The Contract for Sale is the most important document in any conveyancing transaction. It’s the starting point for the purchase and by signing the contract you create a legally binding agreement with the vendor that says you are agreeing to purchase the house or property in question.
When you agree to buy a house you give the name of your solicitor to the estate agent who will then pass it on to the vendor’s solicitor. They will then prepare the contract and send it on to your solicitor. They’ll send two contracts. You’ll sign both and the vendor will sign both so that each solicitor will have one contract that has been signed by both parties. This is important because the contracts can only be considered legally binding once they have been exchanged between the parties.
So what’s in the contract?
The contract is divided into different sections and each part has a purpose in the sale.
The Cover Page
This page does what it says – it’s the cover to the contract and as such it sets out the name of each party and the address of the property.
The First Page
This is the section that sets out the details of each party. So it will have the name and address of the vendor and purchaser. It will set out the address of the property and the purchase price. It’ll also have details of the contract deposit to be paid. This sum must be paid when you are signing the contracts and it will be paid to the vendor’s solicitor to hold in on trust. It will only be paid out to the vendor when the transaction is completing and the full purchase money is handed over to the vendor in return for the keys being handed to you.
This page will also include details of the PPS numbers for the vendor and the purchaser together with the names of their solicitors.
An extremely important section on this page is the part where the vendor’s spouse signs their consent to the sale. Under the Family Law legislation, a family home that is legally in the ownership of one spouse cannot be sold without the formal consent of the other spouse. This is so as to protect their right to live in the home and have an interest in it. So they are obliged to sign the first page of the contract also which confirms that they are happy for the house to be sold at the price set out.
The first page of the contract will also include the date on which the sale is due to complete together with the interest rate that is applicable to the sale. This interest rate is paid by the purchaser to the vendor if the transaction doesn’t complete on the date that has been agreed. If it’s been agreed that the sale will complete on July 1st and it hasn’t completed on that date due to the delay of one party then the other party is entitled to look for interest at the rate set out on page one of the contract. In practice this hardly ever happens. In most transactions each party is aware that delays can happen and it’s only in rare cases that either side would look for interest. Usually it would only happen in cases where there has been a huge delay and no effort is being made to get to completion.
The Particulars and Tenure
The next section of the contract is called “Particulars and Tenure”. This is the section that sets out the legal definition of the property. Every property in Ireland has a legal definition and the vendor’s ownership will be registered on a document that is held in the Registry of Deeds or the Property Registration Authority. Your solicitor will use this description as the starting point to confirm that the vendor is actually the legal owner of the property and that there is no-one else who has a share in the ownership or a charge over the property.
The Documents Schedule
The next section is called the “Documents Schedule”. This sets out a list of the legal documents that relate to the property. So this will include the documents that are mentioned in the Particulars and Tenure. It will include the document proving that the vendor owns the property. Any other document that shows details of a right of way or charge affecting the property will be on the list as well as copies of any planning permissions or other planning documents or letter from the local authority regarding services that are in place.
Each of the documents listed in the Documents Schedule will be sent to your solicitor with the contracts. They will then be able to go through each one and make sure that everything is in order.
The Searches Schedule
After the Documents Schedule there’ll usually be a section called “Searches Schedule”. This will set out details of the searches that are being handed over to the purchaser’s solicitor with the contract. These are formal searches carried out by a firm of law searchers. They’ll carry out a search of all legal documents held in the Property Registration Authority and the Registry of Deeds. They provide an extra way for the purchaser’s solicitor to make sure that the vendor is the legal owner of the property. The results of any searches carried out in the past will be included with the title deeds to the property and the vendor’s solicitor will list them here.
The Special Conditions
The next section of the contract is called the “Special Conditions”. As the name implies, these are matters that relate to the specific property being sold. They are prepared by the vendor’s solicitor so as to give your solicitor an overall view of what affects the property and what they need to look out for.
The usual things that go into the Special Conditions might be things like listing any mortgage that is in place and confirming that it will be discharged by the vendor from the sale proceeds so that a mortgage-free property can be handed over to the purchaser.
If there are any planning matters that need to be explained a bit further then the details will be set out here. So you might have a paragraph that talks about an extension that has been built, and the documents that have been included to do with that.
If it has been agreed that any contents will be included with the sale then they’ll usually be listed in the Special Conditions. And if there is any matter that might hold up the completion of the sale then it will be included here so that both parties know there could be a delay. This could include the issue of a Grant of Probate in a sale by a legal representative. The sale can’t complete until a Grant of Probate is available because the purchaser’s solicitor will need this when they are registering your ownership of the property. If there is a delay in providing this from the Probate Office then the sale can’t complete and this will be included in the Special Conditions so that everyone knows it could delay the sale.
The General Conditions
The next section is called the “General Conditions”. This section sets out a list of conditions that are always the same, regardless of the type of property that is being sold. These conditions have been prepared by the Law Society of Ireland and cover things that are important to every sale. So they will cover things like the planning documents that are needed for every sale, or what procedure must be followed if the parties disagree on some aspect of the transaction. There will be a condition that covers what should happen if there is a mistake in the contract that only comes to light after it has been signed by the parties. They will also set out how the sale will take place if it is going to be by auction.
The General Conditions are an important part of the contract. They’ve been prepared by the Law Society because they’re deemed to be applicable to every sale. In some cases the solicitors will agreed to amend one of the general conditions depending on the transaction in question. If this is the case, then the amendment must be agreed by both parties and it must be explained on the contract by including a paragraph in the Special Conditions that sets out why the amendment is being made.
By signing the Contract for Sale you are officially indicating your intention to buy the property at the price agreed and will complete the sale on the date agreed. It’s the starting point for the transaction and your solicitor will go through the various sections in detail with you before you sign it.
If you would like to view a copy of the actual contract for sale then you can do so here.
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