The Law Society has revised its Standard Conditions of Sale and, in a move that will be widely welcomed, has for the first time made a specimen set of the new conditions available on its website.
The 5th edition of the Standard Conditions of Sale has been released for use in conjunction with the Law Society’s Conveyancing Quality Scheme, which is being introduced on 1 April to drive up standards in residential conveyancing. However, the standard conditions are sometimes used in commercial conveyancing transactions, and the contents of the Standard Commercial Property Conditions of Sale, which are commonly used by commercial conveyancers are also heavily influenced by them. Consequently, the changes will interest all conveyancing practitioners.
The new conditions incorporate provisions to reflect amendments commonly made in practice, and the printed form includes a box that can be used to record how contracts were exchanged and which Law Society formula for exchange was adopted where contracts were exchanged by telephone.
Among the many other changes that have been made, the form makes specific provision for third parties who occupy the property, and who will be expected to vacate with the seller, to sign the contract to consent to the sale, to release any rights they might have in the property and to confirm that they will vacate on completion. In addition, the Law Society has reverted to the position adopted in commercial conveyancing transactions; in future, the risk of damage to the property will pass to the buyer on exchange of contracts. Under the previous conditions, the seller was obliged to transfer the property in the same physical state as it was on exchange of contracts (fair wear and tear excepted). Practitioners will welcome the change.
However, commercial conveyancers should take careful note of changes in the provisions dealing with the payment of VAT. Under the 4th edition of the conditions, all sums payable under the contract were exclusive of VAT, which was payable, where relevant, in addition to the price. Under the new conditions, the price of the property and its contents are inclusive of any VAT (although the buyer is liable to pay VAT on any other sums due under the contract).
Conveyancers will also note that the 5th edition of the conditions makes no provision for situations where a seller is selling part of the land in his ownership; the 4th edition included a condition preserving rights (other than rights of light and air) after completion of the transfer. Interestingly, the Law Society has also decided to omit the provisions in the 4th edition dealing with the sale of commonhold land – presumably because commonhold has not been as widely adopted as was originally hoped.
Practitioners will need to read the conditions carefully to analyse the effect of all the changes before updating their precedents, should they wish to adopt them. They should also be aware that the Law Society has made important changes to the new Code for Completion by Post. The code is more widely adopted in commercial conveyancing transactions than the Standard Conditions of Sale and practitioners will need to familiarise themselves with the changes before they come into effect on 1 April.
Allyson Colby is a property law consultant
