When conveyancing, solicitors nowadays will use a standard contract for sale, first introduced in 1976 by the Law Society of Ireland.
The introduction of this standard contract was intended to eliminate the need for individual solicitors to draft their own contracts and sought to give a fair balance of rights between buyer and seller.
The standard contract has changed many times since 1976 but comprises the following:
- A memorandum of the agreement
- Particulars of the property and tenure (eg freehold/leasehold)
- A documents schedule
- A searches schedule
- Special conditions
- Non title information sheet
- General conditions of sale-51 of them.
In a standard conveyancing transaction, the vendor’s solicitor, once he has obtained instructions from his client and has investigated his client’s title, will draft the contract for sale.
Memorandum of agreement
This will include the purchase price, names of vendor and purchaser, deposit payable on singing the contract, the closing date, and the interest rate payable by the purchaser in the event of a late closing.
The deposit is generally 10%; the closing date, if one is not specified, is 5 weeks from the date of sale. The closing date can also be specified by way of a special condition in the contract.
The date of sale is the date a binding contract comes into existence. This happens when the vendor signs the contract in duplicate and sends one part back to the purchaser.
Particulars and tenure
This will contain a physical (particulars) and legal description (tenure) of the property in sale eg
ALL THAT AND THOSE the premises known as [xxxxxxxxxxxxxxxxxxxxxxxxxxx] being the property comprised in Folio [xxxxxxxxxxxxxx]F Co. Kildare
HELD in Fee Simple
This will list the documents being provided with the contract and will include the root of title, planning documents, and any document referred to in the special conditions.
This will only be applicable in respect of unregistered property.
These will be drafted by the vendor’s solicitor, but the purchaser’s solicitor may also request a special condition (for example in respect of finance) being inserted. Special conditions, if required, should be framed to suit the particular property and transaction.
If there is any conflict between a special condition and general condition, the special condition will prevail.
Purchaser’s Pre-Contract Enquiries
These can be broken down into 2 categories:
- Relating to the physical location and condition of the property
- Relating to the documents furnished.
Physical State of the Property
The purchaser buys the property in the condition it’s in, and the vendor is not obliged to disclose any physical defects.
For this reason, a structural survey is strongly recommended.
Other Pre-Contract Matters
Things to check include:
- Road access
- Water supply
- Any planning proposals which may affect the property eg a dump next door
- Other services eg sewerage disposal
- Any outgoings.
The purchaser’s solicitor will need to carefully go through the documents furnished and check he is satisfied to proceed, or raise queries.
Signing the Contract
Once the purchaser and his solicitor are happy the purchaser signs the contract in duplicate and returns them to the vendor’s solicitor.
The purchaser should arrange insurance from the time he pays the 10% deposit as he has an insurable interest in the property.
When the vendor signs both copies and returns one to the purchaser’s solicitor there is a binding contract in place.
Working Towards Completion
The parties then work towards completion with the purchaser’s solicitor raising objections and requisitions on title and getting satisfactory replies to them.
With the completion of the sale the purchaser gets the keys and all closing title (and other) documents, and the vendor’s solicitor receives the balance of the sale price.
General condition 40 of the Contract for Sale makes provision for the serving of 28 day completion notices where the sale does not close on time. This notice does not terminate the contract but makes time of the essence.
Other general conditions provide for circumstances where problems arise in relation to completion, including clauses dealing with
- Arbitration (general condition 51)
- Forfeiture of deposit and resale (general condition 41)
- Damages for default (condition 42)
- Rescission (conditions 37, 38, 39)
If you are buying a property, don’t overlook the enquiries you yourself can carry out, especially the physical state and location of the property, and access to services.