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LPC Law Notes Property Law and Practice Notes

Drafting And Exchange Of Contracts Notes

Updated Drafting And Exchange Of Contracts Notes

Property Law and Practice Notes

Property Law and Practice

Approximately 490 pages

A collection of the best LPC PLP notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short these are what we believe to be the strongest set of PLP notes available in the UK this year. This collection of notes is fully updated for recent exams, a...

The following is a more accessible plain text extract of the PDF sample above, taken from our Property Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Procedure

  1. It is the seller’s solicitor who drafts the contract.

  2. The buyer’s solicitor then checks the contract and returns to seller’s solicitor with any amendments.

  3. Once the contract is agreed the parties will sign.

  4. When both parties are read to proceed, the contract will be exchanged, at which point the date for completion of purchase is fixed and the parties have a legally binding agreement.

Form of the contract

There are standard form contracts for residential and commercial transactions. These both contain ‘Standard Conditions’ and ‘Special Conditions’. Standard contracts are generally for residential transactions. The Special conditions are used to amend standard conditions and can also be used to incorporate specific conditions.

Drafting the Contract

NB: beware of drafting errors (e.g. misspelt or incorrect parties/incorrectly named property)

Front page (i.e. agreed terms)

  • Property: requires a clear description of the land. State whether it is freehold/leasehold and register/unregistered.

    • If a sale of part then include a plan.

  • Specified Incumbrances: allows seller to discharge duty of disclosure. There is no duty to disclose patent incumbrances (i.e. those obvious on inspection) or physical defects but MUST disclose:

    • Latent incumbrances: something which burdens the land and restricts the owner in some way. This includes easements and existing mortgages. The best way to disclose is to refer to the entries in the Charges Register.

    • Defects in title: these are matters bringing into question the seller’s ownership of the property. If it isn't possible to remedy the defect, the seller should include a special condition revealing the nature of the defect and that the buyer accepts it (known as a Faruqi clause).

NB: if a residential transaction, any incumbrances revealed by the Land Registry or by normal searches must be expressly disclosed in the contract or the seller will be liable for breach.

  • Title guarantee – ss.2-3 LP(MP)A – the guarantee of the seller’s quality of title to the property. DO NOT CONFUSE with class of title:

    • Full title guarantee – expect this – a GUARANTEE that the seller has the right to sell the property and that the property is free from charges/incumbrances OTHER THAN those disclosed in the contract (s.6(1) LP(MP)A) or those the seller couldn't have reasonably known about (s.3(1) LP(MP)A).

    • Limited title guarantee – there is no guarantee property free from all 3rd party incumbrances. Instead, there is a guarantee the seller hasn't created any incumbrances since the last sale and is unaware anyone else has. This should be used if seller has limited knowledge of the property.

NB: unless the contract says otherwise, SCS 4.6.2 states the seller has full title guarantee. Same under SCPC 6.6.2 except there is no pre-printed provision on the front.

  • Deposit – SCS 2.2.1 and SCPC 2.2.1 say this is 10% purchase price. SCS 6.8.3 if a lesser deposit has been accepted and the buyer fails to complete, he must pay the full 10%. It may include chattel payment.

    • SCS 2.2 and SCPC 2.2 state the deposit must be paid to the seller’s solicitor as stakeholder. He may also hold as agent for the seller.

    • Under SCS 2.2.5 (not SCPC) if the seller is buying another house he may use the deposit money to fund the purchase.

  • Contract Rate – should be about 3-5% per annum

  • Purchase Price – the agreed amount for the property.

    • SDLT rates apply to this:

  • Contents Price and Chattels

Special Conditions – see back page of handbook

NB: with all special conditions:

  1. State who (buyer or seller)

  2. Is to do what (e.g. provide document or deal with issue)

  3. And by when (e.g. “on or before Completion”)

  4. And relevant information on how it will be done

  • Vacant Possession: pre-printed special condition (SCS 6.1.3(a))

  • Contents or chattels included and fixtures removed

  • Time for completion.

  • VAT – not payable by the buyer in addition to the purchase price (SCS 1.4, SCPC 1.4) UNLESS:

    • New commercial building OR seller elects to charge VAT and

    • Pt. 2 Condition A1 expressly incorporated (SCPC 1.1.4(b)) OR contract specifically confirms VAT payable (SCS)

  • Non-legal owners: these are occupiers other than sellers – this is a pre-printed special condition in the SCS. If there is another occupier in the property, as special contract should be prepared by the occupier agreeing to waive interest in the property and vacate upon completion. You could also draft a special condition into...

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