Our Practice Advice Service outlines what your options are when dealing with late completion in a residential conveyancing matter

I act for the buyer in a residential conveyancing transaction where completion was set to take place yesterday. My client’s mortgage advance did not arrive on time and we could not complete. The mortgage advance arrived this morning and we immediately sent the funds to complete adding a day’s interest calculated by reference to the ‘contract rate’ by way of compensation pursuant to 7.2 of the Standard Conditions of Sale (fifth edition, 2018 revision). The seller’s solicitor, however, is refusing to release the transfer deed until his client’s abortive removal fees, mortgage interest and other alleged expenses are paid. Is this allowed?

 The Standard Condition of Sale 7.2 deals with late completion.

Standard Condition 7.2.2 confirms that compensation for late completion is to be calculated at the ‘contract rate’ and is payable on an amount equal to the purchase price, less the deposit paid for the period of default.

Standard Condition 1.1.1(e) defines the “contract rate” as being “the Law Society’s interest rate from time to time in force”, although the parties may substitute a different rate by special condition.

Although the standard conditions of sale do not require the buyer to pay compensation in relation to the seller’s out of pocket expenses or the knock-on effects on any related transactions, where these provisions under the contract do not provide adequate redress to the injured party, an action for damages for breach of contract could be considered, albeit subject to Standard Condition 7.2.3 that provides that any claim for loss resulting from delayed completion is to be reduced by any compensation paid under the contract.

In relation to the release of the transfer deed, upon the buyer’s compliance with all obligations under the contract Standard Condition 6.5 requires the seller to handover the documents of title.

Where the Law Society’s Code for Completion by post 2019 has been adopted, the seller’s solicitor will have given undertakings pursuant to paragraph 13(i) of the Code: “to hold to the buyer’s solicitor’s order every document specified under paragraph 9 and not to exercise a lien over any of them” and pursuant to 13(iii) “as soon as possible after completion and in any event by the end of the working day following completion, to send written confirmation that completion has taken place, and, at the risk of the buyer’s solicitor, the items specified under paragraph 9 to the buyer’s solicitor by first class post or document exchange”.

If you conclude that the solicitor has breached any of the undertakings contained in the Code for Completion (such as failing to forward the documents of title to you), you will need to consider whether the breach of undertaking should be reported to the SRA as a breach of paragraph 1.3 of the SRA Code of Conduct for Solicitors.

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While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.

This article is compiled by the Law Society’s Practice Advice Service. Comments relating to the questions should be sent to practiceadvice@lawsociety.org.uk