Residential Conditions of Sale and Purchase by Ford Banks Irwin Solicitors - The Property Lawyers in Manchester
Please note: Not to be used or relied upon without legal advice. These notes are for illustrative purposes ONLY.
Contracts for the buying and selling of residential property in England and Wales have evolved into a fairly standard format. They contain details of the buyer and seller, the property and price together with any special conditions specific to the particular transaction.
The standard conditions common to most if not all contracts for the sale and purchase of a residential property are usually laid out in a fairly logical and coherent pattern.
The standard conditions are divided into various subsections dealing with a variety of matters. These different aspects are dealt with below, under the various sub headings.
GENERAL
This section includes matters which may be regarded as ' boiler plate' clauses dealing with such matters as:definitions: wherein the specific meaning to be attached to any particular word is spelt out, thus avoiding the need to type in a long clause. Words such as ' accrued interest' ' chattels price' ' clearing bank' ' completion date' ' contract rate' ' the lease' ' notice to complete' ' public requirement' ' requisitions' ' working day' ' absolute title' ' official copies' can all have special meanings ascribed to and set out in this section.
Phrases such as ' ready, able and willing to complete' are also dealt with here as well as what constitutes a notice under the contract, how it is to be delivered and in what form, for example whether by e-mail or by facsimile transmission and the date it is to be deemed received.
Although value added tax is not payable in respect of residential property in an ordinary sale between a houseowner and buyer standard conditions normally provided that if any value added tax were chargeable then it has to be paid in addition.
The buyer is not entitled to transfer the benefit of the contract he sale and purchase of the property.
FORMATION
A contract is dated and only becomes binding when the duplicate parts each signed by the buyer and the seller respectively are exchanged.
Exchange of contracts can be done through the post or by the parties solicitors over the telephone. When done in this way it follows a binding formula set out by the Law Society. It is usual on exchange to pay a deposit of 10% of the total of the purchase price and the price for any fixtures and fittings.
The deposit is paid either as cleared funds or by way of a cheque from the buyers' solicitors client account.
The deposit is usually held by the seller's solicitors as stakeholder, which means they cannot release it to the seller until completion. However, if the seller is himself buying another property for his own residence in England and Wales he can use the deposit on his own purchase provided his seller's solicitors hold the deposit as stakeholder.
The procedure at an auction is different. The contract is made binding when the auctioneer accepts the final bid. A deposit of 10% is paid immediately and is held by the auctioneer as an agent for the seller. This means it can be released to the seller immediately without waiting for completion.
MATTERS AFFECTING THE PROPERTY
A residential property is sold free from any encumbrances other than those:
- specified in the contract in the special conditions of sale
- which our discoverable by inspection of the property before the
contract is entered into
- which the seller does not and could not reasonably know about
- which before the date of the contract have been entered in any public register ( this does not include the Land Registry or its Land Charges Department nor does it include records maintained by Companies House
- which are overriding interests
However, the seller is obliged to give the buyer written details without delay of any such matters which come to his attention after contracts have been exchanged.
It is for the buyer to comply with any statutory requirement and as such essential that he make all appropriate preliminary enquiries with the relevant authorities, such as the local land charges Department of the local authority, environmental agency, coal authority and so forth.
The buyer of a residential property takes and accepts it in the physical state and condition it is in as at the date of the contract, unless the seller is building or converting it.
Leases of residential property usually contain clauses requiring the owner to keep the property in a good state of repair and condition. The standard conditions therefore provide that for leasehold properties the seller is not liable for any subsisting breach of any term of the lease relating to the physical state of the property.
Where a property is sold subject to any existing tenancy or lease then the buyer accepts the terms and conditions of the tenancy and is deemed to have entered into the contract knowing and fully accepting those terms.
The seller cannot change any of the terms of the tenancy nor take any action to terminate it or take any other action in relation to it without first notifying the buyer.
The buyer agrees to indemnify the seller against any claims arising from the tenancy for the period after actual completion.
Where the seller is disposing only of part of the property then he reserves to himself the right to develop or build on the land he has retained without let or hindrance from the buyer. The buyer has no rights to any light or air over the land retained by the seller. However, other than that, each does have reciprocal rights over the others land which may be expressly required or necessary to enable each to use their property but these have to be expressly set out in the final transfer deed.