a conveyancer-certified electronic signature is mandatory under Land Registry Practice Guide 82:
(b)please confirm that the signature process will comply with the requirements for conveyancer-certified electronic signatures set out in Land Registry Practice Guide 82;