What are the conditions required for a contract for the sale of land?
- In writing
- Contains all terms agreed
- Signed by or on behalf of parties
These conditions ensure the contract is legally enforceable.
Who will send the draft contract?
Seller’s Solicitor
The seller’s solicitor is responsible for preparing and sending the draft contract.
What are the possible means for exchanging contracts?
- Telephone Exchange (Most Common)
- Personal Exchange (Not Common)
- Postal Exchange (Not Common)
These methods vary in terms of formality and common usage.
What are the three Formula’s available for telephone exchange (Law Society Formulae)?
- Formula A
- Formula B
- Formula C (CHAIN)
Each formula outlines a different process for exchanging contracts over the phone.
What happens to the deposit upon exchange?
Buyer sends the deposit to the Seller’s solicitor
This transfer secures the seller’s position in the transaction.
What are the two ways a seller’s solicitor can hold the deposit?
- As Stakeholder
- As an Agent
Each method has different implications for the buyer and seller regarding security and access to funds.
If the seller went missing with the cash, what could the buyer do?
Apply for a lien over the property for the value
This legal remedy helps protect the buyer’s financial interest.
What are the risks for the client if using Formula C and not synchronised?
- End up with no property or two properties
- Cashflow difficulties
- Increased SDLT rates
These risks highlight the importance of synchronisation in chain transactions.
How can your client mitigate risks of chains?
- SYNCHRONISE
- Arrange other sources of funding
- Sell before buying if worried about SDLT
These strategies can help manage the complexities of chain transactions.
What are the options if a client no longer has sufficient funds for the deposit?
- Negotiate a Reduced Deposit
- Give a Deposit Guarantee from an Insurance Company
- Bridging finance
- Overdraft facilities
These options provide alternatives to secure the contract despite financial constraints.
When does the legal estate pass for unregistered property?
When deed is executed (completion)
This marks the official transfer of ownership.
When does the equitable estate pass?
When the contracts are exchanged
This transfer grants the buyer certain rights before formal completion.
What is the impact of the equitable interest passing?
- Seller holds on trust
- Risk of damage and destruction passes to the buyer
- Seller must manage and preserve the property
The seller’s responsibilities change once the equitable interest is transferred.
