LAND CONTRACTS

Question 1

What are the 3 requirements for a valid land contract?

Answer 1

s2 LP(MP)A:

• The contract must be in writing.
• It must contain all the expressly agreed terms.
• It must be signed by both parties.

Question 2

Does the same contract have to be signed by both parties?

Answer 2

No - can either be contained in one document, which is signed by both parties, or if the contracts are to be exchanged, in two documents provided they are identical (LP(MP)A 1989, s 2(1)).
- LP(MP)A 1989, s 2(2):
▪ the contractual terms may be incorporated into the contractual document either by being set out in the document or by referring to some other document (‘by reference’).

Question 3

What is the position where a contract has been correctly created, but then there is a variation to that contract?

Answer 3

• the variation must also comply with s2 LP(MP)A 1989

- therefore orally agreeing to something is not enough

Question 4

Does typing or printing a name constitute a signature?

Answer 4

no! (Firstpost Homes Ltd v Johnson)

Question 5

What is an option agreement?

Answer 5

• a type of land contract that gives another party a right, during the option period, to serve notice that they wish to buy the land.
• If notice is served during the option period, the seller must sell the land to the buyer. However, the buyer is not obliged to exercise the option.

Question 6

What is a right of pre-emption?

Answer 6

• A type of land contract that gives another party a right of first refusal in the event the land owner decides to sell their land.
• This means that the land owner cannot sell the land without first offering it to the party holding the right. There is no obligation to sell, and there is no ability for the party who has the benefit of the right to require the land be sold to them.

Question 7

What interest does the land contract create?

Answer 7

• The binding land contract passes an equitable interest in the land to the buyer
• proprietary interest in equity
• capable of binding and being specifically enforceable against third parties

Question 8

How can an estate contract be protected against third parties?

Answer 8

• If the land is registered, an estate contract (as an equitable interest) should be protected by registering a notice on the Charges Register of the title of the land subject to the contract (LRA 2002, s.32.)
• This means the contract will be binding and enforceable against a third party purchaser of the land (LRA 2002, s 29(2)).
• If the land is unregistered, an estate contract should be protected by registering aC(iv) Land Chargeagainst the name of the grantor of the right at the Land Charges Registry in Plymouth (Land Charges Act (LCA) 1972, s 2(4)(iv).
• If this is done, the estate contract will be binding and enforceable against a purchaser for valuable consideration of the land (LPA 1925, s 198.)

Question 9

What happens if the interest holder fails to protect the estate contract?

Answer 9

• If the third party is a donee (someone who is gifted or inherits the land) they will be bound by a properly created estate contract, regardless of registration. This rule applies if the burdened land is registered or unregistered

For registered land:
- If the estate contract has not been registered and the third party is a purchaser, the estate contract could still be binding if the holder of the estate contract is in ‘actual occupation’ of the land burdened by the estate contract as an overriding interest (LRA 2002, sch 3, para 2.)

Question 10

What are the remedies for breach of a land contract?

Answer 10

• damages (common law remedy available as of right)
• specific performance (discretionary remedy)
• injunction (discretionary remedy)