W4 Exchange of Contract (Conditions)

Question 1

Which of the following will sell with limited title guarantee?

(a) A seller who is the owner and occupier

(b) A seller who is a mortgagee in possession of

(c) A seller who is the owner but has fully let the property out to a tenant

(d) A seller who is a trustee

Answer 1

Answer: (d)

A trustee would usually give only a limited title guarantee.

Question 2

If, immediately following exchange of contracts, the seller wishes to use the deposit payable by the buyer, the seller’s solicitor must ensure that the contract provides for the deposit to be held in which of the following capacities?

(a) By the seller’s solicitor as a stakeholder

(b) By the seller’s solicitor as agent for the seller’s estate agent

(c) By the seller’s solicitor as agent for the seller

(d) By the seller’s solicitor as agent for the buyer

Answer 2

Answer: (c)

Holding the deposit as agent for the seller means the money belongs to the seller and the seller is free to use it from exchange of contracts. If the deposit was held as stakeholder this means that the seller’s solicitor is custodian of the deposit for BOTH parties: the deposit may not be released to the seller until completion in this case.

Question 3

What is the time for completion under both the SCS and the SCPC?

Answer 3

Answer: 2pm

For the buyer’s solicitor, this means that the money must be received by the seller’s solicitor before 2pm.

Question 4

Time is usually of the essence under both the SCS and the SCPC.

Is this statement true or false?

Answer 4

Answer: False

Both the SCS and SCPC state that ‘time is NOT of the essence until a notice to complete is served.’ This means that if a party fails to complete, the non-defaulting party cannot walk away from the transaction.