Week 4- Exchange Flashcards
Both SCS (residential) and SCPC provide for the seller’s solicitor to hold the deposit as ‘stakeholder’- what does this mean?
Rather than giving the deposit to the seller immediately, the seller’s solicitor holds the deposit and only hands it over to the seller upon completion of the transaction. The reason for this is to protect the buyer’s deposit in the event of default by the seller/insolvency risking loss of deposit.
Who bears the risk between exchange and completion?
The buyer- if anything happens to the property, the buyer must still perform (i.e. pay)
What should the buyer do to mitigate the risk?
Take out insurance on the property from the date of exchange.
NB The lender may also want to confirm this has been done before it advances the completion funds.
If, immediately following exchange of contracts, the seller wishes to use the deposit payable by the buyer (for eg to buy another property- his new dwelling perhaps), the seller’s solicitor must ensure that what is a term of the contract?
The contract must provide for the deposit to be held as agent for the seller (i.e. not stakeholder).
A is buying a house from B, owner and occupier. Official Copies show B and C as RPs who hold the property as tenants in common (TIC). You have been informed that C has died. What do you advise A?
B is to transfer the property with full title guarantee and needs to appoint a second trustee who will give limited title guarantee in the transfer deed. This ensures that any subsisting beneficial interest in the property is overreached.
NB: The second trustee is often not appointed until completion. The sole surviving tenant in common will be named as the ‘Seller’ in the contract and will agree (by way of a special condition) to appoint the second trustee on completion. A trustee will usually agree only to give limited title guarantee as it has limited knowledge of the property.
