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Wk 7: Subject Matter of Sale - Coggle Diagram
Wk 7: Subject Matter of Sale
Identification of Subject Matter
REIQ
Surveys
Cl 7.5(1) REIQ
Buyer can survey the land
Material error?
Terminate - 7.5(4); or
Compensation - 7.5(2)
Otherwise if immaterial the only remedy is compensation
Important: where
buying PART of the land
buying commercial property : "ORDINARY PRECAUTION"
Svanosio v McNamara
If description "lot 6" does NOT correspond with lot as pegged, the subject matter is the LOT AS PEGGED
Donaldson v Hemmant
Plans
-Buyers will inspect the property
Not justified relying solely on that
Means of better identifying via plans
Buyers can't resist S/PERF by arguing they were mistaken as to the extent of their purchase by lack of care in checking plans
The PLAN forms part of the DESCRIPTION of land sold, has contractual force:
Tefbao P/L v Stannic Securities P/L
To operate as a WARRANTY, will need a reference in the contract to the plan as forming a part of the description:
Harris v Smith
Property Parties Price
(Mis)Description of subject matter
Mistake in description
WANT of title, not defect in title
MUST appear on the FACE of the contract (can't be implied):
Jarema P/L v Kato
Cl 21.1(b) gave the plaintiff the right to terminate the contract if access was other than by way of an adjoining road dedicated for public use or by way of a registered easement to a road dedicated for public use. As counsel for the defendant submitted, it does not follow that if access to the land was other than by such a road or easement, there was an error or misdirection within clause 8.2
REIQ 7.5(2)(c)
Overcomes the decision in
Travinto Nominees P/L v Vlattas
Misdescriptions in property did not take account of errors in describing title
Contract sufficiently disclosed of a lease, but didn't disclose the option for renewal
NOW see 7.5
Material misdescription/defect
TEST
The Rule in Flight v Booth
Buyer is not getting substantially what was bargained for; or
Buyer would not have contracted if they knew the true position
If so, a court of equity would not compel by S/PERF
s 69 PLA supports this: allows termination 'where specific performance would not be enforced' due to defect in title
Acceptance of Title
REIQ 7.3 - The buyer may not deliver any requisition or enquiries on title
Requisitions
were
questions about the property (drawn up by lawyers)
Tender of Deed of Conveyance delivered only after satisfactory answers to requisitions
NOW
not
permitted under REIQ
Objections to title can now be maintained up to acceptance of title: settlement, possession or other indication of acceptance - 8.5(2)(b)
Freehold land register
s184 LTA: Registered proprietor of fess simple holds free from all other interests
s 185 LTA: Exceptions
Equity arising from the act of the proprietor
Interest of a lessee under short lease
Beneficiary of an easement if omitted/misdescribed
Adverse possessors
Proprietor with earlier indefeasible title
Other possible issues
Administrative advices
recorded on title but not registered
Unregistered and statutory encumbrances (eg local council: drainage pipes)
Need to search outside the register to determine interests over the title
Last minute check search is crucial (s 70 PLA - if Title Office computers are down, seller not breach, time not of essence)
Compensation
If a buyer is getting substantially what they've bargained for = no compensation
If not, although difficult, court will assess:
if price calculated by area, $ payable for deficiency
If misdescription = lack of physical characteristic. $ payable for diminuition of value without characteristic
if Q is between cost of rectification, and diminuition in value without rectification, under
Edson v Sun Kuong Properties
if property can be rectified, the difference between the property as it should be and the defective property cannot be more than the total cost of rectification
Defects in subject matter
Defects affecting title
Underground drains - statutory encumbrance
Services unlawfully passing though other land - REIQ 7.7(1)(c)
Notices by competent authority or court
Errors in description - REIQ 7.5
Notices under the Building Act 1975 for
defective improvement do not affect title
- REIQ 7.6(4)
Planning Act 2016
Risk in subject matter
On execution of the contract, where it is valid and legally binding:
Seller: retains legal interest until purchase money is paid and has a trustee like role
Buyer: has a beneficial interest in the land commensurate with relief that equity would give by S/PERF or injunction
RISK: general law - passes on execution
REIQ 8.1
Seller has duty to take reasonable care and is liable for damage via neglect, wilful acts