Exchanging Contracts

Agents are authorised under the Property, Stock and Business Agents Act 2002 to participate in the exchange of contracts for the sale and purchase of land. This authority is not absolute and is limited and excluded in certain circumstances. Agents need to be aware of their rights and where the limitations lie in order to avoid the risk of any potential litigation. An example of a particular situation where issues may arise is where a party is represented by a solicitor or conveyancer. 

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Rescission of Contract on Auction Day

The perfect scenario for a Vendor on Auction day would be for them to sell a property to the highest bidder on terms agreeable to both parties, however, purchasers are often quite unprepared for the Auction process. Some will not have a deposit ready on the day, or will request further amendments to the contract. As a consequence auctioneers have been given an unfettered discretion to act in the interests of the Vendor to conclude the sale.

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Checking Contracts For Sale

When receiving contracts of sale for marketing purposes, agents have a duty to check that the contracts they have received are complete documents and they must not market the property until a complete contract is received. Legislation requires specific documents to be annexed to the contract of sale otherwise the purchaser will have the option to withdraw from the contract within 14 days of exchange.

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Exchanging Contracts Without The Full Deposit

In the current property market, it is not always possible for purchasers to have the full 10% deposit required to be paid on the exchange of contracts. In these circumstances a part deposit can be agreed upon, however, Agents need to be careful that they do not go beyond the scope of the authority given to them in making these changes in the contract. In doing so they may place themselves in a position where they may be made liable.

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Handling Deposits

As a result of the role an agent plays in the sale and purchase of property they are given the authority to participate in the exchange of contracts and do so on a regular basis.  Incidentally they are also given the authorisation to act as a stakeholder and to receive and hold deposits. The importance of the role they play in this process places duties and obligations upon them which will need to be properly discharged. The contract for the sale of land requires a ten percent deposit and problems will arise where a lesser amount is received on exchange. This makes agents potentially liable to a damages claim in the situation where the Purchaser is unable to complete. As this is a common occurrence, there are things agents can do to ensure they are protected.

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Authority to sign a contract on behalf of a party

Often a situation will arise whereby all parties who are purchasing a property will not be able to all attend on the date of the auction. When circumstances like this arise, agents need to be aware that a written authority to bid on the property & to sign the contracts on the parties behalf must be obtained and kept as part of the documentation as part of the bidders register.

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