3. Drafting contract and exchange of contracts Flashcards
contract for sale of land must satisfy 3 elements to be binding
s. 2 LP(MP)A 1989
1. be in writing
2. incorporate all terms parties expressly agreed
3. signed by, or on behalf of, each party to the contract
indemnity covenant checklist
- is there a PC
- is there an indemnity in Proprietorship Reg
- if yes - S will insist B enters one, and SCPC 7.6.5 says B will
- put special condition in contract agreeing wording of the indemnity
- indemnity covenant itself is in the transfer (TR1)
VAT on commercial prop transactions = general position
supply of prop = generally exempt from VAT
VAT on commercial prop transactions = EXCEPTIONS
ONE - SALE OF NEW COM BUILDING (3 years from date it is completed)
- S must account to HMRC for VAT at 20% purchase price
- B asked to meet cost of VAT on top
TWO - OPTION TO TAX (OLD COM BUILDING)
- S can opt to tax
- might do this bc supplier can recover any VAT it incurred re: building (e.g. refurbishment works)
VAT = SCPCs
SCPC anticipates S will recover VAT from buyer (SCPS2)
IF NO VAT - TICK CONDITION A1 (special conditions) to disapply SCPC 2
drafting contract for sale - checklist
- check contract contains everything in Heads of Term
- check front page
- draft any further special conditions
- check typos
drafting contract for sale - seller’s name
matches Official Copies/root of title
- must be legal entity (partnership is not one)
- if partnership - do max of 4 individual partners
“[company] incorporated and registered in England and Wales with the company number [XXX] whose registered office is at [address]”
drafting contract for sale - buyer’s name
match Official Copies/Root of Title
drafting contract for sale - property
check address and title number matches official copies/root of title
(if property not as described, B may have a remedy for misrepresentation and breach of contract - SCPC 10.1)
drafting contract for sale - specified incumbrances
“The property is sold subject to matters contained and referred to in entry [ ] of the Charges Register of Title Number [ ]”
does not include mortgage (S not selling property subject to it)
drafting contract for sale - date
[date to be entered at exchange of contracts]
if left blank, SCPC 9.1.1 prevents contracts being void for uncertainty but if filled in, date overrides 9.1.1
drafting contract for sale - completion date
[date to be entered at exchange of contracts]
drafting contract for sale - contract rate
3-5% (lower better for B)
if no figure, SCPC 1.1.1(2)
This is the annual rate of interest at which compensation for late completion is assessed
drafting contract for sale - purchase price
write in from heads of term
drafting contract for sale - deposit
SCPC 3.2.1 says 10% (this can be varied by agreement)
drafting contract for sale -balance
purchase price minus deposit
S’s duty of disclosure = what S must disclose
LATENT incumbrance (not apparant on inspection)
DEFECTS IN TITLE (e.g. RC, PC, easement)
S’s duty of disclosure = what S does not need to disclose
PATENT incumbrnace (apparent on inspection)
PHYSICAL DEFECTS (e.g. rising damp or subsidence)