S18.19.8 Sub-Sales

Question: What certificates require to be submitted in connection with a sub-sale?

Answer: The provisions governing notification and certification of sub-sales are contained in section 45(3) of the Finance Act 2003. That section provides that ‘the substantial performance or completion of the original contract at the same time as, and in connection with, the substantial performance or completion of the secondary contract arising from a subsequent transfer of rights shall be disregarded.’ What this means in practice is that only one certificate is required, namely a certificate in respect of the transfer by the sub-seller to the party applying for registration or recording. The following examples illustrate the operation of section 45(3);

Example 1: A concludes missives to sell to B for £100,000. Before B takes title he concludes missives to sell to C for £150,000, with the Disposition going direct from A to C with the consent of B. In terms of section 45(3) the purchase by B from A is not treated as a land transaction. Only the purchase by C is. When the Disposition by A to C with consent of B is presented for registration all the Keeper will require is a Revenue Certificate in respect of the purchase by C. No Revenue certificate will be required in connection with B since the purchase by B is not a land transaction.

Example 2: A concludes a contract for the sale of a house to B. B subsequently enters into a contract with C for sale of the same property. The date of entry in both contracts is the same. On the date of entry A grants a conveyance to B in exchange for payment of the purchase price and B grants a conveyance to C in respect of the purchase price. Only C takes possession of the property. Both dispositions will be submitted to the Keeper at the same time. Section 45(3) will apply and the Keeper will only require to see a Revenue certificate in connection with the Disposition conveying the property from B to C. 

In order that the Keeper is aware that sub-sale relief applies to a deed or deed being presented for registration solicitors are advised to append a covering letter to the Disposition narrating that section 45(3) applies. Solicitors have been further advised that it would also be of assistance if it were noted on the front page of the accompanying application form that the transaction is in respect of a sub-sale.