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PLP > Completion and Remedies > Flashcards

Completion and Remedies Flashcards

1
Q

Exchange of contracts

A

contract becomes legally binding

S bound to sell property to B, B bound to buy it

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2
Q

Completion

A

Completion takes place

balance of purchase price handed over and TR1 form is dated and sent to B’s solicitor)

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3
Q

s.2 LP(MP)A 1989

A

Contract for sale of land MUST satisfy 3 elements to be binding
ONE - be in writing

TWO - incorporate all terms which parties have expressly agreed

THREE - be signed by or on behalf of each party to the contract

subject to this, contract can take various forms

(1) open contract
(2) standard form contract
(3) tailor made contract

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4
Q

CAPITAL LETTER FOR DEFINED TERMS?

A

NO - standard form contracts to NOT use capital letters for defined terms

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5
Q

Part 1 of standard conditions

A

incorporated automatically if standard conditions are incorporated
SCPC 1.1.4(a)

(subject to variations or exclusions in the contract)

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6
Q

Part 2 of standard conditions

A

only incorporated if done so expressly

1.1.4(b)

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7
Q

purposes of special condiions

A
  1. amending or excluding any standard conditions which are not appropriate to the specific transaction you are dealing with (e.g. if B is paying 5% deposit instead of 10%)
  2. deal with specific matters not covered by standard conditions (e.g. to remove certain things or fix certain things)
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8
Q

Indemnity Covenants

A
  1. Is there a PC?
  2. is there evidence of indemnity covenant in Proprietorship Register?
  3. SCPC 7.6.5
  4. Put special condition in contract agreeing to wording of indemnity
  5. Put indemnity covenant itself in transfer (TR1)
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9
Q

VAT

A

DEFAULT –> EXEMPT (so no VAT payable to HMRC by the supplier)

Exceptions:
ONE - sale of new commercial building (3 years from date of completion)

TWO - option to tax sale of old commercial building

SCPC anticipates S will recover cost of VAT from B (SCPC 2 - b contractually bound to meet cost of VAT)

if no VAT –> tick condition A1 to disapply SCPC 2

20%

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10
Q

GENERAL PRINCIPLES for amending/writing clauses for contract for sale

A

USE ACTIVE (not passive) voice

WHO is to perform?

WHAT is the obligation to be performed?

WHEN is the obligation to be performed?

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11
Q

What to do when amending a contract?

A
  1. contains everything in Heads of Term
  2. check front page (errors/amendments)
  3. draft further special conditions
  4. check for typos and ommissions
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12
Q

contract:

DATE

A

[date is entered at exchange of contracts]

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13
Q

contract:

Seller/Buyer

A

Seller - from Official Copies (NOT the contract)

B - from heads of terms

MUST BE LEGAL ENTITY (so if partnership, that isn’t legal entity, so enter max. of 4 named individuals and full names and addresses of them)

IF COMPANY incl. reg. office and company number
“X Limited incorporated and registered in England and Wales with company number X whose registered office is at X”

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14
Q

contract:

Property

A

delete freehold/leasehold as appropriate

check address matches property register of official copies

enter title number

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15
Q

contract:

Specified Incumbrances

A

E.g. “The property is sold subject to matters contained or referred to in entry 1 of the Charges Register of Title Number BM302735”

MAKE SURE CORRECT ENTRY is being referred to

NB. SCPC 4.1.2 means that S does not need to separately disclose incumbrance listed in 4.1.2

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16
Q

contract:

Completion date

A

[date is entered at exchange of contracts]

17
Q

contract:

contract rate

A

If acting for B - put lowest (3%)
If acting for S - put highest (5%)
Usually - agree on 4%

INTEREST RATE CANNOT BE PENEL (makes provision void)

1.1.1(2) if no figure - Law Society’s interest rate

18
Q

contract:
purchase price,
deposit,
balance

A

write in from heads of terms
deposit is usually 10% (SCPC 3.2.1 - see if amended)

purchase price minus deposit = balance

19
Q

S’s common law duty of disclosure means

S MUST DISCLOSE

A

Latent incumbrance (not apparent on inspection - e.g. RC/PC)

defects in title (e.g. break in chain of ownership)

20
Q

S’s common law duty of disclosure means

S does NOT need to disclose

A

Patent incumbrance (apparent on inspection, interpreted narrowly)

physical defects (e.g. subsidence/rising damp)

21
Q

SCPC 4.1.2

A

S must be clear about what matters it is selling property subject to

SCPC 4.1.2 contains list of incumbrance that property is sold subject to

22
Q

contract:

title guarentee

A

full title guarantee is normal (7.6.2)

limited - if trustee or PR (tick box 3 on back of contract)

different - if one was surviving TC and other was appointed 2nd trustee, the former would give FTG and latter would give LTG (draft special condition)

no title guarantee - given where lender is exercising power of sale because B breached mortgage (special condition to remove 7.6.2 )

23
Q

contract:

time for completion

A

tick box 7 if you want to change it from 2pm (9.1.2)

24
Q

possible special conditions

A
  1. indemnity covenant
  2. non-owning occupier
  3. RC/PC insurance
  4. Fix PC breach
  5. fix any issues with local planning authority
25
why does B's solicitor need to send draft certificate of title pre-exchange
if B's solicitor waits until exchange of contracts, there is a danger that B commits to contract without mortgage funds guaranteed
26
pre-exchange steps
1. CONFIRM COMPLETION DATE (with client) 2. Send agreed form contract to client to sign and ensure you have the signed contract ready to exchange 3. DEPOSIT - ensure client has sent the deposit (cleared funds in client account), this will be sent by electronic transfer 3.2.2 4. SEND DRAFT CERTIFICATE OF TITLE to lender's certificates 5. OBTAIN INSTRUCTIONS FROM CLIENT confirming client wants to exchange contracts
27
Undertakings
O(11.2) - must perform them (can result in disciplinary action if not)
28
default undertakings in formula B
1. hold signed part to other's order 2. send contract to the other side by 1st class post on that date 3. send deposit by cheque MIGHT HAVE TO VARY THESE (for sure have to vary 3 because SCPC 3.2.2 says send by electronic transfer)
29
Risk between exchange of contracts and completion
risk passes to B from date of contract S has no duty to insure
30
occupation by B before completion
ensure this is as a licensee and include arrangements as a special condition (otherwise, B may lose incentive to complete purchase)
31
death of single seller
PR contractually obligated to complete PR must obtain grant of representation before they can sell
32
death of co-seller
beneficial JT: surviving owner can sell by himself (survivorship) beneficial TC (more than 1 trustee remaining): transaction proceeds beneficial TC (one trustee remaining): appoint 2nd trustee to overreach beneficial interest of deceased (name 2nd trustee as S in contract and transfer)
33
death of buyer
PR still has to complete Amend contract/transfer to reflect change of parties PR must obtain grant of representation if funded by mortgage, offer of finance likely to be revoked so PR cannot complete (but they're still bound to so if can't, lose deposit)
34
death of one of 2 buyers
survivor must complete (otherwise lose deposit) if funded by mortgage, offer of finance likely to be revoked so PR cannot complete (but they're still bound to, so if they can't, lose deposit)
35
insolvency of corporate seller
B only affected if it has notice of insolvency by entry made at CH (revealed by search done at CH on morning of completion)
36
bankruptcy of of individual S
B only affected if it has notice of bankruptcy by entry on relevant register (CLC/OS1) bankrupt's assets (incl. legal estate in property) vests in trustee in bankruptcty B must deal with trustee in bankruptcy, not the seller As long as B is not entering into transaction at undervalue (i.e. paying less than property is worth) there is no reason why purchase should not go ahead If co-owner sellers: trustee in bankruptcy joins sale with solvent owner
37
insolvency of corporate buyer
Benefit of contract passes to administrator or liquidator who may complete the transaction If buying property with mortgage, lender will revoke mortgage once it knows B is insolvent (so it might then be impossible to complete the transaction) NB. administrator/liquidator has right to disclaim any contracts it considers onerous so it might not have to complete the transaction
38
insolvency of single buyer
Benefit of contract passes to B’s trustee in bankruptcy who may not complete the transaction If B buying with mortgage, lender will revoke (impossible to complete) NB. trustee has right to disclaim any contracts it considers onerous so it might not have to complete the transaction
39
insolvency of co-buyer
Benefit of bankrupt’s share of contract passes to buyer’s trustee in bankruptcy in the same way and trustee can disclaim BUT remaining co-owners still contractually obliged to complete transaction but may have difficulty in doing so if purchasing with a mortgage

PLP (5 decks)

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