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LPC Law Notes Property Law and Practice Notes

Scpc V Sc Table Ws 4 Itutorial Notes

Updated Scpc V Sc Table Ws 4 Itutorial 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...

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i-tutorial The Contract

Prior to exchange of contract, there is no binding commitment. Exchange of contracts is a stressful time and excitement as it is the point of no return as neither can change the terms of the deal without the cooperation of the other. The contract must reflect the agreed terms.

  1. Why do we need a contract

  2. Types of contracts

  3. How a typical contract is structured

  4. How to draft a contract for the sale of registered freehold property

1. Why do we need a contract?

You don’t need a contract for every property transaction. After all, the contract can’t transfer the land. You need a deed to do that, the contract is just an agreement to transfer the land at a later stage. But why would you want to have a contract? For a variety of reasons:

  • Timing – to lock the parties in while finance or removal arrangements are put in place

  • Conditionality – there may be an important matter to deal with (e.g. while a planning permission is obtain or building work is completed, planning authorization for the change of use) before the buyer is willing to proceed.

  • Non-land issues e.g. chattels, supply contracts

  • There is a chain transaction – one party is awaiting to finalise another sale in order to continue with the following and therefore needs a contract to ensure completion is synchronised.

In all these situations in order to prevent either party to back out the parties need a contract. The contract thus provides parties with certainty regarding:

  • The nature and extent of the property

  • The financial terms

  • The timetable for completion

  • Either party withdrawing from the transaction

Once contracts have been exchanged the parties are locked in.

2. The form of contract (types of contract)

The seller’s solicitor is in charge of drafting the first draft of the contract; he may use:

  • A pre-printed version

  • A firm-specific version (a pre-contract version issued by his firm)

Either way, you may include specific conditions. Moreover, either way a set of standard conditions have to be included in the contract. These standard conditions have been developed by the profession:

  1. The standard conditions of sale (5th edition) (is designed for use in residential conveyancing transactions and some very simple (a straightforward title and a low value) commercial transactions.

  2. Standard commercial property conditions (SCPC)(2nd edition) (to be incorporated into a contract for sale of commercial property or a contract for the grant of a lease of commercial property)

3. The Structure of the Contract

The Standard contracts are divided into three parts:

  1. On the front page are descriptions of the property and the sale. These are particular to the transaction

  2. The second part includes (the middle of both versions) are the “standard conditions” of sale or the SCPC. The detail is included in this section and there are some differences between the two. The terms of the transaction.

  3. Finally the “Special conditions” Section is found in the back of the Standard conditions, these is an area to tailor the transaction to specific requirements. There are some pre-printed suggestions and a section where specific requirements can be inserted.

DRAFTING THE CONTRACT USING THE SCPC (AKA Part 1 Conditions)

The front page of the Contract

FOR REVISION:

1. Read the SCPC

2. Title + Heads of Title are needed to amend the contract

3. Formulas (A/B/C)

You need the two contracts from WS4 to COMPARE and see where these notes apply. We are assessed on the application of the SCPC in the Contract. Thus, if asked to revise a drafted contract you need to note that where the contract is silent the SCPC will apply. This means that if the contract includes info about say, VAT, Deposit or Purchase Price, it is inserting a clause different to that in the SCPC. Similarly, if the contract states that “Conditions XX and X are varied by the…” then the SCPC is being changed and you will not want to agree on that change. You need to verify that that clause matches what was agreed between the buyer and seller which is stated in the “Heads of Terms” and that it does not compromise the clients position. Finally, see the Drafting Special Conditions below.
Cover Page Check that Exchange of contract Box is included on the top right hand side
Contents Delete any sections from the Contents that you might have deleted inside the Contract

Information about the property, seller buyer

Price, the deposit and the chattels

Usually obtained by way of interview with client or memo in written form from client or estate agent.

FUNDAMENTAL Cross check the information contained in the “Official Copies” (i.e. registry doc) against the “Head of Terms” and against the “Actual Contract”. Names, addresses, purchase value, title number etc.

Contract Rate

SCPC 9.3

SCPC 1.1.1(e)

The contract rate is the rate of interest that will be charged on the purchase price less deposit if the buyer is late on completing under SCPC 9.3 The rate must be high enough to hurt the defaulting party and provide an incentive to complete on time. SCPC 1.1.1(e) indicates that the contract rate is the Law Society’s interest rate from time to time in force (Currently at 4.5 %). If the contract rate on the front page is blank, it is inferred that SCPC 1.1.1(e) applies. (See Revision Contracts)

Deposit

SCPC 2.2

A deposit is a prepayment of part of the purchase price made by the buyer to the seller. It is evidence of the buyer’s commitment to the transaction. Thus buyer is subject to SCPC 9.5.2.(failure to comply). SCPC 2.2 states that the deposit is 10%. The deposit may be lower as agreed by the parties. If you are acting for the seller and agree a lower deposit then it would be good to incorporate a clause in the contract for the remaining % in case of the buyer defaulting. In major transactions there may be no deposit at all due to the buyer’s financial state and good reputation. If deposit is blank then it is inferred that SCPC 2.2 applies. Deposit to be held as...

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