Land Contracts Flashcards
What is a land contract?
A contract to enter into the sale of land
What are the formalities for a land contract?
Must be in writing
It must contain all the expressly agreed terms
Must be signed by both parties
Must comply with normal contract law requirements that relate to al contract
Can a contract of land be signed electronically?
Yes if parties agree for a procedure
But not common in practice
What are the requirements that the contract must contain all the expressly agreed terms?
The contractual terms can be incorporated into the contract or by reference to other document
What is commonly incorporated into contracts to satisfy the condition of expressly agreed terms?
The Law Society Standard Conditions of Sale
This is for both commercial and residential sales
What must happen to satisfy that both parties have signed the contract?
If contracts are exchanged then the contract terms can be in two documents provided they are identical
Two copies are drawn up and one copy is signed by the seller and other by the buyer. To create a binding contract the parties then exchange their copies
What happens if the contract was created but there is then a variation to the contract?
McCausland v Duncan Lawrie
Where a material term in a land contract is varied it must also comply with s2 of LP(MP)A
Material term - completion date or anything essential to the nature of the contract
What is the effect of the land contract?
Effect is to pass an equitable interest in the land to the buyer - an estate contract
Walsh v Lonsdale:
- a contract to create or transfer a legal property right will create a proprietary right in equity if the remedy of specific performance is available
- in the case the L and T entered into a contract for a lease but parties failed to execute the deed to create the legal lease
What is an Option Agreement?
Estate contract that give a party a right during the option period to serve notice that they wish to buy the land
If notice is served the seller has to sell
What is a right of pre emption?
Estate contract that gives another party a right of first refusal on the event the land owner decides to sell their land.
Land owner cannot sell the land without offering it first to the party holding the right
There is no obligation to sell and right holder cannot require the owner to sell if they do not want to.
What is the proprietary effect of a land contract?
LC can be created deliberately or it was created where a parties tried to create a deed but failed
The courts will recognise an equitable interest in the land providing that :
- There is a document that complies with LP(MP)A s2 AND
- The remedy of specific performance is available
eg a contract to create a legal mortgage will create an equitable mortgage
What is the effect of an estate contract?
It is a proprietary right in land and can be enforceable against third parties such as subsequent holders of the freehold estate
What are the requirements to bind a third party under an estate contract?
Estate contract must be protected.
This depends on if the land in question is registered or unregistered.
What are the remedies for a brach of a land contract
Damages:
- available as of right at the discretion of the court
- to measure the damages - the loss C suffered eg the surveyor’s fees and loss of bargain
and the below equitable remedies:
Specific performance
Injunction
What does it mean if a remedy is equitable?
It is not available as of right, unlike common law damages and are at discretion of court
There is no automatic right a claimant will get the remedy he seeks
