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What is the purpose of the Code for Completion?

15 February 2019

Are you aware of the precise wording and its implications?

Most residential conveyancing solicitors adopt the Law Society's Code for Completion by Post (the Code) as a matter of course. However, how many fully understand what that involves? 

This article seeks to explain some of the background to the introduction of the Code and looks at some of its key provisions.

Background and the protocol

Personal completion (at the buyer/seller’s solicitor’s office) is relatively rare in residential conveyancing transactions, not least because it is not usually cost effective. 

The Code was developed in order to simplify the completion process where personal completion does not take place.

Arrangements for completion should be made early between the respective solicitors and Form TA13 (Completion Information and Undertakings), which refers to the Code, facilitates those arrangements. 

The Code sets out a structure for the completion process and clear obligations on the part of the solicitors for the seller and the buyer. 

Adoption of the Code is voluntary and avoids the need to negotiate new arrangements for each transaction, so its use should speed up the process.

Both sets of solicitors must agree to use the Code unless they have agreed to use the Law Society Conveyancing Protocol (the Protocol) in which case adoption of the Code is automatically implied. 

Firms accredited with the Law Society’s Conveyancing Quality Scheme are expected to follow the Protocol insofar as it is appropriate for the particular transaction. 

The obligation to act in the best interests of the client always takes precedence over the Protocol, so solicitors should satisfy themselves that adoption of the Code will not be contrary to this obligation.

Any variation to the Code should be in writing and should not be made unless the client so instructs and the variations are specific to the needs of the individual transaction.

Since the Code embodies professional undertakings and other important obligations it should be dealt with at an appropriately senior level within a firm.

Seller's solicitor acting as agent

If the Code is adopted, the seller's solicitor will act on completion as the buyer's solicitor's agent. No fee can be charged. 

This does not require the seller's solicitor to investigate or take responsibility for any contractual breach by the seller and is limited to completion pursuant to paragraphs 10 to 12 of the Code (the steps summarised under the headings 'Completion' and 'After completion' below).

The following are the main provisions of the Code:-

Before completion

The buyer's solicitor:

  • will use reasonable endeavours to collect in the purchase money from the buyer and any lender in good time for completion
  • may send particular instructions to the seller's solicitor about what documents are to be examined and/or handed over on completion or about memoranda to be endorsed or further undertakings, consents or authorities to be provided on completion
  • will send the completion monies to the seller's solicitor (as per the completion statement or in default as per the contract, including any compensation for late completion)

The seller's solicitor:

  • should reply to Form TA13 at least five working days before completion. This may need to be varied if time is tight
  • should list in writing the financial charges to be redeemed or discharged on completion. Question 5.1 on the TA13 deals with this
  • undertakes to have the seller's authority to receive the purchase monies and on completion to have the authority of every specified financial chargee to receive the monies intended to repay it (Edward Wong Finance Company v Johnson, Stokes and Master (1984 AC 296)). Although the seller's solicitor will not normally have specific authority from the lender such authority should be implied by the course of dealings between the seller's solicitor and the lender, for example, if the lender has provided bank details to the seller's solicitor for transmission of the funds.
  • further undertakes that if he does not have the necessary authorities he will tell the buyer's solicitor no later than 4pm on the working day before completion (or immediately if the authorities are later withdrawn) and will not complete without the buyer's solicitor's instructions
  • must confirm receipt of funds sent electronically immediately on becoming aware that the funds have been received

Completion

The seller's solicitor will complete when he is aware the agreed completion monies have been received unless the buyer's solicitor has notified him that the funds are to be held to order or a later completion has been agreed. 

Ideally, any such notification or agreement should be made in writing.

At completion the seller's solicitor undertakes:

  • to comply with any agreed completion arrangements and reasonable instructions from the buyer's solicitor
  • to redeem or obtain discharges for all previously identified financial charges
  • that each specified chargee has been identified by the seller's solicitor sufficiently for Land Registry application purposes. Again, and in the absence of any contrary statement from the lender, a course of dealing between the chargee and the seller's solicitor should enable the seller's solicitor to give this undertaking.

After completion

The seller's solicitor undertakes:

  • immediately following completion to hold the agreed completion documents to the buyer's solicitor's order and not to claim a lien on those
  • to confirm completion to the buyer's solicitor and the estate agents/keyholders (with authority to release the keys) as soon as possible and certainly on the same day
  • to send the agreed completion documents and written confirmation of completion to the buyer's solicitor by no later than the end of the working day after completion. This is to be done by first class post or DX and is at the buyer's solicitor's risk. If this timetable cannot be met for some reason it should be expressly varied as this is part of the undertaking given.
  • if any specified financial charges are discharged electronically to provide confirmation of such discharge to the buyer's solicitor as soon as such confirmation is received from the chargee

General points

Other points to note are:

  • the contract between seller and buyer takes precedence over the Code if there is any conflict between the two
  • any dispute between the solicitors regarding the application of the Code is to be determined by a single arbitrator appointed by the President of the Law Society unless the solicitors can agree the appointment between themselves within a month
  • if the seller's solicitor has to withdraw from using the Code he must tell the buyer's solicitor no later than 4pm on the working day before completion
  • the Code may be used by licensed conveyancers

The above is a summary only of the key provisions of the Code and the undertakings and obligations which are incorporated when there is agreement to adopt the Code.

A copy of the full Code is available online

If you have any queries on the use of the Code, please contact the Law Society's Practice Advice service on 0207 320 5675.

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.