A step-by-step guide to managing the transfer of deeds - particularly useful to LIPs - aimed at making the whole process more comprehensible.
What is the Transfer Deed?
In conveyancing the transfer deed is the document which transfers ownership of the property from the seller to the buyer. It must be signed by all sellers. It will usually also be signed by the buyers, although this is not strictly necessary unless the transfer includes covenants by the buyer or unless there is more than one buyer. A buyer's ownership can only be registered if he is in possession of a transfer deed signed by the sellers, therefore it is vital that the sellers' solicitor has the signed transfer deed in his possession on completion so that he can give an undertaking to forward it to the buyer's solicitor. Without this undertaking, usually given in the replies to requisitions on title, the buyer is not obliged to complete, and should not do so.
Drafting the Transfer Deed
According to protocol, and indeed the standard conditions of sale, the transfer deed is drafted by the buyer's solicitor, although sometimes it will be done by the seller when issuing the contract papers. It is traditionally prepared after exchange although with solicitors increasingly being at a distance from each other and their clients, and with clients' demands leading to shorter gaps between exchange and completion, this approach is often impractical and it is more common now for it to be prepared at a much earlier stage. It must be in one of four standard forms, either the TR1, TR2, TR3 or TP1, depending on the nature of the transaction. The TR1 is used in the majority of transactions, since this is for a transfer of the whole of a title by the registered proprietors of the title, and this is the version we will concentrate on here. To view an example TR1 (which is in Microsoft Word format and so can be downloaded and edited) click the link at the top of the article.
1. Stamp Duty
This section is now redundant. In the past, the transfer deed was submitted to the Inland Revenue, along with a cheque for the stamp duty, to be stamped (hence the term). Now, however, it is necessary to lodge a tax return and this section need not be completed.
2. Title Number(s)
Fairly self-explanatory, this where the title number(s) of the property transferred (there may be more than one) is inserted. For unregistered land it is left blank.
This is the address of the property being transferred. For registered land this must match the address on the Official Copies (unless some evidence is supplied on registration showing that the address has changed). For unregistered land you should show the full address and also refer to the document you are using as the Root of Title, for example it might read "1 The High Street, New Town NT1 2AB as more particularly described in the Conveyance dated 15th August 1977 between John Smith and Jack Jones".
This is the date that will be recorded as the date of completion. It should not be completed until completion has taken place, even if contracts have already been exchanged, because of the possibility of delayed completion.
The Transferor is the seller(s) and their full name(s) is/are inserted here. The name(s) should match the Official Copies unless evidence of a change of name (for example a marriage certificate) is supplied, or in certain other circumstances, as follows:-
Sale by Attorney - if the seller has given someone Power of Attorney to act on his behalf in the sale then the attorney can be named here. The wording to use is as follows:- "[Proprietor] acting by his attorney [attorney]". The attorney does not have to be named here, but if he is not, then the above wording must be added to the attestation clause, in place of the word "Transferor(s)". In either case a copy of the Power of Attorney must be attached to the Transfer Deed.
Sale by executor - if the registered proprietor is deceased and the sale is by the executor/s of his estate then the following wording should be used:- "[Executor/s] as executors of the estate of the late [proprietor] deceased". There are other acceptable variations. A certified copy of the Grant of Probate, as well as certified copies of the death certificate/s of any joint tenants who pre-deceased the person for whose estate the probate is granted, must be attached to the Transfer Deed.
Trustee appointed to join in the sale - if there is a restriction in the proprietorship register of the Official Copies stating that the property cannot be sold by a sole proprietor, and if all but one proprietor is deceased, or if there only ever was one proprietor, then it will be necessary for the selling proprietor to appoint another person to act as a "trustee" so that the restriction can be overreached (overcome). In this case the selling proprietor and the trustee must both be named here.
Sale by mortgagee in possession - if the sale is by the holder of a charge over the property who has repossessed, then the seller would be the charge holder, however in this case the form used would be the TR2, rather than the TR1.
This section of the transfer deed is where the buyer(s) name(s) is/are inserted. If the buyer has given someone Power of Attorney to act on his behalf in the purchase then the wording used should be "[Buyer] acting by his attorney [Attorney]" and a certified copy of the Power should be attached to the Transfer Deed.
7. Transferees address for service
"Address for service" means the address where the land registry will serve any notices. For example, if someone is attempting to claim possessory title of some land which is registered, this is where the land registry will right to invite the registered proprietor to make an objection. It is possible to have three addresses in this section. The first should be the buyer's home address following completion (usually the property address) and the other two ought to be e-mail addresses. The option to use a second and third address is rarely used, though it should be.
8. The Transferor Transfers the Property...
This is simply a statement of the transaction that is taking place. It does not require amendment.
9. Consideration (price)
The consideration is the sum being paid for the property. There are three options, and the appropriate box should be checked. The first is used where a sum of money has been paid and this is therefore the most common. The sum should be written in words and figures. The amount in this box must be the actual purchase price, before any incentives or allowances are deducted, but not including and amount paid for chattels. The second option is to be used if something other than money is paid for the property. This could perhaps be another property. The third option is used when the property is transferred as a gift.
10. Title Guarantee
The contract will state what level of title guarantee is offered by the seller, and that is recorded in this section of the transfer deed.
11. Declaration of trust
This section of the transfer deed only applies where there are two or more buyers. If a property is held as joint tenants then all owners own the property absolutely, so that if one owner dies, ownership of that person's interest passes automatically to the survivors. This is the most common option used for couples in relation to their home. Tenants in Common own the property in shares, and should a joint tenant die, ownership of their share passes via their will or intestacy. This is more common for business partners. If the shares are intended to be unequal then the third box should be checked and the shares should either be set out here or, if the trust is more complicated, the details may be contained in a separate declaration, which should then be referred to here. If this section is not completed then by default the land registry will assume that the property is to be held as tenants in common. This can cause serious problems if the intention for it to be held as joint tenants.
Consider this example. A couple meet, decide to buy a home together but never marry. They intend to hold the property as joint tenants but the solicitor fails to note this in the transfer. One of the couple has children from another relationship, and he or she passes away intestate (without leaving a will). As the couple were not married, the rules of intestacy say that the deceased's share will pass to the oldest child, rather than to his or her partner. If the children do not approve of the deceased's partner then they would be entitled to force the sale of the property and leave the survivor of the relationship with only half the equity. Clearly the client would be looking to the erring solicitor for compensation. It could, of course, be equally disastrous if a joint tenancy were created where the intention was for tenants in common.
12. Additional Provisions
This is where any new rights, covenants, restrictions, declarations etc are inserted. In this example you will we have an indemnity covenant. This is merely a covenant to observe existing covenants. It is unusual in a TR1 to impose fresh covenants or create new rights, since the title has already been created and is merely being transferred. It is fairly common to see various clauses which amend the implied covenants set out in the Law of Property (Miscellaneous Provisions) Act 1994. See the section on Useful Transfer Clauses for examples.
13. Attestation Clause
This is where the sellers and buyers sign the transfer deed. As this is a deed, the signatures must be witnessed. The witnesses must be independent adults, that is to say over eighteen, not family members of the parties to the transaction and not parties to the transaction themselves.
No Transfer Deed on Completion
When acting for a seller it is inevitable that at some point the day of completion will arrive and you will not be holding a transfer deed signed by the seller. Every effort should be made to ensure this does not occur but where it does, it is permissible, with the consent of the buyer's solicitors and the seller, to complete but to retain the balance of the sale proceeds then are due to the seller until a signed transfer is provided. This option would of course not be available if the sale proceeds were needed to fund a linked purchase.