Picture the scene - the pre-Christmas completion frenzy is in full swing and hard-pressed conveyancer Sue is trying to complete Mr. & Mrs. Jones sale. The buyer fails to come up with the money on the day of completion a week or so before Christmas, so Sue serves a Completion Notice on the buyer’s solicitors, thinking that there will therefor be another £150+VAT in the pot for fees as she had added a clause to that effect in the contract. She might even make more than a small profit on this transaction!

Sue tells her clients that if the buyer doesn’t complete they can forfeit the buyers’ healthy deposit and sue the buyer for any losses over and above that. The sellers seem happy with this potential windfall, and they don’t have a related purchase and are not in a rush to sell, so all is well. Or so it seems…..

Christmas Eve and Sue is just looking through her files before the long break as the firms senior partner has given them a couple of extra days off between Christmas and New Year. She has served lots of Completion Notices over the years and usually the buyer completes after a day or two anyway. But this time its different - it really looks like the buyer won’t be able to complete. Sue gets her diary out and works out the date of expiry of the Completion Notice.

Horror - it lands on the day after Boxing Day - a day that Sue’s office is closed! She goes home to ponder this, and after thinking about it sends an email to the buyer’s solicitor extending the deadline to the day after, as Sue’s office will be open then.

Sadly for Sue the buyer’s solicitors are open on the day after Boxing Day and read her email when they come in. They have sorted out their problems and are ready willing and able to complete on the last day before the Notice expires. They try and contact Sue’s office to arrange sending the completion money but get no answer.

Sue comes into the office the next day to find a fax from the buyer’s solicitors saying that they were ready willing and able to complete on the day of expiry of the Notice, that Sue wasn’t and so they hereby give immediate Notice of Recession of the contract! They demand their deposit back with interest and will be seeking damages for breach of contract, hotel bills, expenses etc. etc.!!!

Sue’s email attempting to unilaterally extend the deadline of the Notice had no effect you see, and she was bound by her own Completion Notice to complete on the date of its expiry. As she did not and could not complete the buyer was indeed entitled to rescind. Mr. & Mrs. Jones are hopping mad and say Sue was negligent, that she didn’t explain to them what a Completion Notice was or the double-edged sword that was created as a result of serving the Notice. Sue has to make a call to her insurer and the fallout from that fateful decision carries on for years.

An unlikely tale? No - read the judgement in Northstar v Maitland Brooks [2006] EWCA Civ 756, in which similar circumstances arose over a Completion Notice served just before the Christmas break.

The moral of the tale is ‘be careful what you wish for’ as the saying goes, and nothing could be more true than in relation to Completion Notices. In fact they should really be called Rescission Notices as that’s all they potentially do! Clients and agents often think that the Notice somehow makes the buyer complete but nothing could be further from the truth. Only a probably pointless and horrifically expensive court action for specific performance could do that.

No, take care indeed when you think about serving one on behalf of a seller, and don’t serve a Notice automatically as a knee jerk reaction without making sure the client fully understands what the Notice does and the risks that can fall on the person who serves the Notice as well as on the other party. If you are not ready willing and able to complete of the day your Notice expires then the seller not the buyer will be the guilty party and liable in damages to the other party.

4 Key points on thinking about serving Completion Notices are therefore:

  1. Does the client really understand what you are committing them to if you serve a Completion Notice? Have you explained it to them, and importantly how do you prove you explained it to them as they will often forget or deny having had telephone explanations made in the heat of the moment. Do you have a client guide explaining the risks to them and written authorisation from the client to serve the Notice, accepting those risks and that the Notice could backfire on them?

  2. Do the clients agree to complete the sale on the day of expiry of the Notice and can they physically move out if the buyer comes up with the money on that day? Can the removals firm do the removal on the last day of the Notice if necessary?

  3. How do you actually propose to serve the Notice and how are you going to prove the date of effective service? Bear in mind the SCS set out different deemed dates and times of service for notices served in different ways.

  4. Is this just another case of Mutually Assured Destruction? Aren’t both sets of clients keen on actually completing the purchase rather than pulling out after spending thousands on mortgage brokers fees, banks fees, valuations, estate agents, and so on - isn’t this just a case of the usual bank money transfer problems which will sort themselves out in a day or so? Is it really in the client’s interest to serve the Notice? That’s what is important, not the meagre £150 or so you might get in fees from the other side - which in any case will pale into insignificance in comparison to the costs of litigating the fallout from a hastily served Notice?

Merry Christmas!