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Can an Exchange of Letters Be a Contract for Sale of Land?

on Monday, 13 May 2019.

A recent legal case has highlighted that this could be the case…

Camden Council wanted to redevelop an estate. Mr Kuznetsov owned a flat on the estate. He received a letter from the council offering to buy the flat. The letter advised him to obtain a 'Red Book' (an independent valuation by a surveyor) and stated that it would be willing to purchase the flat at that value.

Mr Kuznetsov wrote his acceptance of the offer on the letter, countersigned it and delivered it to the council. Nothing came of this and the council subsequently compulsorily purchased the property.

Presumably a 'Red Book' valuation would have resulted in a higher price than the compulsory purchase compensation, because Mr Kuznestov started court proceedings, arguing that the letter was a binding contract. We now await for the court to decide whether Mr Kuznetsov is correct.

Whether he wins or not, the moral of the story is to be careful about what is put in writing and to make it clear that no legal obligations exist until a formal exchange of contracts takes place.

In order for there to be a contract for the sale of land or an interest in land, the contract must be in writing and must include all the terms which the parties have expressly agreed. This must be in one document or, where contracts are exchanged, in each, and must be signed by each party.

Usually the seller and buyer agree all the terms of a contract for sale of a property via their solicitors and neither party is legally bound until contracts are formally 'exchanged'.


Do you have concerns regarding buying or selling a property? Contact David Marsden in our Commercial Property team on 01923 919 303. 

 

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