Exchange

Question 1

Special conditions

Answer 1

Pre-printed or bespoke
if LSCP: only SCs which are ‘absolutely necessary’

Question 2

Standard Conditions: Deposit

Answer 2

10% held as stakeholder
(amend by SC if less: note 10% still payable if fails to complete and notice to complete is served)

if related transactions then held as agent (automatic in resi contract but need SC if comm)

Question 3

Title guarantee options

Answer 3

Full Title Guarantee: Free from incumbrances (except those specified)
Limitd Title Guarantee: None created during ownership (e.g. Executor since death)
No Title Guarantee: appropriate if liquidator / administrator

Question 4

Completion date and time (standard condition)

Answer 4

20 working days time @ 2pm
Time is not of essence (IP only entitled to damages at interest rate) unless serve notice to complete (if not performed, then terminate and damages)

Amend by SC if related transactions as timing must be staggered

Question 5

VAT (standard conditions)

Answer 5

Residential: PP is VAT inclusive (none payable as exempt or 0 rated if new build)

Commercial: VAT is paayable and PP is VAT exclusive
- amend if no tax (i.e. not under 3 years) by ticking A1 or A2 (if transfer of going concern)

Question 6

Specified Incumbrances (standard conditions)

Answer 6

Property is sold with following incumbrances:
- specified on front page
- those buyer could have discovered by inspection
- those buyer knows about
- those seller does not and could not reasonably know about

Difference is that in commercial transactions, imcumbrances on title are automatically included. In resi transactions, incumbrances on title and CH are not included. Need to referenced specifically on front page of conrtact.

Question 7

Indemnity covenant (standard condition)

Answer 7

If chain unbroken: buyer will enter cov
if chain broken: by agreement

Question 8

VAT on property

Answer 8

Residential: None (exempt) unless new build (0 rated supply)

Commercial: None (exempt) unless new build under 3 years (standard rated supply)

Question 9

Implied undertakings in formula B

Answer 9

1. Post 1st class same evening
2. Send deposit immediately
3. Hold signed contract to order (buyer’s signed part belongs to seller and visa versa)

Question 10

When is Formula A and Formula C appropriate

Answer 10

A = One soliciotr holds both contracts (e.g. OS on holiday)
C = chain transaction

Question 11

Impact of exchange adn release method

Answer 11

Buyer agrees to exchange with release until specified time (cannot pull out before time)

If seller exchanges on related purchase by agreed time: buyer’s contract treated as exchanged

if seller does not exchange by agreed time: exchange is cancelled