Land Sale Flashcards
How to answer a land sale question
Where the parties have used the ADLS contract, or another contract, consider liability for damage under this framework only. If it is unclear whether they have used a format or not – consider liability under both the ADLS and the default rules.
- Is there a valid contract?
○ S24 & PLA - If ADLS:
○ Damage in the “in-between” period assessed according to Clause 5: Risk lies with V, who must pay for damage or sale is cancelled/carried out at reduced price. - Otherwise, default rules apply
○ If unconditional – ET passes to P, risk lies with P. P to pay for damage, but V owes fiduciary duties to prevent in the first place.
○ If conditional – ET may pass depending on the nature of the condition. If ET does not pass, V is liable for damage. - In either scenario;
○ Consider whether the P can claim the V’s insurance under s 13 ILRA.
Consider whether either of the of the parties could sue in trespass (where damage is caused by someone else).
Registration system for buying and selling land. This involves two distinct processes;
- A contract for the sale and purchase of land (ASAP)
- Change in the register to reflect a transfer of legal ownership
Stage 1
Contract
Exchange of promises (consideration
Signed and in writing.
Stage 2
Transfer
P pays in full; settlement occurs, V enables P to register.
S 24 LTA: Contract is not effective until registered. This is when the P gets legal title.
Default rules for the in-between period under an unconditional contract
If contract is unconditional both parties are legally obliged to perform it (if one doesn’t specific performance from contract)
(unconditional) cases 1
Re Richards - until the contract is registered, the purchaser has an equitable title which means, like in this case when the vendor dies, they can order specific performance of the property
Clarke v Ramuz - fiduciary duties owed by vendor: take reasonable care and keep in reasonable state of cultivation
Englewood Properties: Fiduciary duty is more limited than a trustees but must do what is reasonable with the property
(unconditional) cases 2
Jerome v Kelly: vendor is still entitled to earn an income from property etc.
Batchelar Centre: B agreed to clause that the vendor could take higher offers so no better off clause
result of unconditional contract
If the contract is unconditional it means the purchaser is liable for damage but vendor should prevent it and if they don’t they may have breached their fiduciary duties
Conditional contracts
If there are conditions in the ASAP, the purchaser may not get an equitable title. We have to look at the nature of the condition though.
case on conditional contracts with the two types of conditions
Bevin v Smith – a condition solely for the purchaser that can be waived will create an equitable interest
- Condition precedent – no contract until condition is satisfied (no EI)
- Condition subsequent – condition follows existence of contract (generally EI)
Options to purchase/right of first refusal
Motorworks - ROFR does not confer EI, but if it changes to an option it will
Palm Gardens - the option would only be given after the units were prepped for rent and rented which they never were
Contractual modifications to what happens in inbetween period
Clause 5 of ADLS says the risk lies with the vendor and they must fix the damage. If the damage made the property untenantable (not capable of purpose which it was bought), p can cancel
Statutory modifications
S 13 of the insurance law reform: allows purchase to take on vendors insurance pay out.
Trespass
Cousins v Wilson – could not sue in trespass as did not have equitable interest.
Law uncertain so make policy argument to why trespass should be able to be claimed
