Transfer & Creation of Property Interest
- Created by: Rachel
- Created on: 02-04-14 17:54
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- Transfer & Creation of Property Interest
- FORMALITIES
- ADVANTAGES
- provide written evidence of transaction
- ensure theres evidence of the sale
- terms will be clear - oral trans. -> disputes may arise
- warning to those entering transaction that it will have legal effect
- If you transfer land - must be in a DEED
- DISADVANTAGES
- making formalities compulsory makes informal transactions unenforceable
- cost
- ADVANTAGES
- STAGES OF TRANSFER
- 1.PRELIMINARY NEGOTIATIONS
- At this stage parties still negotiating
- purchaser may make an offer, seller might accept
- agreement will be 'subject to contract' = won't be contractually bound
- purchaser may make an offer, seller might accept
- don't have effect in law - NOT legally binding
- 'gentleman's agreement'
- arent legally binding until exchange of contract - so to give parties a chance to make enquirers and searches
- this can cause problems for the purchaser
- seller - sell property to someone else (legally entitled to do so)
- at risk that another buyer will offer more $$$ - won't be any remedy in court
- "GAZUMPING"
- LOCK OUT AGREEMENTS
- seller may be bound before exchange of contract
- can't negotiate w/ anyone else for limited period of time
- PITT v. ASSET MNGT LTD 1984
- held: possible to over come limitations to 'subject to contract'
- don't need to be in writing
- prior collateral contract
- states during agreed period - seller can't negotiate with anyone else
- doesn't mean purchaser has right to demand land is sold to them
- entitles purchaser to recover damages for breach of argument
- doesn't mean purchaser has right to demand land is sold to them
- states during agreed period - seller can't negotiate with anyone else
- seller may be bound before exchange of contract
- At this stage parties still negotiating
- 2.EXCHANGE OF CONTRACTS
- Any contract for sale of an interest in land created after Sept 1989 must comply with S.2 of LAW OF PROPERTY (MISCELLANEOUS PROVISIONS)ACT 1989
- Act states:
- 1. contract must be in WRITING
- 2. must contain ALL TERMS OF AGREEMENT
- 3. must be SIGNED BY BOTH PARTIES
- both copies of contract must be signed
- both parties must sign contract - signature must be by HAND
- if provisions are met - contract is VOID
- Act states:
- EXCEPTIONS TO s.2 LoP (MP) Act 1989
- collateral contract doesn't have to reform w/ requirements of act
- if parties agree other conditions in separate agreement (collateral contract) it is enforceable as a separate agreement as long as terms aren't overly important
- any variation in term of contract won't be effective unless both parties sign them
- doesn't give parties chance to include fresh terms
- if parties informally vary the terms (not signed) the informal variation won't take effect and original contract will stand
- contract which doesn't comply with s.2 may be upheld on estppel or a constructive trust
- conduct must be unconscionable
- contract to grant leases less than 3 years, contracts made in public auction and collateral contracts can be made orally
- collateral contract doesn't have to reform w/ requirements of act
- SPECIAL PERFORMANCE
- once contracts have been exchanged they are binding. thus neither party can withdraw from the sale w/o committing a breach of contract
- if other party does commit a breach - other party can seek a remedy from courts (special performance)
- equitable remedy - may be unavailable when
- 1. party seeking has acted unconscionably
- 2. award would prejudice the interest of 3rd parties
- 3. it would cause hardships amounting to an injustice
- if SP is refused/not sought after - damages can be claimed
- recession
- if impossible - damages can be claimed
- may be available to return parties to position they were in before the contracts were exchanged
- rectification
- where there has been an error in the contract
- contracts can then be relied on in altered state and sale may proceed
- where there has been an error in the contract
- recession
- once contracts have been exchanged they are binding. thus neither party can withdraw from the sale w/o committing a breach of contract
- entering into binding contract doesn't transfer legal title to purchaser
- BUT in equity contract to transfer land is enforceable - equitable ownership of land passes to purchaser as soon as contract is entered
- thus from moment of exchange of contract -vendor becomes a trustee and holds property on trust for purchaser
- BUT in equity contract to transfer land is enforceable - equitable ownership of land passes to purchaser as soon as contract is entered
- Any contract for sale of an interest in land created after Sept 1989 must comply with S.2 of LAW OF PROPERTY (MISCELLANEOUS PROVISIONS)ACT 1989
- 1.PRELIMINARY NEGOTIATIONS
- 3.COMPLETION OF SALE
- formal transfer of legal title from vendor to purchaser
- necessary to use a DEED - s.51(1) LPA 1925
- deeds before July 1990 - had to be signed, sealed and levered (didn't need to be witnessed)
- deeds after July 1990 must comply with s.1 LP (MP) Act 1989
- deed must be clear that is is a deed
- must be signed by grantor or by both of them if theres more than 1
- signature must be witnessed
- must be delivered as a deed by the grantor or someone authorised to do so on their behalf
- necessary to use a DEED - s.51(1) LPA 1925
- formal transfer of legal title from vendor to purchaser
- FORMALITIES
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