The Practical Lawyer

What is a ‘charter street’?

If an Energy Performance Certificate has not been produced, is it acceptable to put a clause in the contract saying that the EPC will be produced before completion?

When buying a property in a development, the buyer’s solicitors will expect an undertaking from the developer’s solicitors to supply a DS3, under which the chargees release their charges in respect of the particular plot.

Before giving such an undertaking, it is important for the developer’s solicitors to ensure that the DS3 will be forthcoming. The point, of course, is that the proceeds of sale from one individual plot will not usually be enough to discharge in full the amounts owed to the chargees (ie it will usually take the sale of most of the plots in the development before those charges can be fully repaid). Accordingly, the developer’s solicitor should:

either: contact the chargee for a redemption figure before giving any undertaking to the buyer’s solicitors,

As we have previously noted, the LR will introduce a fundamentally important change of practice on 3 August, when it enforces ‘early completion’ (see our June issue, p4).

The LR will introduce a fundamentally important change of practice on 3 August, when it enforces ‘early completion’.

The normal rule is that a contract will merge with the transfer on completion. In theory, therefore, this means that after completion it will not be possible to bring an action that arises from one of the contractual terms – unless that provision has been expressed in the contract to survive and not to merge with the transfer. However, the rule is nearly always overwritten in property contracts; both the Standard Conditions of Sale and the Standard Commercial Property Conditions say that ‘completion does not cancel liability to perform any outstanding obligations under the contract’, and thus there is no merger of outstanding liabilities.

The classic identity mortgage fraud involves H remortgaging or selling the matrimonial home without W’s knowledge (by forging W’s signature). More recently, we have seen the emergence of frauds based upon the adoption of the identity of an existing homeowner who has no mortgage; the fraudster obtains a mortgage in that person’s name and then absconds with the money.

As we all know, the fraudulent transaction will have no effect and the original homeowner will still have full title to the property. But, the buyer (and, more importantly, the buyer’s lender) will probably want to try and recover their losses from the seller’s solicitor. The basis of the claim will be for breach of the warranty of authority. A solicitor who purports to act on behalf of a vendor client may impliedly warrant to third parties that he has the client’s authority to act. This warranty may be given by signing the contract on behalf of the client, or simply by acting in the course of negotiations between the parties and in the exchange of contracts. Indeed, the key moment in the transaction will probably be the delivery of the transfer (and/or charge) by the seller’s solicitor on behalf of the seller at completion. The purchaser or lender will probably be able to establish reliance upon the warranty by the advance of the purchase price or mortgage money at that point.

The ‘early completion’ procedures will apply to all applications received on or after 3 August.

If a buyer defaults, then the obvious remedy is for the seller to forfeit the deposit. But do not forget that the seller will also be entitled to claim damages for the losses arising (and, in a falling market, the decline in property values may well exceed the amount of the deposit).

Normally, requiring a contracting party to forfeit a deposit of 10% would be regarded as an unenforceable ‘penalty’ (being a harsh or unusual punishment). However, it is long established that deposits on the sale of land should be seen as an exception to the general rule.