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Time only becomes of the essence when a notice to complete has been served.
Thereafter, any delay can be fatal to the buyer (who may then lose his deposit).
As an example of the sort of complications that can arise in any transaction,
consider this case, in which there were three Special Conditions:
i) ‘Completion shall take place by 1pm... and if completion shall take
place after that time the Buyer shall be treated as having completed
on the next following working day.’
ii) ‘The Purchaser’s Solicitors will pay to the Vendor’s Solicitors upon
completion the additional sum of £4,497.’
iii) ‘The Purchaser will be responsible for the legal costs incurred by
the Vendor, being £500 + VAT.’
A notice to complete was served, and so time was of the essence. On the
date for completion the completion money arrived at 2.45pm (not 1pm – see
clause (i)), with the total amount being the balance of the purchase money
plus the additional £4,497 in clause (ii), (but with no mention of the extra
£500 in clause (iii)). The seller purported to forfeit the buyer’s deposit because
completion was late, and the full amount due on completion had not been
tendered. The court decided:
1) The money arrived after 1pm: the court found in favour of the buyer
(ie late delivery was not fatal). The 1pm time limit was held to be
similar to that in Standard Condition 6.1.2, (namely that if completion
moneys are received after the specified time then they have to be
recalculated to allow for interest and altered apportionments), but
is not a deadline by which completion must occur. Thus, in this case,
lawful completion could occur after 1pm.
2) Failure to pay the full amount on completion: Special Condition (ii)
said the purchaser had to pay ‘upon completion’ an extra £4,497,
with Special Condition (iii) saying the buyer would ‘be responsible’
for extra legal costs of £500. The former was included in the
completion money, whereas the latter was not. The court decided
that the failure to tender the latter amount was a fatal error; the
extra £500 was part of the balance of the purchase money due and
therefore the sellers were entitled to rescind.
Some may think this is a harsh decision, but it does illustrate the care required
when time is of the essence. One point the court did not address was whether
the completion money should have included the extra day’s interest, since
completion took place after 1pm. There must surely be a strong argument
that such interest should be included and so the best advice to a buyer is
to tender all sums due under the contract, including any interest if there is
a danger of moneys being received after the deadline. See commentary on
Chinnock v Hocaoglu [2007] EWHC 2933 (Ch) in [2008] 215 Property Law
Journal 11.© Practical Lawyer
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