Preparation for and Exchange of Contracts Flashcards
Full vs. limited title guarantee
Full + limited title guarantee = seller has right to dispose of land, will do all they reasonably can to transfer title, and if there is a lease there’s no liability to forfeiture.
Full title guarantee = seller impliedly covenants that the land is disposed of free from incumbrances other than those the seller doesn’t know about.
How is the deposit paid on exchange of contracts?
SC - by electronic means or by cheque
SCPC - by electronic means only
“Purchase price is exclusive of VAT and VAT will be added on top”
When would this be appropriate?
Sale of commercial buildings within 3 years of construction.
Sale of old commercial property where the seller needs to opt to tax to recover VAT paid on refurbishment and/or professional costs and the buyer isn’t VAT-sensitive.
“Purchase price is inclusive of VAT so that VAT can’t be added on top”
When would this be appropriate?
Sale of an old commercial building where the seller hasn’t carried out a refurbishment.
For VAT-sensitive buyers who can’t recover VAT paid on the purchase price.
“Purchase price is exclusive of VAT, so VAT can be added on top if the law changes between exchange and completion”
When would this be appropriate?
Sale of old commercial buildings where the seller doesn’t have input VAT to recover but isn’t willing to take the risk that there will be a change in the tax regime between exchange and completion.
What is the appropriate certificate of title required by the lender?
Residential transactions - produced by Law Society and UK Finance
Commercial transactions - produced by City of London Law Society.
Requirements for binding contract for sale of land
In writing
Incorporates all agreed terms
Contained in 1 document
Signed by both parties
Exchange of contracts - Law Society Formulae
A - where 1 solicitor holds both parts of the contract duly signed
B - where each solicitor holds their own client’s signed part of the contract
C - where there is a chain transaction
