Categories
Property Law

Beware of the Representations Made to You in the Lead Up to Signing a Property Contract

Are you thinking about buying a property? Or a business?

If you are, you need to be cautious and vigilant about the statements you are tempted to rely on, and who is making those statements.

Let me explain.

I act for large numbers of people who are buying (or selling) property. When I meet the purchasers or speak to them on the phone they frequently tell me “the auctioneer said” or “the developer said” or “the seller said”.

I have to tell them to ignore, or at the very least treat with a great deal of caution, these statements because from a legal perspective they cannot rely on them. Because invariably when the auctioneer’s sales advice note issues or when the contract is issued by the vendor’s solicitor there will be disclaimers and conditions along the lines that the purchaser cannot rely on any statement outside of the written contract of sale.

And that the contract contains the entire agreement between the purchaser and vendor.

In other words, the vendor’s solicitor will go to the trouble in many cases of inserting a special condition similar to the following:

Entire Agreement and Representations

  1. The purchasers agree and accept that no statement or measurement contained in any brochure or advertisement issued by the Vendor or any agent on behalf of the Vendor relating to the Subject Property shall constitute a representation inducing the Purchasers to enter into the sale or any warranty forming part of this Agreement.
  2. Any statement, description or measurement contained in in any such particulars or in any verbal form given by or on behalf of the Vendor is for illustrative purposes and are not to be given as matters of fact.
  3. Any misstatement or omission or mis-description or incorrect information given verbally or in form of any printed particulars by any person on the Vendor’s behalf shall not give rise to any cause of action claim or compensation or to any right of rescission under this Agreement.
  4. The Purchaser shall have no right of action against any agent, employee or any person whatsoever connected directly or indirectly with the Vendor whereby any mistake, omission, discrepancy, innaccuracy, misstatement or misrepresentation may have been published or communicated to the Purchaser during the course of any representation or negotiation leading up to the sale.
  5. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes and extinguishes any representations or warranties (if any) previously given or made accepting those contained in the Agreement and no variation shall be effective unless agreed and signed by the parties or by some person duly authorised by each of them.

You will also note that the sales advice note from the auctioneer/estate agent will be “subject to contract/without prejudice/contract denied” which is an indication that you will only be able to rely on what is contained in the contract or is clarified/confirmed between the solicitors as they negotiate a binding contract.

It can be a struggle for the solicitor to temper the enthusiasm of the inexperienced purchaser because they will assume what is being said to them by the agreeable vendor or estate agent can be relied on. Maybe it can, maybe it cannot and if there is a dispute you will need to look to the written agreement between the parties to see exactly where you stand.

And the written agreement between the parties is the Law Society Standard Conditions of Sale 2019 edition.

IDENTITY

11. (a) The Purchaser Accepts the evidence of identity as may be gathered from the documents specified in the Documents Schedule. The Vendor confirms that he has furnished to the Purchaser such information as is in his possession relative to the identity and extent of the Subject Property, but the Vendor is not and shall not be required to define exact boundaries, fences, ditches, hedges or walls or to specify which (if any) of the same are of a party nature, and the Vendor is not and shall not be required to identify parts of

the Subject Property held under different titles.

RIGHTS – LIABILITIES – CONDITION OF SUBJECT PROPERTY

13. The Vendor confirms that he has disclosed before the Date of Sale, in the Particulars the Special Conditions or otherwise, all easements, rights, reservations, exceptions, privileges, covenants, conditions, restrictions, rents, taxes and other liabilities (not already known to the Purchaser or apparent from inspection) which are known by the Vendor to affect the Subject Property and are likely to affect it following Completion.

14. Subject to General Condition 13, the Purchaser Accepts that the Subject Property is sold and the Purchaser shall be deemed to buy:

(a) with full notice of the actual state and condition of the Subject Property and

(b) subject to (i) all Leases (if any) mentioned in the Particulars or in the Special Conditions and (ii) all easements, rights, reservations, exceptions, privileges, covenants, conditions, restrictions, rents, taxes, liabilities, outgoings and all incidents of tenure affecting the Subject Property (each a “Relevant Provision”) and

(c) notwithstanding any partial statement or description of the Lease or the Relevant Provision in the Particulars or in the Special Conditions or in any document specified in the Documents Schedule.

Conclusion

I hope you see from these conditions in the contract for the sale of property are sufficient to cast aside any warranty or representation that was made in the run up to the binding contract coming into effect.

And that you simply cannot rely on these statements, no matter how well intentioned or helpful or clarifying they were intended to be.

Categories
Property Law Property Purchases and Sales

The Formation of the Contract in Purchase or Sale of a Property

In order for any contract to be enforceable you need 5 things:

  1. The parties must have the legal capacity to enter into a contract
  2. They must intend creating legal relations
  3. The contractual terms must be certain
  4. There must be offer and acceptance
  5. There must be consideration.

For the sale of land or real property it was the case that a written note or memorandum was made which was signed by the person to be charged with the contract. Although this requirement was relaxed by reason of the equitable doctrine of part performance.

Doctrine of part performance

This doctrine held that an oral contract for the sale of land, where no note or memorandum existed, could be enforced by the party seeking to enforce the contract has partly performed his actions under the contract and the other party has acquiesced in those acts of part performance.

Land and Conveyancing Law Reform Act 2009

This Act changed the law by repealing the old Statute of Frauds (Ireland) Act, 1695 as follows:

Section 51.— (1) Subject to subsection (2), no action shall be brought to enforce any contract for the sale or other disposition of land unless the agreement on which such action is brought, or some memorandum or note of it, is in writing and signed by the person against whom the action is brought or that person’s authorised agent.

[SF 1695, s. 2]

(2) Subsection (1) does not affect the law relating to part performance or other equitable doctrines.

(3) For the avoidance of doubt, but subject to an express provision in the contract to the contrary, payment of a deposit in money or money’s worth is not necessary for an enforceable contract.

Memorandum/Note of Agreement

The following matters should be included in the memorandum

  1. The parties
  2. The property
  3. The consideration
  4. Any other provisions agreed between the parties

Where the conditions of common law and the Land and Conveyancing Law Reform Act 2009 are satisfied an enforceable contract for the sale of land (real property) comes into being. This type of contract is known as an ‘open contract’ because all the terms of the contract are not set out in the memorandum.

Closed contract

A closed contract, by contrast, is one in which the parties set out all the terms of the agreement in a formal agreement. It is the practice in Ireland that the standard form Contract for Sale produced by the Law Society of Ireland is used.

You can learn more about the standard form contract for sale here. This is the contract that will be used in property transactions in Ireland.