The Property contract Flashcards
What format must a property contract take?
Must be in writing, incorporate all terms agreed by the parties, be signed by each party
What is the purpose of a contract?
- To fix a completion date
- Tie related transactions
- Set out related obligations e.g buying furniture and other contents
- Include conditions e.g obtaining specific planning permission
When might a contract be unnecessary?
For gifts, land of low value, and occasionally commercial transactions
These situations may not require formal contracts.
What standard form is used for residential transactions?
Standard Conditions of Sale
These are made obligatory by the Law Society Conveyancing Protocol.
What standard form do commercial transactions usually use?
Standard Commercial Property Conditions
These can be amended as needed.
What is the difference in incumbrance disclosure between SCS and SCPS?
- Under SCS, the seller needs to disclose any incumbrances registered at the Land Registry, the Land Charges Registry and Companies House
- Under SCPS, the buyer must conduct searches - they are deemed to buy the property subject to any incumbrances which would be revealed by prudent searches
This shifts the responsibility of due diligence to the buyer in commercial transactions.
What are tailor-made contracts often based on?
Firm’s precedent bank, Practical Law, Encyclopaedia of Forms & Precedents
These resources help in creating customized agreements.
What can be changed in special conditions of a contract?
Deposit amount
Standard form contracts often have options like tick boxes for modifications.
What is Title Guarantee?
An exception to caveat emptor where the seller provides a guarantee regarding the quality of title.
What are the two types of Title Guarantee?
Limited Title Guarantee and Full Title Guarantee.
What is a Limited Title Guarantee?
Given by sellers with little knowledge of the property, such as executors of a deceased estate.
What is a Full Title Guarantee?
The default guarantee that should be given unless there is a good reason not to.
What happens with No Title Guarantee?
The buyer has no remedy against the seller if a title issue arises after completion. Administrators/liquidators typically provide this.
What is the default completion date under SCS and SCPC?
20 working days after the contract if parties do not fix a date.
What is the default completion time under SCS and SCPC?
2pm, with money required to be received by the seller’s solicitor before this time.
Explain ‘time is not of the essence until a notice to complete is served’
- if a party fails to complete by the stated date and time, the other party will be entitled to damages but not to walk away
- unless the party who is ready to complete can serve a notice to complete and make time of the essence
- interest rate set in contract
What is the standard deposit percentage?
10%, but it can be varied.
What happens if the buyer doesn’t complete on time but didn’t give a 10% deposit?
If the seller serves a notice to complete, the buyer must immediately pay the balance of the 10% deposit.
How can the deposit be paid under SCS?
By a cheque from the buyer’s solicitor’s client account.
How can the deposit be paid under SCPC?
Only electronically.
What is the role of a stakeholder regarding the deposit?
Must keep the deposit safe and not pay it to the seller until completion.
What is the role of an agent regarding the deposit?
The seller may demand the deposit immediately but assumes the risk of loss.
Is VAT payable by the buyer under SCS?
No VAT is payable by the buyer - the purchase price includes VAT
Is VAT payable by the buyer under SCPC?
- Default is that the property is standard rated - VAT is payable at 20%
- But this can be amended if the property is over 3 years old and the seller has made the option not to tax
