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Buyer’s consideration of the property sale contract

buyers-consideration-of-the-property-sale-contractThe terms of the contract between the buyer and the seller shall be open to negotiations; hence it is the duty of the buyer’s conveyancing solicitor to make sure that the draft contract includes all aspects mentioned in his instructions and is in light of issues revealed by documents in the pre-contract package.

The contract cannot be amended for the simple reason that the buyer’s conveyancing solicitor does not like the style of the draft. Amendments should be made only with regard to the content. i.e. when it is necessary and relevant to the transaction. The buyer’s conveyancing solicitor also should look into the following aspects when inspecting the draft contract:

a)      Does the clause include all client instructions

b)      Does the clause perform what is intended to be performed

c)      Does the clause maintain a balance between the interest of both parties

    How to amend the contract

Earlier, when conveyancing solicitors sent manuscripts of draft copies to each other, the buyer’s solicitor would mark all changes in red and retain the coloured copy and return the original version with the marked comments to the seller’s conveyancer. The amended copy would carry a note with the words ‘amended on’ in red. Similarly, amendments would be marked in a distinctive colour, thereby making it easy for people to identify the changes made. Today, the common practice among conveyancing solicitors is to send electronic copies of the draft contract to each other. Changes are tracked by using the Word processing software. For instance, MS Word allows users to ‘track’ all changes thereby allowing amendments and additions to be made. Such track changes allow the other party to review the changes made by a party. The contract is then send to the other party via email. A document that moves back and forth between the parties is known as travelling draft.

Sometimes, when amendments are minor and are of little significance, they are discussed over the phone and the amendments are agreed. And when all terms and conditions are agreed upon, a fair copy or clean copy incorporating all the amended terms is prepared by the seller’s conveyancing solicitor. This should also be sent to the buyer’s conveyancing solicitor to seek his approval. The buyer’s conveyancer can now resend this fair copy with the markings ‘approved as drawn’. The copies of these agreed drafts can now be prepared to be produced to the parties to obtain their signature.

What to look for when considering the draft contract

The buyer’s conveyancing solicitor should make sure that all details are included and are accurate. The buyer’s solicitor should check the following when the draft is considered:

  • If the full names and addresses of the parties to the contract are included?
  • If every person who is to be included as a party to the contract mentioned as seller?
  • If the description of the property is the same as that mentioned in the register or in the deeds, and if the plan used is acceptable?
  • If the property has the benefit of all easements that are necessary for the buyer to be able to enjoy the property or for any other use that the buyer intends to put the property to use?
  • If the estate that is being sold mentioned correctly?
  • If the class mentioned is correct?
  • If the root of the title is good ?
  • If the title number is mentioned correctly on the draft?
  • If there are incumbrances available on the property, and whether they restrict the buyer’s intended use of property?
  • If full title guarantee is offered by the seller?
  • If the contract rate is more than that quoted by the Law Society?
  • If the purchase price mentioned is correct?
  • If the deposit amount mentioned is correct?
  • The method by which the deposit money shall be held- whether as an agent for the seller or as stakeholder. If the deposit is to be held as agent, is the buyer aware and appreciative of the risks involved?
  • Is VAT applicable on the transaction and does the buyer agrees to the charges?
  • Does the purchase money include fittings and if these fittings are appropriately identified?
  • If the balance amount stated in the draft contract is correct?
  • Does the contract make a mention of vacant possession on completion of transaction?
  • If he is satisfied that the title has been thoroughly investigated and all enquiries and amendments have been dealt with?
  • The standard conditions have been amended or special conditions added. And if they have been added, are they likely to adversely affect the buyer?
  • Will the buyer need to insure?

If special conditions (that were previously agreed upon) required to be entered has been done?

Photo courtesy: tachyondecay

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