Pre-completion steps - Form of transfer deed and execution formalities

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Overview

The pre-completion phase in property conveyancing is vital, requiring careful attention from legal professionals. Key to this process is the preparation and execution of the transfer deed, essential for the legal transfer of property ownership. For SQE1 FLK2 exam candidates, understanding transfer deeds and their execution is fundamental, as it plays a significant role in property law and conveyancing. This article examines these elements, serving as a comprehensive resource for exam preparation and practical application.

Legal Framework and Statutory Requirements

Land Registration Act 2002

The Land Registration Act 2002 provides the legislative framework for transferring registered land in England and Wales. Section 27 of the Act states that a registered estate transfer must be completed by registration, highlighting the importance of properly executed transfer deeds, which are essential for registration at the Land Registry.

Law of Property (Miscellaneous Provisions) Act 1989

Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 outlines the formal requirements for contracts involving land interests. Although primarily related to contracts, it sets the stage for the formalities needed in transfer deeds.

Form and Content of Transfer Deeds

Standard Forms

The Land Registry provides standard forms for transfer deeds to ensure consistency and legal compliance. The most commonly used forms include:

  • TR1: For transferring entire registered titles
  • TR2: For transferring parts of registered titles
  • TP1: For transferring parts of unregistered land

These forms capture all necessary information and standard provisions for a valid transfer.

Essential Components

A well-drafted transfer deed must include:

  1. Identification of the parties (transferor and transferee)
  2. Description of the property being transferred
  3. Consideration (purchase price or other value)
  4. Any new covenants or rights being created or reserved
  5. Existing covenants or rights to continue
  6. Operative words of transfer (e.g., "The transferor transfers to the transferee")

Customisation and Special Provisions

While standard forms offer a template, it's important to tailor the deed to reflect the agreed terms. This may include:

  • Restrictive covenants on property use
  • Positive covenants requiring actions by the transferee
  • Easements granting rights over adjoining land
  • Overage provisions for future development potential

Example: In a transfer of agricultural land with development potential, an overage clause might state:

"The Transferee agrees with the Transferor that if planning permission is granted for residential development within 20 years, the Transferee will pay the Transferor 30% of the increase in the property's value attributable to such permission."

Execution Formalities

Signature Requirements

Proper execution of a transfer deed is critical. Requirements vary based on the party involved:

  1. For individuals:

    • The deed must be signed by the transferor in the presence of a witness
    • The witness must attest the signature with their name and address
  2. For companies:

    • Execution can be by two authorized signatories (typically directors) or
    • By a director with a witness, who must attest as above

Delivery

A deed isn't fully executed until delivered. Practically, this happens when the deed is dated and handed to the other party or their solicitor. Delivery can be conditional, often referred to as "escrow."

Example: A seller might execute the transfer deed but instruct their solicitor to hold it until the full purchase price is received, ensuring protection until completion.

Electronic Signatures

The Land Registry now accepts electronic signatures, provided specific requirements are met:

  • The electronic signature platform must meet security standards
  • All parties must agree to use electronic signatures
  • A conveyancer must oversee the signing process and certify compliance

This modernization is vital for conveyancing practice and is likely to be important in the SQE1 FLK2 exam.

Preparation and Review Process

Drafting by Buyer's Solicitor

Typically, the buyer's solicitor drafts the transfer deed, ensuring it aligns with the contract and any subsequent agreements. This involves:

  1. Reviewing the contract and pre-contract enquiries
  2. Incorporating special conditions or covenants
  3. Ensuring compliance with Land Registry requirements
  4. Checking for discrepancies between the contract and draft transfer

Review by Seller's Solicitor

The transfer deed is then sent to the seller's solicitor for review, which involves:

  1. Verifying the deed reflects contract terms
  2. Ensuring rights or covenants are included
  3. Checking that the property description matches title documents
  4. Confirming new rights or easements are correctly drafted

Negotiation and Amendment

Any discrepancies or disagreements are resolved through negotiation between solicitors. Common issues include:

  • Disputes over rights granted or reserved
  • Clarification of covenant wording
  • Amendments for agreed changes post-contract

Example: In a commercial property transfer, parties might negotiate a restrictive covenant's wording. The final clause might read:

"The Transferee agrees with the Transferor not to use the Property for purposes other than as offices within Class E(g)(i) without written consent, which should not be unreasonably withheld."

Practical Considerations and Common Pitfalls

Timing and Coordination

The preparation and execution of the transfer deed must be timed within the broader conveyancing process. Key considerations include:

  • Ensuring the deed is ready before the completion date
  • Coordinating with mortgage lenders for deed approval
  • Aligning deed execution with fund release and related transactions

Common Errors to Avoid

Practitioners must avoid common mistakes that can cause delays or invalidate the transfer:

  1. Incorrect party details or property descriptions
  2. Omission of necessary rights or covenants
  3. Missing title numbers for multi-title properties
  4. Improper execution (e.g., missing witness details)
  5. Discrepancies between the transfer deed and contract

Case Study: Commercial Lease Assignment

In a scenario where a company assigns a long leasehold interest in an office building, the transfer deed must address:

  • Correct parties (assignor, assignee, and potentially landlord consent)
  • Description of the leasehold interest transferred
  • Restrictions on assignment from the original lease
  • Covenants for the assignee to observe lease terms
  • Potential authorized guarantee agreement (AGA) from the assignor

This complex transaction highlights the importance of detailed drafting and review to ensure all aspects are covered.

Conclusion

Understanding transfer deeds and execution formalities is essential for the SQE1 FLK2 exam and legal practice. The balance between statutory requirements, standardized forms, and case-specific customization requires careful consideration from aspiring solicitors. Key points include:

  1. The legal framework governing transfer deeds, such as the Land Registration Act 2002 and the Law of Property (Miscellaneous Provisions) Act 1989.
  2. Essential components of a transfer deed and the necessity of customization for transactions.
  3. Execution formalities, including signature requirements, delivery, and electronic signatures.
  4. The preparation, review, and negotiation process involving solicitors from both parties.
  5. Practical considerations and common errors to avoid.