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Legal Formalities (Contracts) for Sale of Land – Conveyancing

This article explains about the importance of a written contract and situations where an unwritten contract is acceptable. It also briefly explains about deeds.

Contracts for the Sale of Land:

A contract for sale or creation of interest in land should be set according to the principles set by the Law of Property (Miscellaneous Provisions) Section 2, wherein all contracts are to be made in writing and signed by all parties concerned with the transaction. Failure to effect a written contract results in there not being a contract at all, and courts do not have the jurisdiction to allow the enforcement of such a contract (i.e. a contract that does not comply with Section 2).

The written contract must expressly state all terms and conditions mutually agreed by the parties and should be signed by or on behalf of all parties to the contract.  It is possible for the contract to refer to another document that contains all or some of the terms mutually agreed upon. And if the document does not contain all the terms, an order for rectification can be sought.

Based on the conditions of the sale and the terms agreed upon, the seller’s solicitor drafts a contract and prepares two identical parts of this contract- one for the seller and the other for the buyer. It is not necessary that both parties should sign both parts of the contract.

While it is the general rule that all contracts must be written, there are exceptions to this general rule. They include contracts formed to grant a lease not exceeding a period of three years and taking effect in possession at the best rate without a fine, or contracts that are made at a public auction at the fall of the hammer. Also options, equitable mortgages and side letters (variations of a contract) issued in connection with the sale transactions do not need to satisfy requirements under Section 2.

Deeds

Deeds are required to give away or create a legal title or interest on the property. But, when a lease is granted for a period that is less than three years and which takes effect in possession at the best rent available without a fine, such a deed is not necessary. There are no legal formalities attached to such a lease and can even be created orally. But consequent leases cannot be undertaken unless there is a deed.

Even if requirements of a deed are not satisfied, the transaction may still operate in equity provided the Laws of Property (Miscellaneous Provisions), S 2 are complied with.

Photo courtesy: Editor B

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