Property Contract Flashcards
Who drafts property contract?
Seller - approved by buyer
A contract for land must be…
In writing, incorporate all agreed terms, and signed by both parties
When is use of Standard Conditions of Sale mandatory?
When using Law Society Conveyancing Protocol
What are the standard contract conditions?
- property address
- parties
- specified incumbrancee
- title guarantee
- completion date/time
- deposit
- risk and insurance
- indemnity covenants
- vat
What must residential seller disclose in relation to specified incumbrances?
Any incumbrances at Land Registry, Companies House or Land Charges Registry (if unregistered).
If not - in breach of contract
Possible options for title guarantee?
Full - default position. Should be offered unless good reason not to. States that property is free from all incumbrances unless specified
No title guarantee - seller cannot guarantee right to sell property or that it is free from incumbrances. Rare. Buyer has no remedy against seller if title issue arises after.
Limited title guarantee - given by sellers with limited knowledge, eg PRs or trustees. States that no incumbrances have been created over property during period of ownership
Title guarantee from sole surviving tenant in common?
Buyer will expect title guarantee from surviving TIC and second trustee appointed.
Second trustee usually not appointed until completion.
Surviving TIC will be named seller and will (with special condition) agree to appoint second trustee ob completion.
A trustee will usually only give limited title guarantee.
Standard completion date/time
4 weeks from exchange. 2pm. Damages if late but cannot walk away.
Time is not of essence until notice to complete is served - contract must be performed by specified time or non-defaulting party can walk away
Contract sets % interest for delayed completion
If completion time is set for 2pm Friday, and completion does not take place until 4pm, how many days interest payable?
3 - friday, saturday and sunday
Completion at 4pm on Friday will be deemed to take place on Monday
What does it mean if seller’s solicitor holds deposit as stakeholder?
Cannot pay to seller until completion
What does it mean if seller’s solicitor holds deposit as agent?
Can pay to seller before completion
What is default position as regards seller’s solicitor holding deposit as stakeholder or agent?
Default is hold as stakeholder
Will need to amend with special condition if hold as agent
Who bears risk / obligation to insure at after exchange?
Buyer
VAT payable on residential property?
Usually exempt (so 0). Price deemed to be inclusive of VAT
VAT payable on commercial property?
Default is standard rated (20% on top of purchase price).
This does not apply if commercial property is over 3 years old, or seller has not opted to tax.
