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Code for Completion by Post

9 October 2019

Overview

The Code for Completion by Post is a process to follow when completing a property transfer that does not take place in person.

The code can be used for completion of residential or commercial transactions.

The aim of the code is to:

  • provide a convenient way to complete a property transfer on an agency basis
  • set out a clear structure for completion
  • make your obligations clear when acting for a buyer or seller

Using the code can help you:

  • save time
  • speed up completion
  • complete sales and purchases in a chain more quickly than physically attending completion meetings

The 2019 version of the code came into force on 1 May 2019.

Download the Code for Completion by Post 2019 (PDF 196 KB)

Using the code

 
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Completing a property transfer in person at a solicitor’s office is not always convenient.

Buyers and sellers often choose to complete on an agency basis, where the seller’s solicitors act as agent for the buyer’s solicitors.

The code gives you a standardised structure to follow, which means you do not need to negotiate new arrangements for each transaction.

The code can be used by:

  • solicitors
  • those licensed by an appropriate professional body to undertake conveyancing

Use of the code must not conflict with your obligation to act in your client’s best interests.

The code contains professional undertakings, so the decision to use it in your practice should be made at a senior level.

CQS practitioners

All Conveyancing Quality Scheme (CQS) accredited practitioners must agree to follow the Conveyancing Protocol.

Use of the code is automatically implied when you use the protocol.

You should follow the code as it stands, unless you agree to specific variations with the other party’s solicitor.

Any variation to the code should be:

  • in writing
  • made on your client’s instructions
  • specific to the requirements of the transaction

Non-CQS practitioners

If you’re not CQS accredited, you can choose whether you’d like to use the code.

You must agree with the other party’s solicitor to use the code for it to apply.

Use of the code is automatically implied if you agree with the other party’s solicitor to use the Conveyancing Protocol.

Updates to the code

 
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We updated the Code for Completion by Post in May 2019 to clarify the code following the Court of Appeal’s decision in Dreamvar.

There are no changes in substance to the previous edition. You do not have any additional responsibilities under the 2019 code.

The revisions aim to make it clearer that the seller’s solicitor only gives undertakings where there’s a genuine sale.

This should give innocent purchasers greater protection from fraudsters – which should help boost consumer confidence in the conveyancing process.

Responsibility of the seller’s solicitors

The 2019 code has the same effect as the previous code, as interpreted in Dreamvar.

The code does not place any additional responsibilities on you when you act for the seller. There is no change to your existing obligations to verify your client’s identity.

Duty to verify authority from the genuine seller

The Court of Appeal confirmed that when you use the code, you undertake that your client is legally entitled to sell the property. This has not changed in the revised code.

You should still take reasonable steps to make sure that:

  • your client is the person they claim to be
  • they are (or will be) entitled to transfer the property at the point of completion

When you use the code, you automatically give undertakings based on your having authority to act for the genuine seller. This is the person entitled to convey the legal and/or equitable title.

If you’re acting on behalf of the seller, you’re in the best position to make sure that the person instructing you is entitled to sell the property.

If you cannot be sure of your client’s identity, you should consider whether it’s safe to continue acting.

Information on identifying your client can be found in our guidance on property and title fraud.

Warranties and undertakings

When you use the code, you give professional undertakings.

The operative words of the undertakings and their effects have not been changed. The 2019 code does not require any further warranty or undertaking.

Undertakings to discharge mortgages

When you act for the seller, you undertake to pay the lender the amount required to discharge their charge. We have not changed the effect of this undertaking.

You must let the buyer’s solicitors know in writing of any charges to be redeemed or discharged on completion. This includes:

  • mortgages
  • charges
  • other financial incumbrances

You undertake to pay the lender all the incumbrances identified before or at the point of sale. We have not changed the effect of this undertaking.

Background

 
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The latest version of the code was developed after the Court of Appeal decision in the Dreamvar case.

Summary of the Dreamvar decision

In 2018, the Court of Appeal ruled on the liability of solicitors in cases of identity fraud in P&P Property Ltd v Owen White & Catlin LLP and Dreamvar (UK) Ltd v Mishcon de Reya [2018] EWCA Civ 1082.

In both cases, fraudulent people posed as sellers of properties in London worth around £1 million. They instructed estate agents and genuine buyers were found.

The fraudulent sellers and the genuine buyers each instructed their own solicitors. Contracts were exchanged, and they completed the sales under the 2011 Code for Completion.

The frauds were discovered before registration at HM Land Registry.

As the sales and purchases were not genuine, the court held that completion had not taken place.

The buyers were entitled to recover the purchase money paid on completion, but the fraudsters and the money could not be found.

The buyers tried to recover the purchase money by claiming against the seller’s solicitors for breach of warranty of authority, breach of trust and breach of undertaking. They also took action against their own solicitors for breach of trust.

In Dreamvar, the fraudster seller’s solicitor had not carried out all the identity checks that were needed.

The Court of Appeal found that the buyer’s solicitor:

  • had not been negligent
  • was liable for breach of trust in parting with the completion money at a non-genuine completion
  • could not obtain relief under the Trustee Act 1925

The court found that the seller’s solicitor:

  • breached their undertaking to the buyer’s solicitor implied by the code, which required the seller’s solicitor to use the money for a genuine completion
 

Code for Completion by Post 2019

 
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Warning: Use of this code embodies professional undertakings.

Introduction and scope

This code provides a voluntary procedure for postal completion for either residential or commercial transactions. It may also be used by those authorised by an appropriate professional body to undertake conveyancing.

Solicitors adopting this code must be satisfied that its adoption will not be contrary to the interests of their client. When adopted, this code applies without variation unless otherwise agreed.

This code is intended to provide a fair balance of obligation between seller’s and buyer’s solicitors and to facilitate professional co-operation for the benefit of clients.

Procedure

General

  1. To adopt this code, both solicitors must agree, preferably in writing, to use it to complete a specific transaction, except that the use or adoption of the Law Society Conveyancing Protocol automatically implies use of this code unless otherwise stated in writing by either solicitor.
  2. In this code:
  3. (i) all references to the “seller” are references to the person or persons who will be at the point of completion entitled to convey the legal and/or equitable title to the property and
    (ii) all references to the “seller’s solicitor” are to the solicitor purporting to act for the party named as the seller in respect of the contract or purported contract that the buyer has entered into in order to acquire the property.

  4. If the seller’s solicitor has to withdraw from using this code, the buyer’s solicitor should be notified of this not later than 4pm on the working day next before the completion date. If the seller’s solicitor’s authority to receive the monies is withdrawn later, the buyer’s solicitor must be notified immediately.
  5. In complying with the terms of this code:
  6. (i) the seller’s solicitor acts on completion as the buyer’s solicitor’s agent without fee or disbursement, but this obligation does not require the seller’s solicitor to investigate or take responsibility for any breach of the seller’s contractual obligations and is expressly limited to completion pursuant to paragraphs 11 to 13; and
    (ii) where the seller’s solicitor receives and/or holds the money received for completion, the seller’s solicitor receives and/or holds that money on trust for the person or persons who provided it, to be either

    (a) paid away only in respect of a completion in which the seller executes and delivers a valid conveyance or transfer; or
    (b) repaid to the person who remitted it, if completion does not take place.

    Before completion

  7. The buyer’s solicitor will use reasonable endeavours to ensure that enough funds are collected from the buyer and any mortgage lender in good time to transmit to the seller’s solicitor on or before the completion date.
  8. The seller’s solicitor should provide to the buyer’s solicitor replies to completion information, and undertakings in the Law Society’s standard form, at least five working days before the completion date unless replies have been provided to such other form requesting completion information as may have been submitted by the buyer’s solicitor.
  9. The seller’s solicitor should provide to the buyer’s solicitor replies to completion information, and undertakings in the Law Society’s standard form, at least five working days before the completion date unless replies have been provided to such other form requesting completion information as may have been submitted by the buyer’s solicitor.
  10. The seller’s solicitor undertakes:
  11. (i) to have the seller’s authority to receive the purchase money on completion; and
    (ii) on completion, to have the authority of the proprietor of each mortgage, charge or other financial incumbrance which was specified under paragraph 7 but has not then been redeemed or discharged, to receive the sum intended to repay it;

    BUT if the seller’s solicitor does not have all the necessary authorities then:

    (iii) to advise the buyer’s solicitor no later than 4pm on the working day next before the completion date of the absence of those authorities or immediately if any is withdrawn later; and
    (iv) not to complete without the buyer’s solicitor’s instructions.

  12. The buyer’s solicitor may send the seller’s solicitor instructions as to any other matters required by the buyer’s solicitor which may include:
  13. (i) documents to be examined and marked;
    (ii) memoranda to be endorsed;
    (iii) undertakings to be given;
    (iv) deeds or other documents including transfers and any relevant undertakings and authorities relating to rents, deposits, keys, to be sent to the buyer’s solicitor following completion;
    (v) consents, certificates or any other authorities that may be required to deal with any restrictions on any Land Registry title to the property;
    (vi) executed Stock Transfer Forms relating to shares in any companies directly related to the conveyancing transaction.

  14. The buyer’s solicitor will remit to the seller’s solicitor the sum required to complete, as notified in writing on the seller’s solicitor’s completion statement or otherwise in accordance with the contract, including any compensation payable for late completion by reference to the ‘contract rate’ if either the Standard Conditions of Sale or the Standard Commercial Property Conditions are utilised, or, in default of notification, as shown by the contract. If the funds are remitted by transfer between banks, immediately upon becoming aware of their receipt, the seller’s solicitor will report to the buyer’s solicitor that the funds have been received.
  15. Completion

  16. Completion
  17. (i) the buyer’s solicitor has notified the seller’s solicitor that the funds are to be held to the buyer’s solicitor’s order; or
    (ii) it has previously been agreed that completion is to take place at a later time.

    Any agreement or notification under this paragraph should if possible be made or confirmed in writing.

  18. When completing, the seller’s solicitor undertakes:
  19. (i) to comply with any agreed completion arrangements and any reasonable instructions given under paragraph 9;
    (ii) to redeem or obtain discharges for every mortgage, charge or other financial incumbrance specified under paragraph 7 so far as it relates to the property which has not already been redeemed or discharged;
    (iii) that the proprietor of each mortgage, charge or other financial incumbrance specified under paragraph 7 has been identified by the seller’s solicitor to the extent necessary for the purpose of the buyer’s solicitor's application to HM Land Registry.

    After completion

  20. The seller’s solicitor undertakes:
  21. (i) immediately after completion has taken place, 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;
    (ii) as soon as possible after completion:

    (a) to confirm to the buyer’s solicitor by telephone, fax or email the date and time at which completion has taken place;
    (b) to notify the seller’s estate agent or other keyholder that completion has taken place, and authorise them to make keys available to the buyer immediately;

    (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;
    (iv) if the discharge of any mortgage, charge or other financial incumbrance specified under paragraph 7 takes place by electronic means, to notify the buyer’s solicitor as soon as confirmation is received from the proprietor of the mortgage, charge or other financial incumbrance that the discharge has taken or is taking place.

    Supplementary

  22. The rights and obligations of the parties, under the contract or otherwise, are not affected by this code and in the event of a conflict between the contract and this code, the contract shall prevail.
  23. When someone authorised by an appropriate professional body to undertake conveyancing adopts this code, references to a “solicitor” include that person.
  24. When someone authorised by an appropriate professional body to undertake conveyancing adopts this code, references to a “solicitor” include that person.

Notes to this code

  1. The 2019 version of this code will apply to transactions where this code is adopted after the first day of May 2019.
  2. The object of this code is to provide solicitors with a convenient means for completion on an agency basis when a representative of the buyer’s solicitor is not attending at the office of the seller’s solicitor.
  3. As with the Law Society’s formulae for exchange of contracts, this code embodies professional undertakings and is only recommended for adoption between solicitors and licensed conveyancers.
  4. Paragraph 4(i) of this code provides that the seller’s solicitor will act as agents for the buyer’s solicitors without fee or disbursements. The convenience of not having to make a specific appointment on the date of completion for the buyer’s solicitor to attend to complete personally will offset the agency work that the seller’s solicitor has to do in completing under this code. Most solicitors will from time to time act for both sellers and buyers. If a seller’s solicitor does consider that charges and/or disbursements are necessary in a particular case, this would represent a variation in this code and should be agreed in writing before exchange of contracts.
  5. Paragraph 4(ii) of this code makes explicit the effect of the decisions in Twinsectra Ltd v Yardley [2002] UKHL 12, Lloyds TSB Bank plc v Markandan & Uddin (a firm) [2012] EWCA Civ 65 and P&P Property Ltd v Owen White & Catlin LLP and Dreamvar (UK) Ltd v Mischcon de Reya (a firm) [2018] EWCA Civ 1082, that the seller’s solicitor holds any purchase money received on trust for the person or persons who provided it and is under a fiduciary duty not to deal with that money other than in accordance with the terms of this code.
  6. In view of the decision in P&P Property Ltd v Owen White & Catlin LLP and Dreamvar (UK) Ltd v Mischcon de Reya (a firm) [2018] EWCA Civ 1082, paragraph 8(i) of this code constitutes an undertaking that the seller’s solicitor has authority from the true owner of the title to the property named in the contract to receive the purchase money, and that such person is at the point of completion entitled to convey such title as the contract states will be conferred. This case law is also reflected in the definition of “seller” used throughout this code.
  7. In view of the decision in Edward Wong Finance Company Ltd v Johnson, Stokes and Master [1984] AC 296, paragraph 8(ii) of this code requires the seller’s solicitor to undertake on completion to have the authority of the proprietor of the mortgage or charge to be redeemed to receive the sum needed to repay such charge. Such an undertaking remains an indispensable component of residential conveyancing. While the seller’s solicitor will often not be specifically instructed by the seller’s mortgagee, the course of dealings between the solicitor and mortgagee in relation to the monies required to redeem the mortgage should at the very least evidence implicit authority from the mortgagee to the solicitor to receive the sum required to repay the charge (if, for example, the mortgagee has given its bank details to the solicitor for transmission of the redemption funds).
    On the basis of those dealings (and in the absence of any contrary statements from the mortgagee), the seller’s solicitor should be in a position to give the undertaking to discharge (in the Law Society’s recommended form, adapted where relevant for electronic discharges) and, for paper discharges (DS1, etc.) to undertake that they have identified the Seller’s mortgagee to the extent necessary for the purpose of the buyer’s solicitor’s application to the Land Registry, on which the buyer’s solicitor should be able to rely.
    The seller’s solicitor should, if at all possible, receive an express confirmation from the seller’s mortgagee that the paper discharge, or an acknowledgment of the discharge (for electronic discharges) will be supplied to them. If the seller’s mortgagee expressly prohibits the seller’s solicitor from dealing with the redemption money, the seller’s solicitor should notify the buyer’s solicitor as soon as possible. The seller’s solicitor and buyer’s solicitor should consider whether in those circumstances they can adopt this code and, if so, the necessary variations.
  8. In view of the decisions in Angel Solicitors (a firm) v Jenkins O’Dowd & Barth (a firm) [2009] EWHC 46 (Ch) and Clark v Lucas Solciitors LLP [2009] EWHC 1952 (Ch), the undertaking in paragraph 12(ii) of this code is to be taken, unless otherwise stated, as including confirmation that a satisfactory redemption statement has been obtained from the lender whose charge is to be redeemed.
  9. Paragraph 14 of this code provides that nothing in this code overrides any rights and obligations of the parties under the contract or otherwise.
  10. The seller’s solicitor is to inform the buyer’s solicitor of the mortgages or charges which will be redeemed or discharged (see paragraph 7 of this code). The information may be given in reply to completion information and undertakings (see paragraph 6 of this code). Such a reply may also amount to an undertaking.
  11. Care must be taken if there is a sale and sub-sale. The sub-seller's solicitor may not hold the transfer nor be in a position to receive the funds required to discharge the seller’s mortgage on the property. Enquiries should be made to ascertain if the monies or some of the monies payable on completion should, with the authority of either the sub-seller or the sub-seller's solicitor, be sent direct to the seller’s solicitor and not to the sub-seller's solicitor.
  12. Care must be taken if there is a sale and sub-sale. The sub-seller's solicitor may not hold the transfer nor be in a position to receive the funds required to discharge the seller’s mortgage on the property. Enquiries should be made to ascertain if the monies or some of the monies payable on completion should, with the authority of either the sub-seller or the sub-seller's solicitor, be sent direct to the seller’s solicitor and not to the sub-seller's solicitor.
  13. For the purposes of paragraphs 10 and 13 of this code, as it will be in the best interests of the client to know as soon as possible that completion has taken place, it is assumed that procedures promptly to notify the arrival of monies will be in place.
  14. Any variation of this code must be agreed in writing before completion.
  15. These notes form part of this code and this code is to be construed by reference to them. These notes refer only to some of the points in this code that practitioners may wish to consider before agreeing to adopt it.