When it appears that a property sale contract is not likely to be completely any time soon, the aggrieved party may consider serving a fresh notice where time is made the essence of the contract. A new date of completion is set and if the contract is not completed within that date, the aggrieved party has the option of terminating the contract immediately or forfeiting the deposit money along with accrued interest besides claiming damage to recover loss. Thus, a definite decision can be formed as to whether a new property can be purchased or find a new seller for the property.
When time is made essence to the contract, it binds both parties concerned. Thus, if the previously agreed party is now unable to honour the contract on the new date, the other party gets the right to terminate the contract and make claims for breach of contract. Thus, a notice to complete the contract should not be served simply as an idle threat; the person serving should be fully aware of the consequences and must be sure that he shall be able to comply with the new completion date.
Standard Conditions 6.8
Even though service of completion notice is provided under common laws, provisions for the same are included in the contract. This is dealt by Standard Conditions 6.8 wherein it is mentioned that the contract should be completed within ten days of service of notice, thereby making time an essence of the contract. As per Standard Conditions 6.8.3 a buyer who has paid less than 10% deposit has to pay the remaining 10% immediately on the service of notice to complete.
The parties’ rights and obligations when a notice has been served but not complied with are governed under SC7.4 and SC 7.5. Once this notice is served, it cannot be withdrawn.
Non-compliance with a notice to complete
While it is true that when a notice to complete has not be complied with, it gives the aggrieved party the right to terminate the contract; it does not automatically terminate the contract.
Buyer’s failure to comply with a notice to complete
As per Standard Conditions 7.4, besides rescinding the contract, the seller also has the right to;
a) Forfeit and keep the deposit and any other accrued interest
b) Resell the property and all other chattels included in the contract; and
c) Claim damages
The seller also retains his rights and remedies that would allow him to claim for specific performance if he so wishes.
Seller’s failure to comply with a notice to complete
This is guided by Standard Conditions 7.5 and mentions that in addition to rescinding the contract, the buyer is also within his rights to claim that the deposit money be returned. He can also make a claim for specific performance or compensation.
Photo courtesy: Alex Pepperhill
