Most contracts for the sale of land will incorporate either the Standard Conditions of Sale or the Standard Commercial Property Conditions. However, there is no obligation (subject to the requirements of the Protocol) to use either of these Conditions in any particular contract, and it is perfectly possible for all the provisions of the contract to be set out in full in the contract document itself, with no reference to Conditions being incorporated. There is also no obligation to use the current edition of the Conditions – when the National Conditions of Sale (20th Edition) was superseded by the Standard Conditions of Sale on 21 March 1990, many commercial conveyancing contracts continued to incorporate the old National Conditions, as the Standard Conditions of Sale were not particularly appropriate for commercial transactions. Similarly, it is still common for commercial conveyancing contracts to incorporate the first edition of the Standard Commercial Property Conditions .

Standard Conditions of Sale

The current edition of the Standard Conditions of Sale is the fourth edition, which came into force on 13 October 2003. The Standard Conditions of Sale are appropriate for residential sale transactions and for some simple commercial sale transactions, and are prescribed by the Protocol.

Standard Commercial Property Conditions

The Standard Commercial Property Conditions are based on the Standard Conditions of Sale, but are more appropriate for commercial sale transactions (particularly the more complex ones) and contain more detailed provisions. The current edition is the second edition.

The main differences between the Conditions

The main differences between the Standard Conditions of Sale (fourth edition) and the Standard Commercial Property Conditions (second edition) are:

Insurance (link): the Standard Conditions of Sale provide for the seller to retain the risk until completion (the buyer has the right to rescind the contract if the property burns down between exchange and completion), but with no obligation to the buyer to insure the property (Condition 5) whereas the Standard Commercial Property Conditions provide for two alternatives (Condition 7), the first being where the seller is under an obligation (under a lease of the property or pursuant to the contract) to insure the property (in which case he must insure, noting the buyer’s interest if so requested, and pay insurance proceeds to the buyer) and the second being where there is no such obligation (in which case the seller is not obliged to insure but where the buyer’s insurance proceeds are reduced, the price is also reduced). There is no buyer’s right to rescind under the Standard Commercial Property Conditions if the property burns down between exchange and completion – in other words, risk passes to the buyer on exchange, as used to be standard practice under the old National Conditions of Sale.

Assignment and sub-sales: although both Conditions prohibit the assignment of the contract (Condition 1.5), the Standard Commercial Property Conditions also state that the seller cannot be required to transfer the property in parts or to any person other than the buyer, whereas the Standard Conditions of Sale do not contain this additional prohibition.

Matters affecting the property: see Practice Point at the end of Full title guarantee - the implied covenants in the Covenants for Title sub-section.

Deposit: although both Conditions (Condition 2.2) provide for the deposit (except in the case of an auction sale) to be held by the seller’s conveyancer as stakeholder, the Standard Conditions of Sale permit the deposit to be used as a deposit for the seller’s own purchase, so long as it is still held by a conveyancer as stakeholder. In addition, the Standard Conditions provide for the deposit to be 10% of the purchase price plus 10% of the chattels price, whereas the Standard Commercial Property Conditions provide for it to be 10% of the purchase price only. Furthermore, where a deposit of less than 10% is paid on exchange of contracts, or no deposit is paid, the Standard Conditions (Condition 6.8.3) require the difference between the deposit paid (if any) and 10% of the purchase price to be paid by the buyer to the seller upon service of a notice to complete by the seller on the buyer, but the Standard Commercial Conditions do not require this.

Leases affecting the property: not surprisingly, the Standard Commercial Property Conditions (Condition 4) contain far more detailed provisions relating to leases affecting the property than do the Standard Conditions of Sale (Condition 3.3). In particular, the Standard Commercial Property Conditions contain detailed obligations for the management of the property between exchange and completion.

Rent reviews: the Standard Commercial Property Conditions contain (Condition 5) detailed provisions where there is a rent review in progress in relation to the property, whether the seller is landlord or tenant in relation to that review, but the Standard Conditions of Sale contain no such provisions.

Apportionments: the Standard Commercial Property Conditions contain (Condition 8.3) far more detailed provisions in relation to apportionments than do the Standard Conditions of Sale (Condition 6.3), in particular relating to the apportionment of sums the amount of which is not known at completion, and relating to sub-leases of the property.

Superior landlord’s consent: the Standard Commercial Property Conditions contain (Condition 10.3) far more detailed provisions in relation to the obtaining of any necessary consent to assign the lease of the property than do the Standard Conditions of Sale (Condition 8.3). In particular, under the Standard Conditions of Sale, the buyer is only obliged to provide information and references, whereas under the Standard Commercial Property Conditions, the buyer may be required to provide covenants and guarantees.

The Standard Commercial Property Conditions are split into Part 1 and Part 2. Part 1 is similar to the Standard Conditions of Sale, although it contains 12 Conditions compared with 10 in the Standard Conditions of Sale. Part 2 contains specific provisions in relation to VAT (in particular, provisions for transfer of a going concern), Capital Allowances and tenants’ rights of first refusal under the Landlord and Tenant Act 1987. Although it is not surprising that the Standard Conditions of Sale do not deal with the first two topics, which are relevant to commercial properties only, it is somewhat surprising that the Standard Conditions of Sale do not provide for the 1987 Act, which relates to the rights of tenants of residential, rather than commercial, properties.

Amending the Conditions

Most solicitors, whether they incorporate within their contracts the Standard Conditions of Sale, the Standard Commercial Property Conditions, or an old set of Conditions of Sale, will amend those Conditions further by express provisions in the contract itself. Provisions such as the prohibition on sub-sales and the list of incumbrances subject to which the buyer will take the property are commonly amended in a commercial sale. Generally, the sale contract will state that the relevant Conditions apply save where a Condition is inconsistent with an express provision of the contract, or where otherwise required; best practice is to set out expressly the changes and deletions required to the Conditions, so that there can be no doubt as to whether or not a particular Condition applies or has been altered.