What is in a Contract for Sale and Transfer Deed
THE CONVEYANCE DOCUMENT AND WHAT IS A CONTRACT FOR SALE?
A conveyance, also known as a Property Transfer Deed, is the document that legally transfers the ownership of a house from the seller to the buyer. Whilst it must be signed by the seller and is normally, also signed by the buyer this may not always be the case. Though as a matter of fact it only needs to be signed by the buyer if the document contains covenants or there is more than one of them. The agreement between the seller and the buyer, for the conveyance to proceed is what is known as the Contract For Sale.
When you buy a house, if you do not have the signed Transfer Deed by the seller, technically known as the Transfer Instrument, cannot be registered as the property owner with the Land Registry.
Your solicitor or conveyancer must, above all else, have a signed Property Transfer Deed in their possession upon completion of the sale is not valid and the buyer can pull out. To prevent this disappointment, the solicitor or conveyancer will give an undertaking to ensure that the signed Deed is in their possession as the sale moves toward an exchange.
The TR1, which is the formal land registry document, which confirms that the property is registered with the Land Registry and that the whole of the property is being transferred.
This is then the document which literally transfers the legal ownership of a property from one person to another. If not a TR1, which is in the majority of cases, it must be in one of the four allowable formats of TR1, TR2 TR3 and TP1 which provide for the different types of purchase, and whichever is used it is sent to the land Registry on completion.
In normal circumstances, the seller’s solicitor or conveyancer will draft the contract for sale while the buyer’s solicitor or conveyancer will draft the transfer instrument although, alternatively it can be done by the purchaser’s legal team.
WHAT INFORMATION DOES THE CONVEYANCE (TRANSFER DEED) CONTAIN?
These are the main elements to the Property Transfer Deed and most importantly they must all be correctly detailed:-
- The title number, this information can be found on the Land Registry document and is unique to the property. If the land is unregistered the details are left blank however unregistered land is increasingly rare.
- The address, this would seem an obvious detail but in fact, it is a very important matter. The address must match that contained in the Official Copies. Moreover for unregistered-title, the importance is greater, as it is the identifier and must be particularity described in detail.
- The legal name of the seller (the transferor) which must also match the Official Copies.
However, there are 4 exceptions which are:-
- Where a seller has given another person Power of Attorney (POA), their name and the certificate granting them POA is placed with the deed which also identifies them as acting as POA. Also the name of the person he is representing will be included.
- If the property is for sale by an executor, where the property owner has died. The executor’s name and additionally a certified copy of the Grant of Probate must accompany the Property Transfer Deed.
- Also where a Trustee is appointed to join in the sale. A Trustee is used for the purpose of allowing a sale to complete where there is a restriction on the register of the Official Copies. This is often where no one person is allowed to sell the property and the additional person is deceased. All names including the trustees must be included in the Property Transfer Deed.
- As a consequence of a property being repossessed, the lender, normally the mortgage company, will have its name on the register and then a TR2 form will be required.
- The buyer’s name (transferee) and address, usually the property they are buying, also an email address, will be placed on the deed to ensure that the Land Registry can contact the buyer if they need to. Where two or more people are buying a declaration of trust is needed which states who owns what share and what happens on the death of one of the buyers or in a future sale.
- The price agreed between the buyer and the seller and in addition the date, which is the date of completion, not exchange.
- If there are any new rights or covenants they are declared in the contract and their details listed along with a title guarantee. Moreover, this states what level of title guarantee is offered in respect of the property.
- Finally, the Property Transfer Deed should be signed.
Exchange of contract is the point of no return. Once the contract for sale has been signed and contracts exchanged, the sale or purchase becomes legally binding on all parties. So before signing the contract, there is a last opportunity to ensure that everything is correctly detailed and set down.
A pre-exchange list is helpful to ensure nothing has been missed which gives comfort that you are getting what you want and haven’t forgotten anything.
What you should confirm with your solicitor or conveyancer:-
- That the searches are complete;
- You have your mortgage offer;
- Your funds for the deposit are available;
- Both parties to the transaction have returned their signed contract of sale to their respective conveyancers;
- Make sure you have an Energy Performance Certificate (EPC) and sometimes forgotten, bricks and mortar insurance which needs to be valid from the date of exchange.
Also, most importantly, chat through any aspect of the sale or purchase you don’t fully understand with your solicitor or conveyancer. They will be only too happy to ensure you are comfortable with everything before exchange.
Up to this point, either the buyer or the seller can withdraw and there is nothing that can legally be done to prevent this. However, once the exchange takes place you are nearly there as exchange makes the contract legally binding.
At the actual time of exchange both the buyer and the sellers’ solicitor or conveyancer will each have a copy of the contract. The Seller’s solicitor or conveyancer will have the signed transfer deed ( TR1). The buyers’ side will now hold the funds to pay the deposit, the mortgage offer and a confirmed buildings insurance policy.
The next step is to agree on a completion date and above all, the last stage prior to completion is the confirmation between the sides that all of the documents and the other requirements are ready for exchange.
The exchange itself is usually done between the legal representatives over the phone and at this point the exchange transaction itself is complete. If there is a chain and each exchange is dependant upon another one the exchange is confirmed, down the line, until the exchange at the bottom of the chain is confirmed and then the whole chain is exchanged.
A completion date should be agreed, and a two to four week period from an exchange is usual. This allows everyone to make their arrangements, such as a removal company, satellite and broadband installation, and last but not least book time off work.
Avoiding a Friday is a good idea if at all possible, as for solicitors and conveyancers this is always the busiest day, and even more so for removal companies.
The actual day of completion is when the seller’s solicitor or conveyancer is in receipt of the full purchase money and as a consequence of this confirms the completion to the buyer’s side.
The transfer of the title documents takes place by the dating of them and a time for vacant possession should be agreed upon. Normally vacant possession is 1 pm on the day of completion but this can be varied, in certain circumstances, to suit all parties.
Exchange and completion can take place on the same day, but normally if there is a mortgage involved the lender requires a period of around 5 working days between the two.
Once you have picked up or dropped off the keys you can relax as you have now either bought or sold your home.