Suppose a buyer fails to complete, and as a result the seller is unable to complete their own related purchase, and so loses their deposit on that purchase. Can the seller (a) forfeit the deposit from their buyer, and (b) also claim compensation for the deposit that they have lost on their related purchase?

If a buyer delays completion, then the seller can claim interest under Standard Condition 7.3. But, it is important to appreciate that 7.3 provides a regime for late completion, not non-completion.

Currently, ‘land agreements’ are excluded from competition laws. Accordingly, land owners are free to impose restrictive covenants (eg against the use of premises for the sale of alcohol), and also include prohibited use controls into shopping centre leases. But, that may change as from 6 April 2011, when land agreements become subject to competition law.

Note that competition law will then apply to all land agreements in force as at 6 April 2011 (to that extent, it will be retrospective – so a ten-year lease granted in 2007 will be subject to the new regime). So, when negotiating new agreements it is important to bear in mind the changes that will come into effect next year. The sort of restrictions that may be viewed as anti-competitive are:

an obligation to charge prices no lower than those specified in the agreement;

Most conveyancers (and homebuilders) were taken by surprise by the unheralded announcement of the Homeowners Code, which applies from 1 April 2010. In theory, it is not compulsory, but in practice it is – since homebuilders cannot offer National House-Building Council (NHBC), premier guarantee, or Local Authority Board Control (LABC) new home warranties without adopting the Homeowners Code.

In general terms, the idea of the Code is to ensure that homebuyers are treated fairly, are given reliable information, and know what service levels to expect. Thus:

All sales and marketing materials must be clear and truthful (although this probably adds little to obligations under the Property Misdescriptions Act 1991).

While most of the Homeowners Code focuses on the provision of information to the buyer, there are important provisions for conveyancers:

Contracts must clearly state the termination rights under the Code, and comply with the Unfair Terms in Consumer Contracts Regs 1999. Presumably, this means that sellers’ solicitors will now need to add a paragraph to their standard contracts explaining the termination rights.

The collapse of the property market, and the arrival of the credit crunch, caused major difficulties to many property developers and would-be buyers. In response, some argued that such unexpected circumstances could amount to ‘frustration’, and so end contractual obligations. That argument has, however, been given short shrift by the courts (as confirmed in Gold Group Properties Ltd v BDW Trading Ltd [2010] EWHC 323 (TCC), noted in last month’s issue at p16).

A ‘virtual’ signing is when some or all of the parties are not physically present at the same meeting. In practice, this covers the situation where clients pre-sign, and the signature papers are then sent by the solicitors to the other side via e-mail or fax.

The credit crunch has obviously caused problems for buyers who have found that the assets they contracted to buy are not worth as much as originally envisaged (which, in turn, means that funding may no longer be available).

A contract may contain a liquidated damages clause, saying that a certain sum of money is payable in the event of breach. The danger, of course, is that this provision will be struck out as an unenforceable ‘penalty’.

Property cannot be tied up in a trust forever. Gifts (eg to a particular child, or a group of people who satisfy a particular condition) must vest within the perpetuity period.

Conditional contracts always raise the potential for problems. Two recent cases involving contract conditions on the grant of planning permission illustrate this:

Contracts were exchanged conditional on the buyers obtaining planning permission to develop the property. That planning permission was obtained and the purchase completed. Three weeks after completion, neighbours applied for judicial review – with the planning permission being quashed, and the buyers being unable to develop the property. They sold it a year later at a loss. Not surprisingly, the buyers’ solicitors were held to be negligent for not having included a ‘call-in’ clause (ie extending time to allow for any appeal or application for judicial review). So, always include an appropriate delay period – or alternatively tell the client of the risks of going ahead without such a provision. Stoll & ors v Wacks Caller (A firm) [2009] EWHC 2299 (Ch).

A reminder of the procedures to be adopted when involved in a ‘virtual’ signing (ie where some or all of the parties are not physically present at the same meeting). In practice, this covers the situation where clients pre-sign, and the signature pages are then sent by the solicitors to the other side by e-mail or fax.

A recent case involving a share purchase agreement serves as a useful reminder of the importance of strictly adhering to conditions for completion as set out in the contract.

The particular contract included precise notification obligations. On the facts, although substantial completion had taken place before the contractual completion date, the fact that the seller had not served the required notices meant that he could no longer enforce the contract.

All practitioners should now be familiar with the LR’s policy of ‘early completion’, which came into force last August. The new policy applies whenever an application for discharge on the existing charge of whole is made, together with other applications (eg to register a transfer and a new charge), but without there being evidence of the discharge of the existing charge. In that situation, the LR will reject the application for discharge – but complete the other applications. Thus, the old (existing) charge will remain registered.