Buyer Loses Flat Because of Vendor's Error

A recent case illustrates that, when mistakes occur, it may not always be possible to put them right.

A buyer and seller exchanged contracts on a flat, which was being sold by way of a long lease. This seems straightforward enough, but when the plans were sent to the Land Registry for title to be registered, the wrong plan was sent.

The buyer and seller agreed that the completion date would be 14 days after the vendor’s solicitors had provided the buyer’s solicitors with proof that the title document had been amended by the Land Registry. The sale agreement also contained a condition that set a date by which either side could give notice to the other to terminate the contract in the event that the necessary documentation was not provided within five working days. In this event, the vendor was required to return the buyer’s deposit and the buyer, who was allowed to occupy the flat even though completion had not yet taken place, had to vacate the property.

Despite the best efforts of the vendor’s solicitors, the amended documentation was not received. The vendor then served a notice on the buyer to terminate the contract but the buyer responded by issuing a waiver to the vendor and requested a completion statement.

The High Court first had to determine whether the buyer had the unilateral right to waive the condition and demand completion by the vendor. It concluded that since the practical effect of the condition was for the sole benefit of the buyer, he did have the right to do so.

The next question was what the completion date would be were the condition waived. The Court concluded that this would be 14 days after the condition had been waived. This date had already passed by the time the matter came to court.

The last question was whether the buyer could waive the condition after the vendor had given notice to terminate the contract. The buyer argued that he could, because the service of the notice to complete had occurred within five days of the vendor’s notice of termination. The vendor argued that he could not, because the termination notice was valid within the terms of the contract. The Court accepted the vendor’s point of view.

In this case, the buyer’s contract did not give him the right to accept a (temporarily) defective title once the vendor had decided to terminate the contract.

What seems unfair in this case is that the error was on the part of the vendor and the buyer wished to remain in the flat. Nevertheless, the agreement signed gave the vendor the right to act as he did.