Property Practice 13 - Delayed Completion And Remedies

Question 1

What are the 2 factors that must be distinguished regarding delayed completion?

Answer 1

Is the completion delayed beyond the contractual completion date?
OR
Does completion not take place at all?

Question 2

When can an innocent party receive damages caused by the delay?

Answer 2

Can only cancel the contract if the time for completion was ‘of the essence’

Question 3

Is time automatically of the essence in residential contracts?

Answer 3

No, unless special conditions to that effect are added
HOWEVER
ANY delay in completion still amounts to a breach

Question 4

What time must money due upon completion be received?

What happens if funds are received afterwards?

Answer 4

2pm

If received after 2pm, completion is treated as taking place on the next working day
- seller entitled to interest at the contract rate on the outstanding balance for the number of days completion was delayed

Question 5

Can the seller take rental income in place of compensation?

Answer 5

Yes, but must notify the buyer before completion occurs

Question 6

What is a notice to complete?

Answer 6

When time is not of the essence but the innocent party wants to terminate/withdraw from the contract, they must serve a notice to complete on the breaching party which makes time of the essence

Question 7

What are the requirements for a notice to complete?

Answer 7

• can be served at any time after completion by a party who is READY, ABLE AND WILLING to complete
• solicitor must find out the reason for the delay and take instructions from the client

Question 8

When do you not serve a notice to complete?

Answer 8

If it seems likely that completion will occur soon
Where completion is late but has already taken place

Only serve when completion has not occurred on the contractually agreed date

Question 9

How long does the defaulting party have to comply with the notice to complete?

Answer 9

10 working days (excluding the date of serving the notice so 11 days)

Question 10

What are the consequences of non-compliance with a notice to complete?

Answer 10

Buyer is Defaulting Party
- seller can rescind the contract
- retain buyer’s deposit
- resell the property
- claim damages

Seller is Defaulting Party
- buyer can rescind the contract
- reclaim their deposit monies with interest at the contract rate
- claim damages Seller

Question 11

What are remedies for contract breach before completion?

Answer 11

Specific performance
-can be sought in anticipation of a breach

Claim for compensation by way of damages

Rescission

Question 12

What are the measure of damages?

Answer 12

Standard measure: the innocent party is entitled to be placed in the position they would have been in had the contract been performed

Credit must be given for any deposit funds forfeited by the seller

Question 13

What is the calculation of damages for a buyer’s breach?

Answer 13

Seller can recover the difference in value between the contract price and the value on resale

• if the resale price is higher, the seller’s solicitor should advise them to retain the buyer’s deposit and not pursue a claim for damages as well

Question 14

What are the 2 meanings of recession?

Answer 14

1. Court order to put parties back in a position as if the contract never existed (fraud, misrepresentation, mistake)
2. Innocent party’s acceptance of the repudiation of the contract (breach of a major term)
   ——————————————-

Question 15

When is recession permitted under the Standard Conditions of Sale?

Answer 15

1. Misrepresentation because of an error/omission
2. Landlord’s consent for an assignment is required
   A) and the license to assign isn’t forthcoming 3 working days before completion
   B) consent has a condition that either party reasonably objects

Question 16

When is rescission allowed for misrepresentation?

Answer 16

• when there’s an element of fraud/recklessness
• if the innocent party took the property, it would be substantially different from the property the innocent party expected to take

Question 17

What is misdescription?

Answer 17

An error in the property particulars of the contract
E.g: indicating the tenure is freehold when its a leasehold

If significant = innocent party can rescind and claim damages

Question 18

What remedies are available after completion?

Answer 18

Breach of Title Guarantee Covenants
1. Full title
2. Limited title (for personal reps / trustees)
3. No title
E.g: seller gave a full title guarantee but after completion a superior title holder contested the buyer’s title

Question 19

What are the additional title guarantees for leaseholds?

Answer 19

• the lease is valid and subsisting
  AND
• there is no breach of covenant rendering the lease liable to forfeiture

Question 20

What is the remedy for breach of title guarantee covenants?

Answer 20

Damages

Question 21

A buyer is delaying completion. They then say they can complete, 4 days after the initial deadline. However, on that day, the seller’s solicitor serves a notice to complete. The buyer’s solicitor calls two days later and says he finally has the funds. What remedy is available to the seller under the Standard Conditions of Sale?

Answer 21

The Standard Conditions of Sale provide for interest at the contract rate if completion is late.

However, rescission is not available unless a notice to complete is served (which did occur here)
and the defaulting party failed to complete within ten days (which did not occur here - they completed two days after the notice).
Thus, the only remedy available under our facts is interest.