Joanne Wood
Commercial Property
Standard Commercial Property Conditions
Most property transactions, whether residential or commercial, are governed by standard conditions.
Residential contracts are governed by the Standard Conditions of Sale for which the latest edition is the Fifth Edition – 2008 Revision.
Commercial property transactions are governed by the Standard Commercial Property Conditions and the latest edition is the Third Edition – 2018 Revision.
The Standard Conditions of Sale cover many aspects of a property transaction, whether freehold or leasehold to include the deposit, encumbrances on a title (which may or may not include an outstanding mortgage), property risk and insurance, consent from third parties, VAT, notices and condition of the property.
Standard Conditions also deal with completion, apportionments and rent arrears together with late completion.
The Standard Conditions are updated from time to time to ensure that they remain relevant to property transactions for example, they now refer to an “option to tax” as opposed to “election to waive exemption” to reflect the current statutory terminology in Schedule 10, Part 1 of Value Added Tax Act 1994.
The Standard Conditions provide a useful starting point for solicitors in drafting contracts and enable property solicitors to draft contracts focusing on the main agreed terms, whether pursuant to agreed heads of terms or simply terms notified by the client and can just refer to the Standard Conditions rather than having to detail them all within the contract itself.
Contracts can easily be drafted to suit the circumstance. For example, a property being sold subject to leases may well require the position regarding risk and insurance to be amended to provide for the seller to continue to insure the property pursuant to the terms of the leases as opposed to the risk passing to the buyer on exchange as it would usually do.
Similarly, whilst timescales are set in the Standard Conditions of sale for completion, in most instances, parties agree the period between exchange and completion themselves and indeed, often exchange and complete simultaneously and so vary the Conditions to suit.
Whilst solicitors do not generally run through all Standard Conditions with their clients, they are always mindful of the Conditions when drafting the contract and will often report upon clients’ obligations within the contract, whether clearly set out in the contract itself or referred to directly or indirectly pursuant to the Standard Conditions of Sale.
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Joanne Wood Head of our Commercial Property department, comments:
“At Mullis & Peake we make every effort to understand the nature of our client’s business and the transaction at hand to ensure that any contract documentation is drafted as clearly as possible for all parties but also to cover every potential eventuality.
Whilst every effort is made by every solicitor to exchange and complete a transaction in accordance with the terms of the contract, sometimes things are outside of our control and it is important that the contract, incorporating the Standard Conditions, clearly sets out obligations on the parties for a successful contract but also steps to be taken in the event of a breach.”