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REAL ESTATE (KNOWLEDGE) Unit 6 Guide The Contract

Context Unit 6 concerns the purchase of Kenulf House by your client, Arcadian Investments Limited, from Winter Estates Limited. You have taken instructions, investigated the seller’s title and analysed the results of your searches and enquiries. In that process, you have identified certain issues that need to be dealt with in the contract for the sale and purchase of Kenulf House. In this Unit you will consider all the outstanding issues and how they are to be dealt with before proceeding to agreeing the contract. The contract is usually drafted by the seller’s solicitor and sent to the buyer’s solicitor as part of the initial pre-contract package. Accordingly, it will have been drafted to suit the “opposing” party and may not contain all the provisions necessary to deal with the issues that have arisen as part of your investigations. In Unit Workshop 6 you will amend the draft contract and advise the buyer on its terms. Once you are satisfied that all the outstanding issues have been resolved and that the client is in a position to enter into a contractually binding commitment, you will consider what additional steps need to be taken before you can finally exchange contracts.

Outcomes By the end of this Unit you should be able to: 1.

Identify the outstanding issues following on from investigation of title and completion of searches and enquiries.

2.

Review and suggest appropriate amendments to a contract drafted by the seller’s solicitor, including drafting a special condition.

3.

Carry out the necessary steps to be able to proceed to exchange of contracts.

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Unit Workshop Tasks In this Unit Workshop you will: 1.

Identify the issues outstanding following the investigation of title and searches and enquiries made on behalf of the buyer.

2.

Review and explain amendments to the draft contract proposed on behalf of the buyer.

3.

Agree the draft of a special condition for the contract dealing with a title problem.

4.

Identify final steps to be taken before proceeding to exchange of contracts.

5.

Consider the practicalities of an exchange of contracts.

Preparation To prepare for this Unit Workshop you should: 1.

Read chapters 6.2 of chapter 6, 18, 21, 22, 23 and 24 of the Property Law and Practice textbook. Please note, you do not need to be familiar with the Standard Conditions of Sale.

2.

Complete Test & Feedback – Unit Workshop 6 (Preparation).

3.

Complete Preparatory Tasks 1, 2 and 3.

Materials required for the Unit Workshop 1.

The Guides for Unit Workshops 1, 2 and 4 together with any notes you made.

2.

Your answers to the Preparatory Tasks.

3.

The Property Law and Practice textbook.

4.

This Guide.

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Consolidation after Unit Workshop It is important that you consolidate your learning. In particular you should: 1.

Review your answers to the Preparatory Tasks and the Unit Workshop Tasks in the light of the feedback you received in Unit Workshop 6.

2.

Complete Test & Feedback – Unit Workshop 6 (Consolidation).

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PREPARATORY TASK 1 You are a trainee solicitor at Gibson & Weldon LLP (“G&W”). You are currently sitting in the Real Estate Department and your supervising solicitor is Teresa McKillop. Teresa has asked you to assist her in acting for Arcadian Investments Limited (“Arcadian”) on their purchase of Kenulf House, 34-38 Fletton Street, Peterborough PE1 3LR (“Kenulf House”) from Winter Estates Limited (“Winter”). When acting for the buyer, before agreeing the form and terms of the contract and proceeding to exchange of contracts, it is essential to deal with all outstanding issues raised in your client’s instructions, the investigation of title and the pre-contract searches and enquiries. You should now read through your notes from Unit Workshops 1, 2 and 4 and compile a list of all the outstanding matters which remain to be dealt with.          

Planning Permission with conditions local llc 1 and kong 29 Enforcement notice and stop notice Removal of load bearing wall without B regs Blake’s Alley, in good condition wont need work for 20 years or so they wont be contributing to it Proposed car parking scheme Environmental/flooding/asbestos investigation The positive covenant and the wall The breach of the restrictive covenant language school Restrictive covenant against alteration to exterior without consent Prescriptive easement give statement of truth to confirm they’ve used the area without any problem for at least 20 years

PREPARATORY TASK 2 Locate and read ‘Land Registry Practice Guide 52: easements claimed by prescription’ and bring to the Unit Workshop the information/documents which a registered proprietor of land, seeking to register an easement which has arisen by prescription, will need to show to the Land Registry to demonstrate the existence of such easement.

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PREPARATORY TASK 3 Attached to this Preparatory Task are: 1.

The Heads of Terms for the sale of Kenulf House. These have been drawn up and agreed between the agents acting for Winter and Arcadian.

2.

The draft contract for the sale and purchase of Kenulf House as drafted by Winter’s solicitor. It is based on a precedent published by Practical Law and incorporates the Standard Commercial Property Conditions (Third Edition) (“SCPC”) which you will find in Appendix 3 of the Property Law and Practice textbook.

In order to draft the contract, the seller’s solicitor will have investigated his client’s title to check that the seller has good title to the property and to identify any incumbrances that affect the property as these should be disclosed in the contract. Winter’s solicitor will also be hoping (as far as is consistent with the solicitor’s duty to act in the best interests of his client) to pre-empt any issues that you, as the buyer’s solicitor, will raise. If such issues can be dealt with at the outset, it can prevent them becoming a stumbling block later in the transaction. Although the Heads of Terms set out the basic financial details, the terms of the contract are open to negotiation to the parties and you, as the buyer’s solicitor, will have to review the contract in the light of your instructions and the information revealed in the searches and enquiries. 1.

Read the Heads of Terms.

2.

Read the attached contract, making sure you understand the meaning of every clause. You will see clause 3.1 incorporates the SCPC into this contract (except where the SCPC are inconsistent with the special conditions of the contract itself) so that together, the SCPC and the contract are one document. Where the contract refers to the SCPC, please check the SCPC to see how the contract and the SCPC inter-relate.

3.

After your initial read through, consider whether the draft contract in its current form: (a) (b) (c) (d)

contains any typographical errors; is consistent with the Heads of Terms; deals with problems identified in the title investigation and the results of the searches and enquiries; and adequately protects the buyer’s position between exchange and completion.

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Mark in red pen any amendments you think are necessary on the draft contract itself.

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Johnston & Palmer Associates Limited 45 Peterlee Street, Peterborough PE1 6FJ Tel: 01733 5114027 Heads of Terms for the sale and purchase of Kenulf House Property

Kenulf House, 34-38 Fletton Street, Peterborough PE1 3LR.

Seller

Winter Estates Limited (company number 40091963) Winter House, 2 High Court Lane, London W1D 6FJ.

Contact: Edward Latimer Tel: 020 3206 5930 E: [email protected] Buyer

Arcadian Investments Limited (company number 24021964) 356 Little Britain Street, London EC2 7DL Contact: Richard Tilling Tel: 07546383982 E: [email protected]

Seller’s Agent

Johnston & Palmer Associates Limited Contact: Ayesha Ray Tel: 01733 311022 E: [email protected]

Seller’s Solicitors

Wilkinson & Stevens 29 The Rise, Milton Keynes MK1 7RE Contact: James Purdie Tel: 01908 691 382 E: [email protected]

Buyer’s Solicitors

Gibson & Weldon LLP 72 Chalfont Row, Birmingham B1 7ZX. Contact: Teresa McKillop Tel: 0121 650 5368 E: [email protected]

Tenure

Freehold

Price

£1,175,000. The Seller will not opt to tax the Property.

Deposit

10% of the Price, payable on exchange of contracts to be held as stakeholder

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DATED ------------

CONTRACT FOR THE SALE OF FREEHOLD LAND WITH VACANT POSSESSION at

KENULF HOUSE, 34-38 FLETTON STREET, PETERBOROUGH PE1 3LR between

WINTER ESTATES LIMITED and

ARCADIAN INVESTMENTS LIMITED

DISCLAIMER This document is subject to copyright. It should not be copied, reproduced, distributed or passed to any other person in whole or in part. This document is for teaching and learning purposes only. It does not constitute the provision of any advice by the University of Law. It does not purport to be comprehensive or to contain all the information that may be needed for a particular transaction or matter. Furthermore it may contain deliberate errors and/or omissions. It is not a substitute for legal or other advice and must not be used as a precedent in any circumstances. © Practical Law Publishing Ltd and Practical Law Company Ltd [2016]. Reproduced with the permission of the publishers. For further information visit http://uk.practicallaw.com or call 0207 202 1200

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CONTENTS __________________________________________________________ CLAUSE 1. Interpretation.............................................................................................................13 2. Sale and purchase....................................................................................................15 3. Conditions.................................................................................................................15 4. Risk and insurance....................................................................................................15 5. Deposit......................................................................................................................16 6. Deducing title............................................................................................................16 7. Vacant possession....................................................................................................16 8. Title guarantee..........................................................................................................16 9. Matters affecting the Property...................................................................................16 10. VAT............................................................................................................................17 11. Completion................................................................................................................17 12. Buyer's acknowledgement of condition.....................................................................17 13. Entire agreement.......................................................................................................18 14. Joint and several liability...........................................................................................18 15. Notices......................................................................................................................18 16. Third party rights.......................................................................................................20 17. Governing law...........................................................................................................20 18. Jurisdiction................................................................................................................20

SCHEDULE Schedule 1................................................................Documents of title referred to in clause 6

This contract is dated [DATE]- not entering into contract today and thinking of approving and amending so we would not date the contract only until the client sings and agrees terms Company number is winters number Parties (1)

WINTER ESTATES LIMITED incorporated and registered in England and Wales with company number 40091963 whose registered office is at Winter House, 2 High Court Lane, London W1D 6FJ (Seller).

(2)

ARCADIAN INVESTMENTS LIMITED incorporated and registered in England and Wales with company number 40091963 whose registered office is at 356

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Little Britain Street, London EC2 7DL (Buyer).- this is winters company number Agreed terms 1.

Interpretation The following definitions and rules of interpretation apply in this contract.

1.1

Definitions:

Buyer's Conveyancer: Gibson & Weldon LLP, 72 Chalfont Row, Birmingham B1 7ZX. Completion Date: leave this blank until moment of exchange Contract Rate: interest at 4% per annum above the Law Society’s interest rate from time to time in force. – relates too what happens if there is a delay of completing on time, this should not be a penalty clause it should be compensatory in nature to compensate them for not receiving their money and not punish buyer. Usually is the law society’s interest rate look at appendix 3 in the textbook provision 111E. check base rate on law society gazette. This clause above amounts to 8% which is penalising not compensating. Indicates that the base rate can change (time to time) this is not set at the exchange and can change to a different rate. Deposit: £117,500 (exclusive of VAT). Part 1 Conditions: the conditions in Part 1 of the Standard Commercial Property Conditions (Third Edition - 2018 Revision) and Condition means any one of them. Part 2 Conditions: the conditions in Part 2 of the Standard Commercial Property Conditions (Third Edition – 2018 Revision). Property: the freehold property at Kenulf House, 34-38 Fletton Street, Peterborough PE1 3LR and registered at HM Land Registry with absolute title under title number HW7876099. – title number is inaccurate made an error Purchase Price: £1,175,000 (exclusive of VAT). There shouldn’t be any VAT in relation to this transaction, this leaves the buyer thinking that VAT can be added on top and this is not what we agreed. Seller's Conveyancer: Wilkinson & Stevens, 29 The Rise, Milton Keynes MK1 7RE. VAT: value added tax chargeable in the UK. 1.2

A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality).

1.3

Unless otherwise specified, a reference to a statute or statutory provision is a reference to it as amended, extended or re-enacted from time to time and shall include all subordinate legislation made from time to time under that statute or statutory provision and all orders, notices, codes of practice and guidance made under it.

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1.4

A reference to laws in general is a reference to all local, national and directly applicable supra-national laws as amended, extended or re-enacted from time to time and shall include all subordinate laws made from time to time under them and all orders, notices, codes of practice and guidance made under them.

1.5

A reference to writing or written includes fax but not email.

1.6

Except where a contrary intention appears, a reference to a clause or Schedule is a reference to a clause of or Schedule to this contract.

1.7

Unless the context otherwise requires, references to clauses and Schedules are to the clauses and Schedules of this contract and references to paragraphs are to paragraphs of the relevant Schedule.

1.8

Clause, Schedule and paragraph headings shall not affect the interpretation of this contract.

1.9

The Schedule forms part of this contract and shall have effect as if set out in full in the body of this contract. Any reference to this contract includes the Schedule.

1.10

Unless the context otherwise requires, words in the singular shall include the plural and in the plural shall include the singular.

2.

Sale and purchase

2.1

The Seller will sell and the Buyer will buy the Property for the Purchase Price on the terms of this contract.

2.2

The Buyer cannot require the Seller to: (a)

transfer the Property or any part of it to any person other than the Buyer; or

(b)

transfer the Property in more than one parcel or by more than one transfer; or

(c)

apportion the Purchase Price between different parts of the Property.

3.

Conditions

3.1

The Part 1 Conditions are incorporated in this contract so far as they:

3.2

(a)

apply to a sale by private treaty;

(b)

relate to freehold property;

(c)

are not inconsistent with the other clauses in this contract; and

(d)

have not been modified or excluded by any of the other clauses in this contract.

The terms used in this contract have the same meaning when used in the Part 1 Conditions.

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3.3

The Part 2 Conditions are not incorporated into this contract.

4.

Risk and insurance

4.1

With effect from exchange of this contract, the Property is at the Buyer's risk and the Seller is under no obligation to the Buyer to insure the Property.

4.2

No damage to or destruction of the Property nor any deterioration in its condition, however caused, will entitle the Buyer either to any reduction of the Purchase Price or to refuse to complete or to delay completion.

4.3

Conditions 8.2.2, 8.2.3 and 8.2.4(b) do not apply to this contract.

5.

Deposit

5.1

On the date of this contract, the Buyer will pay the Deposit to the Seller's Conveyancer as agent for the Seller. - should be consistent with heads of terms it said that the seller would receive that money for stakeholder, protect clients interest it’s better for buyer money is hel...