property practise

Question 1

exchanmge of contracts

Answer 1

Exchange of contracts is the point in the conveyancing transaction when the matter becomes legally binding on the seller and buyer. Up to the point of exchange, either party can withdraw without penalty. The purpose of the buyer’s pre-contract searches – such as the local search – is to gather practical information about the property so that the buyer can make an informed decision about whether to purchase the property. Here, the buyer is still in the pre-contract stage, as no deposit has been paid yet. Thus, the buyer is entitled to withdraw without penalty since no contracts have been exchanged yet.

Question 2

latent defects

Answer 2

The man should disclose the right of way in the contract of sale because it is a latent defect. A latent defect is an issue which is not apparent from physical inspection of the property. The right of way is not mentioned in the title, but the adjoining property owner is likely to have acquired a prescriptive right by long use (use over 20 years). A latent defect must be disclosed by the seller in the contract. If a seller breaches their duty of disclosure, the buyer may have the right to withdraw from the contract after exchange and claim damages for losses.