Back to basics

The contract for the sale and purchase of land is an essential part of the conveyancing process '“ at the very legal heart of the matter. I recall the first time I readsection 40 of the Law of Property Act 1925, the section requiring contracts to be in writing, now re-enacted as section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, a rather less exciting title but nonetheless important.

The standard conditions of sale are used for most residential transactions. Currently in their fourth edition (and shortly to be issued in their fifth permutation) their history stretches back some 20 years. A glorious union between two rival factions. The Montagues and Capulets of the conveyancing world were the Law Society conditions and standard conditions of sale '“ few people romanticise about this so please stay with me!

The Law Society's new Conveyancing Quality Scheme is putting down a baseline, a marker for best practice. This is not a 'nanny knows best' exercise '“ although no doubt the accusation will be levelled '“ but is rather born out of a thorough analysis of ideas to improve the conveyancing process.

When the first edition of the standard conditions was launched, many firms adopted them, understanding that they were new and up to date. The four special conditions would be quite sufficient and everybody would be happy.

Over the last 20 years, law has changed and practice has shifted. Solicitors, always keen to act in the best interests of their client, have come up with new ways of defining obligations '“ that is as it should be.

Less is more

Some observers have said that this was followed by a degree of complacency. Each firm, when selling, added more and more special conditions, utilising words from each others' contracts, sometimes perhaps worried that someone must be cleverer than them and inserting a clause that they had not thought of. What we have ended up with is a contract that is far from being 'standard'. Time is wasted by buyers' and sellers' solicitors in correspondence negotiating its terms which are for the most part irrelevant to the transaction in hand. There has been a loss of focus on the aim of the process '“ which is simply for the client to move house rather than just protecting one's own position.

The result of the merger of earlier editions of the conditions means that copyright of the standard conditions is held jointly with Oyez Straker. The Law Society cannot simply alter them as it may wish.

The process of producing a fifth edition has required considerable collaboration, argument to both practical and academic has gone back and forth so that ideas are tested and re-tested, sometimes to destruction. The result or aim of all this work is to provide an up-to-date version which can properly be relied on without the necessity for endless reams of clauses which do little to enhance the process.

The fifth edition is not just for CQS firms but will supersede the fourth edition and should become the new industry standard, in the same way as did its predecessor.

Knowledge is power

The use of special conditions is not forbidden but the protocol requires amendments to be specific to the individual transaction and with the knowledge of the client. This is a relatively small hurdle to jump over but one there nonetheless and designed to stop unthinking use of irrelevant clauses.

Knowing and understanding the conditions should be central to the work of solicitor. Many of the special conditions currently within contracts demonstrate that is not the case. They are repetitious of standard conditions '“ or sometimes contradictory. If we as a profession want to claim or reclaim this work we have to understand the degree of expertise that is required. We must want to know and be proud that we do know.

Why does the contract have to be so complicated? Well it doesn't have to be. If everybody always did what they said they were going to do you wouldn't need anything in writing. Having a written contract keeps people honest. It is there to govern what happens if something goes wrong, but by its existence prevents the problem from occurring in the first place which is why it is essential for the document properly to reflect good practice.

The contract is produced by the seller but if we are to prevent time and effort being wasted in negotiation it must provide a fair balance, albeit that the conditions must reflect the differing contractual obligations '“ even if they are as simple as the buyer paying a deposit and the seller giving vacant possession.

Small steps

Land Registry tried and failed to improve the process with Chain Matrix, the government tried and failed with home information packs. Now it is a chance for the people who really know what they are doing, solicitors, through their professional body, the Law Society, to improve the procedure.

I once heard a good line from a film, that 'big changes sometimes happen with small steps'. The launch of the CQS, inception of a new protocol, new standard conditions, a new code for completion by post and updating of protocol forms are those steps. I hope that the whole will be greater than the sum of its parts.