The contract for sale
The front sheet every sale in England and Wales is exchanged on, the Standard Conditions of Sale it incorporates, the special conditions that sit on top, and the memorandum of exchange by telephone, all filled from the record.
The contract that turns an agreed sale into a binding one
A contract for sale is the document by which a seller agrees to sell and a buyer agrees to buy a particular property at a particular price on a particular day. In England and Wales it does the work that an offer, an acceptance and a handshake do not. A contract for the sale of land has to be in writing, has to contain all the terms the parties have agreed, and has to be signed by or on behalf of each of them, under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Until that has happened, and until the two signed parts have been exchanged, either side can walk away and neither owes the other anything beyond wasted costs. That is what people mean when they say a sale is not safe until exchange. This is not advice: the contract on any real sale is settled by the solicitors acting for each side.
The document itself is short. Almost everything a conveyancer needs is already written down in the Law Society's Standard Conditions of Sale, and a residential contract in England and Wales is normally a single front sheet that carries the particulars of the sale and then says, in one line, that those Standard Conditions apply. The edition in general use is the Fifth Edition, 2018 Revision. The Standard Conditions are the Law Society's copyright material and are incorporated by reference, never reproduced: Homebinding does not print them, and neither does the front sheet. They are supplied by the solicitors with the draft contract, and anything the parties want to change or add appears underneath as a special condition.
What each particular means
The front sheet is a table of facts about the sale. Every line has a job, and a mistake in any of them travels all the way to the transfer and the register.
| Particular | What it means |
|---|---|
| Agreement date | The date the contract comes into existence, which is the date of exchange, not the date the draft was prepared. |
| Seller and buyer | Full legal names and addresses of everyone who owns and everyone who is buying. The names must match the register on one side and the mortgage offer on the other. |
| Tenure | Freehold, leasehold, share of freehold or commonhold. Leasehold pulls in the lease, the ground rent, the service charge and the management pack. |
| Property | A description clear enough to identify the land, with the full postal address and postcode, and for part of a title a plan. |
| Title number | The HM Land Registry title number, or part of a title where only some of the registered land is being sold. |
| Specified incumbrances | The covenants, easements, rights and entries the buyer is agreeing to take the property subject to. Anything listed here is the buyer's problem after completion; anything not listed is the seller's to clear. |
| Title guarantee | Full or limited. Full is the ordinary promise of an owner who has lived there; limited is used by executors, trustees and lenders who cannot vouch for what happened before them. |
| Completion date | The day the money moves and the keys are released. It is left blank on the draft and filled in on exchange. |
| Contract rate | The interest rate that runs on late money. It is normally expressed as the Law Society's interest rate, a published rate set by reference to bank base rate, rather than a figure typed into the contract. |
| Purchase price | Written in words and again in figures, so that a typing error in one is caught by the other. |
| Chattels price | Any separate sum for contents, which is not part of the price of the land. |
| Deposit | Usually ten per cent, and held either as stakeholder to the seller's solicitor's order or as agent for the seller. The difference decides who can spend it before completion. |
| Balance | The price less the deposit, payable on the completion date. |
The clauses that sit on top
Special conditions vary the Standard Conditions or add to them. A residential sale usually carries much the same short set. The first incorporates the Standard Conditions of Sale, Fifth Edition, 2018 Revision, and says that where a special condition and a standard condition conflict, the special condition wins. The second records that the property is sold with full or with limited title guarantee. The third lists the contents included in the price and, separately, the fixtures and fittings that are excluded and will be removed, so that nothing turns on an argument about what a fixture is. The fourth deals with possession: the property is sold with vacant possession on completion, or else subject to the tenancies described. The fifth may move the completion time, most often from the standard two in the afternoon to twelve noon, which suits a chain that wants keys the same day. The sixth records that the buyer has not relied on any representation except one made in writing by the seller's solicitors, which puts an end to arguments about what somebody said at a viewing. The last is used where an adult lives at the property but does not own it: that person signs the contract too, agreeing to leave on completion and to release any interest they might claim.
Anything unusual is written as a further special condition in the same place: an agreement to grant a lease, an obligation to transfer a freehold reversion to a management company, a promise to accept appointment as a director of that company, an overage, a retention, or a works schedule.
Exchange by telephone under the Law Society formulae
Exchange is almost always done by telephone between the two solicitors, using one of three standard formulae published by the Law Society. Whichever is used, the call is timed, the agreed completion date and any amendments are read out, and each solicitor writes an attendance note of what was agreed. That note is the evidence that a binding contract exists.
Formula A is used where one solicitor already holds both signed parts of the contract. That solicitor confirms they hold their own client's part and the other side's part, the two agree the completion date, and the contract is exchanged from that moment. The solicitor holding both parts undertakes to send the other side's part on the same day.
Formula B is used where each solicitor holds only their own client's signed part, which is the common case. Each confirms they hold a part signed by their client, they agree the completion date, and each undertakes to hold their part to the other's order and to post it that day. Exchange takes effect on the call.
Formula C is used in a chain, where a solicitor needs to be able to exchange but only if the rest of the chain does. It works in two stages: an activating call giving the other side the right to exchange within a set period, then a second call in which the right is used. It carries heavier undertakings and is used only where the timing of several linked sales has to be locked together.
Contract for sale
This is Homebinding's template front sheet for the sale of a home in England and Wales. It is normally filled in by the seller's solicitors from the listing, the reservation agreement and the memorandum of sale, and checked by the buyer's solicitors. The Standard Conditions of Sale, Fifth Edition, 2018 Revision, are the Law Society's and are incorporated by reference only: they are not reproduced here. Answers are kept in this browser and will be saved to the transaction record when the Homebinding back end is live (demonstration).
Memorandum of exchange by telephone
This is the note each solicitor makes at the moment of exchange. It is filled in by the person who made or took the call, immediately after it. Answers are kept in this browser and will be saved to the transaction record when the Homebinding back end is live (demonstration).
How the contract sits on the record
Every sale on Homebinding has a transaction record, and the contract front sheet is one of the documents on it. The record fills most of the particulars by itself: the property description, postcode, tenure and title number come from the listing, the price and the parties come from the reservation agreement, and the solicitors on each side come from the memorandum of sale. The solicitors then add the special conditions, which is the part no system should guess at. Title numbers and incumbrances are checked against official copies obtained under the Land Registration Rules 2003, and the register itself is kept under the Land Registration Act 2002.
The deposit is already there. Money taken at reservation is held by a regulated stakeholder, and on exchange the record converts that holding into the contract deposit, so the buyer does not send a second sum and nobody is chasing cleared funds on the day. Exchange itself is recorded as an event: the formula used, the time of the call to the minute, and the names of the two people on it, taken from the memorandum above. From that moment the record shows the sale as exchanged, the completion date is fixed on both sides of the chain, and the transfer, the requisitions and the completion statement follow from the same particulars rather than being retyped.
Bank details are the one thing the record refuses to carry. They move solicitor to solicitor on a verified channel, and Homebinding shows a standing warning in their place.
Sources: the Law Society (Standard Conditions of Sale, Fifth Edition 2018 Revision, and the formulae for exchange by telephone), HM Land Registry, the Solicitors Regulation Authority, the Council for Licensed Conveyancers and legislation.gov.uk. The Standard Conditions of Sale are the Law Society's copyright material and are incorporated by reference only, not reproduced on this page.
