Contract drafting

Question 1

Matters to consider when drafting the front page of a pre-printed standard form contract

Answer 1

1) Seller
2) Buyer
3) Property (if it is freehold delete the words leasehold)
4) Title Number (if it is registered deleted the words root of title)
5) Specified Incumbrances
6) Title guarantee
7) Contract Rate
8) Purchase price
9) Deposit
10) Contents price
11) Balance

Question 2

Title number

Answer 2

Class of title should be added in brackets after title number

Question 3

Specified Incumbrances - Mines and minerals

Answer 3

If the property register has an entry which excludes mines and minerals then this needs to be entered.

Question 4

Specified Incumbrances - Restrictive covenants in charges register

Answer 4

Any restrictive covenants referred to in the charges register need to be included

Question 5

Specified Incumbrances - Restrictions

Answer 5

Any restrictions regarding charges or dispositions by sole proprietors will be removed on sale so do not need to be included.

Question 6

Specified Incumbrances - Mortgages

Answer 6

These will be discharged on completion so will not need to be added.

Question 7

Specified Incumbrances - Indemnity covenants

Answer 7

This is a personal covenant given by the seller; as this is not something which will bind the buyer after completion, it should not be included.

Question 8

Specified Incumbrances - Example wording

Answer 8

The mines and minerals exception in entry 2 of the Property Register and the covenants in entry1 of the Charges Register

Question 9

Contract Rate

Answer 9

Need to put ‘The Law Society’s interest rate from time to time in force’

Question 10

Deposit

Answer 10

If not stated otherwise it will be 10%

Question 11

Contents Price

Answer 11

This is if they’re buying chattels. Insert the price payable for them. If they’re not buying any then leave it blank.

Question 12

Matters to consider when drafting the back page

Answer 12

1) Look at the pre-printed special conditions 1-7. How will you amend them?
2) What additional special conditions will you need to draft?

Question 13

Pre-printed Special Condition 3(a)

Answer 13

If they’re buying any contents then keep this in. If they’re not then exclude it.

Question 14

Pre-printed Special Condition 3(b)

Answer 14

If the seller is taking any fixtures then keep this in. If they’re not then exclude it

Question 15

Pre-printed Special Condition 4

Answer 15

If the property is sold with vacant possession then remove the second part. If it is sold subject to leases or tenancies keep in second part and get rid of first part. Additionally, add in tenancy details or lease details

Question 16

Pre-printed Special Condition 5

Answer 16

This should be deleted if there is no agreement to bring forward the time of completion

Question 17

Pre-printed Special Condition 7

Answer 17

If there is an occupier keep this in and include the name of the occupier e.g a seller’s partner. If there isn’t an occupier then remove this.

Question 18

Pre-printed Special Conditions 1, 2 and 6

Answer 18

Should always stay in

Question 19

Additional Special Conditions

Answer 19

1) Appointing a second trustee
2) Limited or no title guarantee
3) If the seller will require an indemnity covenant from the buyer
4) Disclosing a defect in title
5) A deposit of less than 10%
6) VAT
7) If the seller has agreed to purchase and provide defective title insurance

Question 20

Additional Special Conditions - Example of condition when seller has agreed to purchase and provide defective title insurance or restrictive covenant insurance

Answer 20

Prior to completion the Seller will at its own expense arrange a [restrictive covenant] [defective title] indemnity insurance policy for an insured sum of at least [normally current value] in respect of [the covenants in] [the restrictive covenant in] referred to in entry [number] of the Charges Register maintained by the Land Registry under the title number []such policy to be in a form approved by the Buyer (such approval not to be unreasonably withheld or delayed) and to be handed over by the Seller to the Buyer on or before completion.

Question 21

Additional Special Conditions - Defective title insurance or restrictive covenant insurance - Wording if you know the amount

Answer 21

The seller can produce a [Defective Title Insurance Policy] [Restrictive Covenant Indemnity Policy] in respect of this [Conveyance] and prior to completion will at her own expense arrange for the insured sum to be increased to [£440,000] and will hand the policy over to the buyer at completion

Question 22

When will you need a special condition for defective title insurance or restrictive covenant insurance

Answer 22

If a property is subject to covenants, but the nature of those covenants and the wording of them is unknown - restrictive covenant indemnity insurance. Or if a document listed on title is lost then you need defective title insurance. The entry in the Charges Register will make it clear that the details were not available when the property was first registered.

Question 23

Additional special conditions - Deposit being paid to the seller’s conveyancer as agent for the seller

Answer 23

The deposit can be released to seller immediately after exchange and can be used by the seller for any purpose. E.g to use the deposit as a deposit on a related purchase of a house for the seller. Wording to use ‘The deposit shall be paid to the seller’s conveyancer as agent for the seller [and Standard Condition 2.2.6 is varied accordingly].’

Question 24

Additional special condition - Removing fixtures

Answer 24

Fixtures automatically pass with the land unless a special condition is included giving the seller the right to remove them.

Question 25

Additional special condition - Not making good any damage caused by removing fixture

Answer 25

Making good any damage caused by removing fixtures is a usual condition so if you don’t want to make good any damage then this needs to be included as a special condition.

Question 26

Additional special condition - Removing fixtures - Example of removing fixture and not making good any damage caused by removing it

Answer 26

The antique grandfather that is secured to the floor and wall in the living room of the property is excluded from the sale. The seller may at any time before completion remove it from the property and shall not be required to make good any damage caused

Question 27

Additional special condition - Contents

Answer 27

Contents, fittings or chattels which are to be included in the sale must be specifically identified in the contract either by special condition or by making use of the printed special condition 3(a) which refers to the contents which are itemised on a list attached to the contract. USE ONE OR THE OTHER

Question 28

Additional special condition - Contents - Example wording if using special condition

Answer 28

The sale includes all the fitted carpets and curtains at the property and the buyer is to pay the contents price for them.