Considering the sums involved, the contractual terms relating to property transactions are often treated rather casually, in the sense that the penalties for failing to meet completion dates are often not enforced.
However, this is not always so, as a recent case involving a buyer who was late with his completion money demonstrates. The buyer failed to complete on the agreed date and, as a result, the seller issued a notice of completion, which is a notice requiring the buyer to complete within a stipulated period. Once such a notice has been issued, time becomes of the essence in the contract and the buyer must pay the sum due by the date specified. If the buyer fails to pay, the seller has the right to rescind the contract and to retain the deposit paid by the buyer.
In this case, the buyer paid across the purchase price on the last day of the notice period. Crucially, however, the buyer failed to pay the seller’s legal costs and the contract provided that these would also be payable by the purchaser in these circumstances.
The court ruled that since the buyer had not paid the full consideration required under the contract, the seller was free to rescind the contract and retain the buyer’s deposit. The argument that the buyer did not know the precise amount of the seller’s legal costs was also given short shrift – the whole amount due had to be paid by the end of the period specified. This makes things quite complicated where these costs are not known. Typically, a contract will also specify that interest is payable by the buyer in the event of a late completion. The vendor can therefore insist that these sums are paid also.
It is unwise to assume that a vendor will adopt a casual attitude in such circumstances or will allow the transaction to go ahead and the ‘extras’ to be paid later by the buyer.