Agreements for Sale

Question 1

Conveyancing transactions involve 3 different stages. What are they?

Answer 1

• Pre-contract stage – at this point in time the parties have not executed the sale agreement. There is nothing binding them to sell or purchase. At this stage, the purchaser carries out a number of preliminary inquiries and searches before he makes the decision to enter into a binding contract.
• Contract stage – involves the preparation of the sale contract -the drafting of the various terms and conditions to be inserted into the contract. To do so the attorney drafting the same must obtain clear detailed instructions from his client.
• Post Contract stage – if there are any queries the Purchaser has in relation to the title - it is at this point in time that she/he will raise them. The Transfer document (deed of conveyance or transfer instrument ) will be prepared at this stage and of course, the same will need to be recorded or registered. If you act for the Vendor you will need to prepare a closing statement showing the receipt by you of the proceeds of sale and how the funds have been applied.

Question 2

What is a Vendor’s duty of disclosure at common law?

Answer 2

At common law, the vendor has a limited duty of disclosure to the purchaser. His duty of disclosure relates mainly to matters of title.

The Vendor has no obligation to disclose to the purchaser every matter concerning the property.

The purchaser must therefore make inquiries before the execution of the contract

Question 3

Of whom should inquiries be made by the purchaser before the execution of a contract for the sale of land?

Answer 3

Important for the Purchaser to make inquiries of
- local planning authorities
- the Vendor himself
- a commissioned land surveyor

Question 4

What inquiries should be made by the purchaser before the execution of a contract for the sale of land?

Answer 4

• Zoning and Planning inquiries from the relevant authorities/physical condition of property/disputes with adjoining land owners/boundaries
• Searches at the Titles Registry
• Inspection of the Property
  Adverse Possessors
  Short term tenancies
  Physical condition of property
  Commissioned Land Surveyor- verify accuracy of description of property and/or location/boundaries/encroachments/breaches of restrictive covenants.
• A careful purchaser before entering into a binding contract, should satisfy himself for example, as to the physical condition of the property and any other matters which might affect his use and enjoyment of the property. So if he is buying the property and intends to use same to conduct a particular business thereon –he needs to check the restrictive covenants (if any ) that affect the title to the land as well as the relevant zoning and planning laws to ascertain whether or not the particular business activity is prohibited.
• So too, if the building on the land is in a dilapidated condition –and he is concerned as to its structural integrity – then the Purchaser needs to physically inspect the property himself and obtain the services of a structural engineer.

Question 5

Why is important for the purchaser to make preliminary inquiries?

Answer 5

• Will dictate special conditions that will be included in the Agreement for Sale, for example, subject to the approval of the local authorities for sub-division
• To ascertain what are the statutory restrictions on the use and enjoyment of the property under the local planning laws.
• To ascertain what documents are registered or recorded and so constitute actual notice, for example, mortgages, caveats, and charges.

Question 6

True or False.

A Vendor is not obliged to prove title to property or to answer preliminary inquiries before the formation of a binding contract.

Answer 6

True.

Question 7

What are the duties of the Vendor’s attorney at the Contract Stage?

Answer 7

The vendor’s attorney should of course ensure:
- Vendor possesses a good title.

• Title Search is also conducted at the Registry
• Ascertain whether or not Vendor is the sole proprietor named on the Title.
• check that name on the vendor’s identification (passport, driver’s licence) and name on the title corresponds.
• Get full particulars of the parties, full names, addresses and occupation
• Check parties capacity to contract(is purchaser a company/a statutory corporation/an individual)
• Details of Purchaser’s attorney
• Details of the property:-
  vacant lot/land and house
  furnished/unfurnished
  identify items to be sold with the house
  should there be a separate chattel agreement?
• Purchase Price/Consideration
• How is purchase price payable –a deposit and balance on completion or balance payable in installments/quantum of deposit payable?
• How do Purchasers intend to hold the property (joint tenants/tenants-in-common)?
• Date for completion – Parties are free to fix a time for completion.Usually ninety (90) days or one hundred and twenty (120) days from the date of the agreement. If no date is fixed for completion the law will imply a reasonable period of time.
• How is completion and payment of the balance purchase money handled with registered Title?
  A. on payment of money in exchange for Title registered in the name of Purchaser.
  OR
• a time of the essence clause