What the Law says about the buying and selling of Land

The law regarding the buying and selling of land:

  • The Law before the 27th September 1989 

Section 40 of the Law of Property Act 1925 states that:

“No action may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto by him lawfully authorised.”
Note that any contract which did not comply with s.40 of the Law of property Act 1925 was not void but was merely unenforceable.

Contracts Made on or After 27th September 1989

Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 states that:

“a contract for the sale of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or where contracts are exchanged in each.”

The terms of the contract may either be incorporated if they are set out in the original contract or by reference to another document that will contain them 

The contract incorporating the terms must be signed by or on behalf of each party to the contract.

The effects of a Valid Contract

A contract which complies with s.2 of the 1989 Act has the following effects: 

  • The Vendor (seller of the property) ‘becomes in equity a trustee for the purchaser of the estate sold’

  • The Purchaser gains an equitable interest 

  • The purchaser may protect his interest in the land by registering his interest. With relation to unregistered Land the interest can be protected by registering a Class C Land charge against the property. With regards to registered land the purchaser can enter a notice on the land registration against the Vendors title to have evidence of his interest legally recognised.

Remedies where a contract fails 

Where a contract complies with s.2 and has been exchanged, but the agreement does not proceed to completion, the parties may:

  • Sue for damages at common law for breach of the contract;

  • Apply for an order of specific performance of the contract;

  • Apply for an injunction to restrain a threatened breach of the contract;

  • Rescind the contract (if it is possible for the parties to be returned to their original position). 

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For more information on:

  • How to create a Deed
  • When is the conveyance effective
  • Rights that are overreaching 
  • When does overreaching apply?