Wk 8: Contract to Settlement, Pt 2

Paper Settlement

Settlement = compete conveyance from one party to the other

  • when title is given and accepted (buyer WAIVES right to object to defects in title)
  • Cl 5.3: payment on settlement date in exchange for transfer documents and
  • instrument(s) to release encumbrances
  • (if requested no less than two days before settlement) keys
  • tenancy documents

Tender

Obligations = dependent and concurrent

Each party must be ready, willing and able to settle on the date

Can't terminate for failure unless your own client was RWA

Failure won't be excused unless eg the other party intimates that tender will be futile: Foran v Wright

At common law - solicitor does not have authority to give/receive a discharge of the obligation to pay - need written authority to accept purchase money

S 66 PLA empowers a solicitor to give and receive a discharge of the obligation to pay

See cl 2.5(1)

If no REIQ, buyer needs a written direction from seller/seller's solicitor to disburse funds at settlement

E- Conveyancing

  • PEXA, Sympli, LexTech
  • Process discussed LCQ 7.3
  • Obligations = dependent and concurrent BUT
  • NO physical act of tender
  • Seller's ability to deliver a transfer capable of regn (thus good title) requires BOTH parties to cooperate and digitally sign the electronic workspace
  • Settlement depends on the computer systems (PEXA, Land Registry, RBA, Office of State Revenue) being operable

Cl 5.3, 11.3 REIQ

Electronic Settlement, REIQ

  • Buyer deemed to comply with obligation to pay by cheque if pays via PEXA
  • Seller deemed to comply with obligation to deliver title/transfer if completes and signs e-transfer and form 24 and release of mortgage provided in the workspace prior to settlement
  • Where documents or other 'things' not suitable for electronic lodgement, Seller's solicitor must:
  • confirm they hold
  • undertake to send to buyer no later than the business day after settlement

Video resources on Moodle

Possession

Implied condition if the Reference Schedule is left blank, then vacant possession will be given at Settlement
Handover of keys/cards = delivery

Vacant Possession

Ibrend Estates BV v NYK Logistics (UK) Ltd

  • More than mere absence of people
  • purchaser can assume/enjoy immediate and exclusive possession occupation & control
  • Empty of chattels
  • But this only breached if chattels left substantially prevent or interfere with the enjoyment of the right of possession of a substantial part of the property (Q of fact in each case)

Cumberland Consolidated Holdings Ltd v Ireland

  • This is the exception rather than the rule
  • Normally buyer accepting possession would either
  • waive right to claim damages
  • ask for (cannot insist on) reduction in price to cover cleaning expenses

Lawful Use

The present use of the property is described in the Reference Schedule

No compensation is payable if the use is not lawful (seller does not warrant that this is lawful, cl 7.4(5))

BUT buyer can terminate if, eg, property not lawful under a town planning scheme, cl 7.7(1)(a)

ALSO it is a failure to provide possession: If a certificate of classification is required for lawful occupation and this is not provided. A breach of cl 5.5 - seller not providing LAWFUL POSSESSION (can terminate)

Chattels. Property

1.1(2)(ii) Reserved items

1.1(2)(v) Improvements

1.1(2)(gg) Property

5.5 at Settlement:

  • Must give vacant possession of the Property (including Improvements)
  • Titles to Included Chattels passes
  • Reserved items on property deemed abandoned
  • If chattels included, buyer should search the PPSR! (security)(encumbrances)

Merger

  1. Execution of Contract
  1. Transfer is executed by seller
  1. Settlement
  1. Registration - true settlement

exchange of transfer and purchase price, after this time:

Buyer accepts title, so

Buyers right to object to title is 'merged' in the conveyance

Conveyance only set aside for more than defect in title or misdescription - need fraud, TFC, misrep, mistake

true settlement - buyers particulars entered on title

After this time

Buyer has indefeasible title

Conveyance only set aside for eg exception to indefeasibility - fraud, unconscionable conduct, equitable misconduct

Collateral Obligations

Registration of the transfer will NOT destroy and condition to which registration will not give effect:

  • Warranties, collateral or other rights to the purchase money
  • compensation given by the contract
  • will all survive the merger

NB cl 7.5 claim to compensation - this will survive, but remember the buyer needs to be given written notice pre-settlement

  • Limited only by Limitation of Actions Act upon the contract (6 years)
  • But if fraud, misrep shown: no time limit

Pascon Pty Ltd v San Marco in Lamis Cooperative Social Club Ltd