The Offer and the Contract in Conveyancing
On this page, we discuss the contract which forms the basis of conveyancing transactions, such as a house purchase/sale. All words in the following text which are in italics are defined in our separate Glossary of terms.
The standard procedure is that the Contract (or Missives) is the exchange of letters between the purchaser’s solicitor and the seller’s solicitor. You can be bound into a contract for sale or purchase without having to sign any of these letters.
Typically, the first letter is the Offer and this details who the purchaser is, what property they wish to buy, the price they are willing to pay and any special or Suspensive Conditions such as that, before the purchaser will commit themselves fully to the purchase they wish to obtain a Timber Specialist Report, or that they are to finalise their Mortgage.
What happens once the offer is submitted?
The Estate Agent will check with the seller whether the main details of the Offer are acceptable, and this will be the price, the proposed date of entry and any special or Suspensive Conditions. If the seller is happy with these details the Offer will be accepted in principal and the Offer passed to the seller’s solicitors for the next stage of the Contract and the Conveyancing Process.
What does the seller’s solicitor do with the offer?
The Offer is usually a two or three page letter with a schedule of Standard Clauses attached. The seller’s solicitor will go through the Offer conditions and also the Standard Clauses with the seller and check whether any adjustment is needed.
For example, the Standard Clauses state that “the seller has not received any notice from the local authority for repair work to be carried out”. The seller will wish to disclose in the Contract if there has been a notice.
The seller’s solicitor prepares an Acceptance. This is usually a Qualified Acceptance, i.e. there are one or more matters from the Offer which the seller wishes to change or disclose – or there may be an additional condition which the seller wishes to impose, such as that payment will be made by telegraphic transfer.
More rarely, if there are not any adjustments or disclosures, a De Plano Acceptance (i.e. complete agreement to all terms of the Offer) will be prepared and this means that the contract is binding on the purchaser and the seller with immediate effect.
How many missive letters will be in the contract?
There will be at least one letter, being the Offer and, normally, there are 3 to 5 Missive letters. The solicitors exchange Missive letters, turn about, until every point is agreed. The last letter “Concludes The Contract” and at that point the Contract is binding on both the purchaser and the seller.
In certain circumstances, the Offer will include a place for the recipient to sign accepting the Offer. This is usually only if the purchaser is buying a new build house from a builder.
Are the contract letters binding on me even if I do not sign them?
Yes, if the Missives letters have been sent on your behalf by your solicitor. It is your Contract and you will be legally bound to implement the Contract. If you are unsure about any aspect of the Contract you should ask for clarification.
Other Types Of Contract
Not every Contract follows the exchange of Missive letters format.
Often, with a commercial Property, the Offer and adjustments are in draft until all points are agreed. At that time the principal Offer is issued, so that a De Plano Acceptance (complete acceptance) will be sent in response. The Standard Clauses are not normally used for a commercial Property. It is not unusual for the process to be slightly reversed, in that there is an Offer to sell rather than an Offer to purchase.
The overall idea, i.e. that the Contract is made up by an exchange of letters between solicitors on behalf of their clients remains the same.
The builder, or their solicitors on their behalf, issue an Offer to sell sometimes directly to the purchaser. It is possible that this type of Offer will have a section at the end for the purchaser to sign accepting the Offer. If the purchaser signs, the Contract is binding.
Every builder is slightly different with their requirements although there are Standard Clauses for new build properties which are different to the usual residential Standard Clauses.
It is usual that the builder will give a fairly tight timescale to accept the Offer. With this type of Offer it is expected that a deposit will be made when at the time the time of Conclusion of the Contract and sometimes this could be several months in advance of completing the purchase.
The purchaser may need to carry out extensive investigations before the Offer is submitted. Typically, this type of Offer will be conditional on Planning Permission or Building Warrant being granted, so it will be impossible to say what the timescale for completion of the purchase will be. A long stop date will be included.
This means that, if Planning Permission or Building Warrant is not obtained or other Suspensive Condition(s) confirmed by the long stop date, the purchaser and seller will not need to go ahead with the Contract and will not Breach the Contract by deciding not to proceed.
The practical matters that the purchaser will wish to be sure of – as well as being able to build the house that they wish (Planning Permission and Building Warrant) – are that there will be services available (such as electricity and water) and availability for drainage, possibly to a septic tank.
Council house purchase
After a purchaser has made an application to purchase a Council house, the Council issues an Offer to sell. The timescale for accepting the Offer and completing the purchase is in line with statutory requirements.
As the purchaser is already in occupation of the Property, the Standard Clauses do not apply and there would usually be no reference to such matters as alterations, specialist treatment work and other practical issues which the purchaser will already be aware of.
How we can help?
We hope you found this explanation of offers, acceptances and contracts in conveyancing to be helpful. If anything was not clear, feel free to contact us and ask for clarification. There’s no charge for that. We’d like this to be as clear as possible, so you’ll be helping us out.