Buying and Selling Property
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Frequently Asked Question - I'm in the process of buying a property; what should I look out for when reading the draft contract?
- You need to evaluate the information given in the preliminary enquiries with what the solicitor has written concerning the items, referred to as 'chattels' in the Agreement, which the seller agrees about the price that is included.
- Is the amount of deposit settled right?
- Make sure to whom and under what conditions the deposit is to be paid. You need to insist that whosoever receives the deposit does so as stakeholder, because a stakeholder cannot part with the money unless he or she has been satisfied that completion has taken place.
- There should be a clause stating the capacity in which the vendor sells, called 'Title Guarantee Full/Limited'. If such a clause doesn't appear in the draft contract, ask for one to be inserted.
- Ensure that the address and/or description of the property to be sold is correct. If the property being sold is part of an existing registered title, then you should also be provided with a plan, for more detailed inspection.
- If you were told that you are buying a freehold, check that it says so in the description.
- If your vendor agreed to include items such as carpets in the sale price, they should be in the contract, but if the price you are paying is just over the level at which stamp duty becomes payable, fix a price for the item (£x) and ask that the clause has added to it 'and £x of the purchase price shall be apportioned to these items'.
- Look at the rate of interest (contract rate) in the contract. This is usually four per cent above bank base rate. If it specifies the Law Society's rate, that is four per cent over the base rate of Barclays Bank. You will be expected to pay interest at that rate if you delay completion beyond the date which eventually gets inserted in the contract.
- Check the covenants clause so that you know everything there is to know about the property, because you buy property warts and all, and once you are the owner, you will be responsible for seeing that the covenants (if any) are adhered to.
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