If you've ever bought or sold property and been in the unfortunate position of completion being delayed, it may be necessary to serve a notice to complete on the other side.
When buying or selling a property, the completion date is perhaps the most important date in the entire process. It is the day that the buyer should receive the keys to their new property and the seller should receive the money from the sale.
The completion date is generally agreed between both parties on exchange of contracts. This is usually done by inserting a fixed date or a condition specifying clearly when completion will take place. In either case, the completion date will be a contractual term and thereby legally binding on all parties to the contract pursuant to exchange. A party should bear this in mind before committing to exchange of contracts.
What happens if completion does not go through on the agreed date?
In a contract for sale of real property, a party’s failure to complete on the agreed date does not give rise to an automatic right to terminate the contract. Whilst it is unlikely that a party would wish to terminate the contract in the event of delay, this issue can arise in practice.
Contracts will usually incorporate standard conditions regarding failure to complete on time. These conditions allow the non-defaulting party to a contract to terminate the agreement where the other has failed to complete on the specified date in the contract, provided that time is “of the essence”. The conditions also make it clear that time will not be “of the essence” until a notice to complete is served.
What is a notice to complete?
If completion does not take place on the date stated in the contract, the non-defaulting party may choose to have their solicitor serve a notice to complete on the delaying party’s solicitor, thereby making time “of the essence”.
In order for such a notice to be valid, it is crucial that the serving party is ready, willing and able to complete. A correctly served notice in accordance with the standard conditions will provide a new completion date (usually 10 working days after the notice is served, excluding the date of service) and complying with that new date now becomes a condition of the contract. Either party’s failure to complete by the new date entitles the other to terminate the contract.
Whilst serving a notice to complete may sound simple, it is fraught with potential pitfalls and someone considering serving such a notice should take advice first so they are clear on all potential remedies available to them in the face of delayed completion.
If you’d like to know more about serving a notice to complete, call and speak to one of our experts on 0121 289 3780.