Preparation for + exchange of contracts Flashcards
SC and SCPC rule on incumbrances:
Seller sells free of incumbrances except those specified in the contract, or listed in SC/SCPC
Which incumbraces are listed in SC (don’t have to be explicitly named in contract)?
- those specified in the contract,
- those discoverable by inspection before the date of the contract,
- those the seller doesn’t and reasonably couldn’t know about,
- those that are public requirements
- those the buyer knows about
- those entered on public register before the contract was entered
Which incumbraces are listed in SCPC (don’t have to be explicitly named in contract)?
- those specified in the contract,
- those discoverable by inspection before the date of the contract,
- those the seller doesn’t and reasonably couldn’t know about,
- those that are public requirements
- those the buyer knows about, or would’ve known about if carried out the searches a prudent buyer would’ve
Consequences of non-disclosure of an incumbrance under SC and SCPC
Buyer can rescind the contract, and/or get damages
3 title guarantees seller can sell with:
- full
- limited
- none
What does the seller impliedly covenant by selling with full or limited title guarantee?
- he has the right to dispose of the land,
- he’ll do anything he reasonably can to transfer title,
- if it’s a lease, lease will subsist at the time of disposal
What is the difference between full and limited title guarantee?
Full: seller impliedly covenants the land’s disposed of free of incumbrances, except those the seller doesn’t/couldn’t know about
Limited: seller only covenants that no incumbrances were created since he acquired the property
What is the default title guarantee in SC and SCPC?
Full
Default contract rate in SC and SCPC
Law Society’s rate from time to time
Currently 4% about Barclay’s base rate
Default deposit size in SC and SCPC
10% of price
How is the deposit received by the seller’s solicitor under SC and SCPC?
In both as stakeholder (cannot give it to the seller before completion)
But: parties can vary this, so that seller holds it as agent (so seller can receive deposit immediately)
BUT: in SC, deposit can be used for related purchase of a house for the seller
Other special conditions that can be added to the contract
- disclosing a defect of title
- VAT payment
- deposit to be held by solicitor as agent
- appointing 2nd trustee for transfer
- positive covenant indemnity…
Who bears risk for damage to the property between contracts and completion?
Buyer- should get insurance!
Seller has no duty to insure
3 options for VAT:
- purchase price exclusive of VAT
- purchase price includes VAT
- purchase price exclusive of VAT, but it can be charged extra if the law changes so that the sale becomes a chargeable supply
What is the SC VAT default position?
Price includes VAT (cannot be added on top)
What is SCPC VAT default position?
Purchase price exclusive of VAT (VAT added on top)
Which form is the certificate of title for the lender for residential properties in?
Approved by the Law Society and UK Finance
Which form is the certificate of title for the lender for commercial properties in?
City of London Law Society form
What is the format of the City of London Law Society certificate of title?
It sets out statements that cannot be altered- if one doesn’t apply, the solicitor sets out how it doesn’t apply
Which funds should the buyer’s solicitor have in his account ready for the exchange of contracts?
Deposit
What are the formalities for a binding contract of sale?
- in writing,
- incorporates all agreed terms,
- in one document,
- signed by the parties
Law Society’s Formula A for exchanging contracts
If the solicitor holds both signed copies, he undertakes to send the client’s copy on the same day by 1st class post/DX/by hand
Also undertakes to send the banker’s draft or cheque for the deposit
Law Society’s Formula B for exchanging contracts
If each solicitor holds own client’s signed copy, both undertake to send them on the same day by 1st class post/DX/by hand
Also undertake to send the banker’s draft or cheque for the deposit
When is the Law Society’s Formula C for exchanging contracts used?
When there is a chain of transactions (rare)
