Property SPA Flashcards
What is the first thing you need when drafting a contract?
The title.
- official copy entries, or
- epitome of title
What do you not need include when drafting?
You do not fill in the dates.
- Wait until exchange of contracts to put the date in.
What information about the seller is included in a contract?
Full name and address of everyone who is a registered proprietor, or on the conveyance (if unregistered).
What information about the buyers will be included in the contract?
Full names and address
How do you fill in the description of property on the contract?
Information is taken from the description in the registered title, or description from conveyance in epitome.
If the boundary is unclear, refer to a plan.
What is included on the contract re specified encumbrances?
All that will bind the buyer
Exclude any mortgages on registered title.
List them by entry on the register - e.g., the easement referred to on entry no.4 of the charges register etc
What types of things would you consider including in the special conditions section when drafting a contract?
- Will it be sold vacant, if not, what is it sold subject to?
- Anything else you need to add - e.g., is there another adult in the property? You would want something to say that the occupier would agree with the seller + buyer to leave the property
- Details of any indemnity insurance,
- Details of any chattels being taken - may want to say when you are taking it, and that the seller will make good that damage when they take it,
- Appointment of any second trustee
- Other information provided in your instructions
When are the Standard Conditions of Sale used?
Used in residential transactions.
How is a Contract Incorporating the Standard Conditions of Sale divided?
Divided into 3 parts.
- Particulars of sale
- Standard conditions of sale
- Special conditions of sale
What is included in the particulars of sale?
i. names of the parties
ii. whether the property is freehold/leasehold
iii. the type of title guarantee given
iv. completion date, and
v. purchase price
What is included in the standard conditions of sale?
i. provisions for payment of VAT
ii. the deposit
iii. risk of loss etc
What is included in the special conditions of sale?
Includes conditions specific to the particular transaction, such as:
- whether the property will be vacant on completion,
- whether a different time for completion has been agreed.
What is the view on VAT being included in the price?
Under the Standard Conditions of Sale, the purchase price + the contents price include VAT unless the contract is amended.
When can a seller use the deposit received on their sale?
If the seller has a related purchase of a property for their residence in England and Wales, they can use the deposit received on their sale towards the deposit required on that purchase transaction.
How is a deposit usually held under the Standard Conditions of Sale?
Deposit is held by the seller’s solicitor as stakeholder.
This means the seller’s solicitor holds the deposit in the firm’s client account on behalf of both parties + the deposit can’t be paid over to the seller until completion.
What title guarantee must be given under the Standard Conditions?
The seller must provide a full title guarantee unless the Standard Conditions are amended.
What is a full title guarantee?
Includes a guarantee that:
i. the seller is entitled to sell the property,
ii. they will, at their own cost, do all in their power to transfer the purported title to the buyer,
iii. the seller is selling the property free from all charges or encumbrances other than those disclosed in the contract.
What is a limited title guarantee?
Seller warrants that they:
- haven’t created any charges, or
- granted any rights,
- during their period of ownership that have not been disclosed in the contract
What happens if the contract discloses obligations relating to the property which will bind the buyer?
E.g., obligation to maintain a fence for the benefit of the neighbouring property owner.
The Standard Conditions of Sale provide that the buyer agrees to perform the obligation + to indemnify the seller if the buyer breaches the obligation in the future.
When does the risk of loss pass?
Risk of loss in the property passes to the buyer on exchange of contracts.
If the property is destroyed or damaged between exchange and completion, the buyer must still go ahead with the purchase.
What happens if the completion date isn’t inserted into the contract on exchange?
(In most cases, it will be)
The Standard Conditions of Sale provide that completion will take place 20 working days after exchange.
Certain special conditions are pre-printed at the end of a Contract Incorporating the Standard Conditions of Sale - what do these include?
i. whether the property being sold will be vacant on completion or whether there will be a tenant in situ (in which case the relevant tenancy agreement will be inserted),
ii. whether a different time for completion has been agreed,
iii. whether there are any occupiers on the property, such as the seller’s relative (in which case the occupiers must confirm their relinquishment of any rights on completion).
What will happen when the buyer’s solicitor receives the contract package?
The buyer’s solicitor should investigate title to ensure the buyer will receive good title when the buyer’s solicitor applies for registration after completion + also to identify any issues with the title that may adversely affect the buyer’s future plans for the property.
What will the buyer’s solicitor do if there are any issues with the title that require resolution?
The buyer’s solicitor will ask questions of the seller’s solicitor –> raise pre-contract enquiries.
What is the best way of resolving the issue if a defect in title is identified?
Best way of resolving the problem is to enter into a deed of variation or deed of rectification to put the problem right.
When this is not possible, indemnity insurance may be purchased to cover future losses that might arise from the defect.
