Written Contracts for the Sale of Land and the Exceptions Thereof

Ref. Property (Miscellaneous Provisions) Act 1989, section 2

All contracts drafted for the sale of freehold land, or the creation of an interest in the same, must comply with the Law of Property (Miscellaneous Provisions) Act 1989, section 2 (the ‘Act’).

As with all similar contracts, the agreement must be made in writing, incorporating all the terms expressly agreed upon, and signed by the parties. Where the contracts are to be exchanged, as frequently occurs in property transactions, each part of the contract must contain the appropriate terms and be signed by the appropriate party before exchange.

When contracts have been exchanged, it is not necessary for either party to sign the received version of the contract. By exchanging, each party then holds a version signed by the other party, which is sufficient.

A separate document containing some or all of the terms might be referred to in the signed document. In this instance, an order for rectification may be sought if the document does not contain all of the terms.

In some cases, however, a written contract is not a necessity. Contracts to grant a lease for a term shorter than three years taking effect in possession at the best rent without a fine (ie. a capital payment) do not require a written contract. Likewise, a contract made at the fall of a hammer (ie. at auction) does not require a written contract.

Where a written contract is necessary, failure to comply with Section 2 of the Act will result in there being no contract at all in the eyes of the law. In this situation, the courts will have no jurisdiction in equity to enforce the terms and the sale will not have occurred. The only possible recompense would then come through compensation via the common law.

 

The full Section breakdown can be found here.

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