With new build developments, it has long been common for developers to use sale contracts that provide for completion to be fixed by reference to the date of service of a notice by the developer (ie the seller) confirming that the property is practically complete. This, of course, allows the developer to control the completion timetable.

In the current property market, there have been many instances of buyers wanting to back out of new build contracts signed at the height of the boom. The bottom line is that those contracts will normally be binding, and the unhappy buyer will usually have to go ahead and complete (or face a claim in damages). However, in many instances, the developer, as seller, will have delayed completion of the building works, and in those cases the buyer may argue that the seller has been guilty of an unreasonable delay that goes to the heart of the contract (and so entitles the buyer to rescind).

However, a recent case has upheld the validity of contracts that fix the completion date by reference to a notice served by the seller. What happened was that a group of buyers agreed to buy 11 new build flats, with it originally being suggested that completion would take place in December 2007. Six months later, the flats had still not been completed, and so the buyers served notices for the works to be completed within ten days. In due course, both sides served notices to complete. The question then arose as to whether the buyers had been entitled to serve notice to complete because of the delay in finishing the building works. However, whilst the contract said that all work had to be done ‘with all due dispatch’, completion was defined as being ‘not more than ten working days after the buyer has been sent notice that the property has been completed’ (which is typical wording for new build contracts of this sort). In the court’s view, that provision was binding and it could not be argued that the six-month delay was sufficiently serious to ‘go to the root of the contract’ and so amount to a repudiatory breach.

In most cases, therefore, delay in completing the contract will not allow the buyer to withdraw. However, this does not mean that a developer can simply mothball a development, since that sort of delay will almost certainly ‘go to the root of the contract’ and be a repudiatory breach (allowing the buyer to serve notice that he regards the contract at an end). See commentary on North Eastern Properties v Coleman [2009] EWHC 2174 (Ch) (access free at www.practicalconveyancing.co.uk) in [2009] 241 PLJ 6.