The Common Auction Conditions are designed for use in property auctions
and are published by the RICS. They are some 20 pages long, written in plain
English, and intended to be used by the general public. In general terms they
are similar to the Standard Conditions of Sale and the Standard Commercial
Property Conditions, but particular points to note are:
- Licence from L: if a formal licence is needed then the contract is
conditional. A three-month long-stop completion date is set, after
which if the licence is not forthcoming either party may rescind. The
SCS and SCPC have a four-month time limit.
- Sale by practitioner: a ‘practitioner’ means a ‘receiver, administrative
receiver, liquidator or a trustee in bankruptcy’. Since a practitioner will
not generally have had any personal dealings with the property, CAC
19 requires the buyer to take the property as it is, with no warranties
being given by the practitioner seller and no title guarantee included
in the transfer deed. There are no equivalent conditions in the SCS or
SCPC.
-
TUPE: the CAC 20 contains two alternative warranties depending upon
whether Special Conditions state that TUPE applies or not (largely
for use when property is transferred as a going concern). These are
complex provisions. There are no equivalents under the SCS or SCPC.
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Environmental: Condition 21 only applies if the Special Conditions say
so, but it does impose an onerous liability to remediate land. The
buyer should be wary of accepting this Condition since its conclusion
may indicate that the land is subject to a potential liability under
EPA 1990. The general indemnity that the buyer has to give under
Condition 21.3 is open-ended and as such is undesirable from the
buyer’s point of view.
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Service charges: services charges are not apportioned on completion.
Instead, the seller provides the buyer with a detailed statement of
service charges within two months of completion, showing the
expenditure attributable to each tenancy, the payments received from
each T, the amounts due but unpaid, and details of any amounts that
are irrecoverable. Apportionments are then made in respect of each
separate tenancy. This is a relatively cumbersome and complicated
method of dealing with service charges which provides no certainty
over payment to either party. In practice, it is better to have a Special
Condition dealing with apportionment on completion on a best
estimate basis (as in SCS 6.3.5).
-
Insurance: under CAC 3, the buyer takes the risk in the property from
the date of the contract and so must insure from that time (s47 LPA
1925 is excluded).
In general terms, the CAC are straightforward to use. There are some matters
that are not dealt with by the SCS or the SCPC (eg warranties, TUPE). In some
situations they are less detailed, and it should be noted that there are no
specific conditions relating to chattels or fixtures and fittings (particularly
important when dealing with tenanted property). There are also instances
where the conditions are more onerous on the buyer than would be the
case otherwise (eg environmental liabilities). Source: the excellent Standard
Conditions of Sale by Frances Silverman (Jordans; £39).© Practical Lawyer
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October 2008 |