In great condition

The Law Society’s Conditions of Sale 2019 for conveyancers came into effect on 1 January 2019. They provide that title is now investigated before the contract is entered into.

The conditions radically changed the conveyancing process for solicitors and their clients. Up to 1 January 2019, the title to a property being purchased on foot of a standard Law Society contract was investigated after the contract came into force.

The 2019 Conditions of Sale provides that title is now investigated before the contract is entered into.

This change was made following an extended period of consultation with the profession, which had, by a margin of two to one, endorsed the proposed change. The main arguments advanced to support the change were that such a change would:

• Reflect practice,
• Bring uniformity to pre-contract enquiries,
• Avoid duplication and post contract delays, and
• Assist in the move to e-conveyancing.

The main arguments advanced against the change were that such a move would slow the conveyancing process, and expose solicitors to the possibility of carrying out significant amounts of work – and not recovering the cost or indeed the outlay associated with such work.

Significant changes

So what has been the experience a year after the change? To date, the feedback has been overwhelmingly positive.

There is, however, a sense that, for many practitioners, the change has simply been that they now furnish with the contract a set of requisitions with replies. The change is, however, far more significant than that.

General condition 6(b) of the 2019 Contract for Sale provides that the purchaser accepts that he has received:

• The documents specified in the documents schedule,
• Requisitions on title with replies,
• Replies to such other requisitions and rejoinders as the purchaser may have raised, and
• Purchases with notice of those documents and replies.

‘Accepts’ is a defined term in the contract, and means that the purchaser shall be deemed to have acknowledged and satisfied himself as to the matter concerned, prior to the coming into force of the contract (the ‘date of sale’); and agrees to be bound by it.

This is much more than notice – it means, in essence, that the purchaser has considered and accepts the matter.

Radical change

General condition 6(c) encapsulates the most radical change contained in the contract, and provides that the purchaser confirms that:

• He has been afforded the opportunity to make any requisitions and rejoinders prior to the date of sale, and
• He accepts the title offered, and that 
• No further or other requisitions shall be made on the title shown by the vendor pursuant to general condition 6(b), and
• Subsequent requisitions may only be raised in the very limited circumstances outlined in general condition 7.

General condition 7 stipulates that requisitions may only be raised after the date of sale on a matter of title that, prior to the date of sale, was not apparent from:

• The particulars, the special conditions, the documents and information provided, pursuant to general condition 6 or otherwise, or
• An inspection of the property, or
• An inspection of the Planning Register, or
• Searchers furnished, or
• Not otherwise known to the purchaser.

Pre-contract planning search

The purchaser is deemed to be on notice of what is apparent from inspection of the Planning Register at the date of sale and, therefore, must obtain a pre-contract planning search.

Whether a requisition is a requisition raised pursuant to general condition 7 is a matter which, in default of agreement, is dealt with under the dispute resolution provisions contained in general condition 47.

That title must be investigated pre-contract is reinforced by the general conditions, for example, general condition 9, which deals with leasehold title, provides that, where the whole or any part of the subject property is held under a lease, the purchaser accepts that the lease was well and validly made, and is a valid and subsisting lease.

Thus, in cases where, for example, a lease is less than 15 years old, a purchaser must call for the title to the lessor before entry into the contract.

Absolute title

General condition 10, dealing with registered land, provides that, in cases where the vendor’s title is a possessory title, the purchaser accepts that the vendor has, prior to the date of sale, furnished sufficient evidence of the title to enable the purchaser to be registered with an absolute title.

General condition 14 provides that (subject to the vendor’s obligations pursuant to general condition 13 to disclose, prior to the date of sale, all easements, rights, and other matters – called ‘relevant provisions’ –  not already known to the purchaser or apparent from inspection affecting the property), that the purchaser:

• Acceptsthat the subject property is sold, and
• The purchaser is deemed to buy subject to (i) all leases (if any) mentioned in the particulars or in the special conditions, and (ii) all relevant provisions “notwithstanding any partial statement or description” of any such lease or relevant provision.

Without this provision, a purchaser could possibly find a way to exit the contract because a disclosure was not entirely complete. In some cases, the vendor may have incomplete information, or the matter may not be capable of better description than as appears in the title or the description offered.

The view of the Conveyancing Committee on this issue is that a partial description should put the purchaser on adequate enquiry at the pre-contract stage.

Good title

In essence, what the 2019 contract provides is that it is incumbent on the purchaser to raise all and any matters necessary to ensure that a purchaser obtains good title in order to satisfy himself on the issues prior to the date of sale.

Unless the matter can be brought within the very narrow parameters of general condition 7, the purchaser has accepted the vendor’s title. It is crucial that solicitors acting for purchasers grasp this very much intended fundamental change to the conveyancing process.

Pre-contract enquiries are an important part of the process of a purchaser deciding if he will commit to purchase. In order to assist purchasers, requisitions with replies are part of the documentation submitted with the draft contract to a purchaser’s solicitor.

The replies to requisitions will deal with many matters that may not be apparent from the documents furnished in the documents schedule of the contract.

Queries

In the case of registered land, the requisitions will raise queries in respect of matters that affect registered land without registration pursuant to the provisions of section 72 of the Registration of Title Act 1964, for example, easements that affect the subject property other than those created by express grant after first registration.

A further significant change in the Conditions of Sale 2019 is that an ‘error’ (as defined in general condition 29) entitling a purchaser to compensation, or possibly a right to rescind the contract, now includes an inaccuracy, mis-statement or mis-representation in a reply to a requisition or a rejoinder.

The 2019 Conditions of Sale are an important reform and simplification of the conveyancing process.

This, anecdotally, would appear to be the experience of the profession at large. The feared ‘lost-costs’ issue does not appear to be a problem in practice, nor does the change appear to have led to significant delays in the sale process.

The aims of standardising pre-contract enquiries and removing duplication has, in the main, been met by the furnishing of requisitions duly replied to with the contract, resulting in more focused and pertinent pre-contract queries/rejoinders being raised by purchasers.