Who is responsible for the property—SCs?

The following Property practice note provides comprehensive and up to date legal information covering:

  • Who is responsible for the property—SCs?
  • What happens if the buyer occupies before completion?
  • What if the property is damaged or destroyed between exchange and completion?
  • Who insures between exchange and completion?
  • What if both the seller and the buyer insure the property (double insurance)?
  • LPA 1925, s 47

Who is responsible for the property—SCs?

The Standard Conditions of Sale (5th Edn) (5th edition) (SC) reflect the open contract position. They confirm that the risk in respect of the property passes to the buyer from the date of the contract.

What happens if the buyer occupies before completion?

Risk passes to the buyer. However, the seller may be concerned that:

  1. the buyer may acquire a tenancy in the property

  2. once the buyer has gained possession its incentive to complete diminishes and completion may be delayed

  3. the buyer may alter the property without the seller's consent, and then for some reason fail to complete

To address these issues SC 5.2 provides that:

  1. the buyer occupies as a licensee and not as a tenant

  2. the buyer cannot assign its rights of occupation

  3. the buyer cannot alter the property

  4. the licence terminates automatically on the contractual completion date or can be terminated on five working days' notice by either party

Where occupation is allowed pending completion of a contract to acquire the freehold or a lease of the property, the court is likely to find that there is no tenancy even if the arrangement has the hallmarks of a tenancy identified in Street v Mountford (exclusive possession of defined premises for a term at a rent). However, where occupation is allowed before contracts have been exchanged (even if the ultimate intention

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