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Tutorial 4
Property Law (LAW 2112)
Monash University
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TUTORIAL 4: TOPIC 7 SALES OF REAL PROPERTY; GIFTS OF
PROPERTY
Question One
Barry owns a house in Seville in the Yarra Valley, which is fully insured. The property is on the market for private sale. To save costs, Barry has decided to advertise over the internet and handle the sale himself, rather than engage a real estate agent. Barry obtains two copies of the Standard Form Contract of Sale of Real Estate that is used by Victorian real estate agents in readiness for what he hopes will be a quick sale.
After visiting the property twice, on 1 February 2022 Carol makes Barry an offer to purchase the property for $850,000. The offer is made over the phone and is verbally accepted by Barry, whereupon Carol immediately pays a deposit of 10% into Barry’s bank account by electronic transfer. On 5 February, Barry and Carol meet to ‘fill in the blanks’ on the contract. The contract provides for settlement to take place within 90 days of the signing of the contract, and is expressed to be ‘subject to finance’. Carol signed Barry’s copy of the contract, but in his haste Barry forgot to sign Carol’s copy. Carol noticed the omission on 7 February, and Barry promptly faxed her a copy bearing his signature.
a) What is the nature of the interests held by Barry and Carol in the Seville property on the 7th, 5th and 1st February?
On 27 February a tree branch comes down on the Seville house and severely damages the roof. Carol has not taken out any insurance on the property.
b) Carol comes to you for advice as to her options.
When the following happens... 1 March 2022 Barry enters into a written contract to sell the Seville property to Des for $900,000. The contract provides for settlement to take place within 30 days of the signing of the contract, and settlement does take place. Des is now the registered proprietor. Barry is quite prepared to return Carol’s deposit.
c) What interests are held by Barry, Carol and Des respectively after settlement of the contract between Barry and Des?
Question Two
Mr Chan is a developer who owns several properties in Melbourne, including a Unit located at 12/ 34 Mitford Street, Port Phillip. In September 2021, Mr Chan decides to sell the Unit. In the advertisement placed on the internet, the Unit is described as having 2 bedrooms, a bathroom, living area, balcony, and private car space.
Mr Chan has been in the property business for some time and decides to prepare the sale documents himself. He prepares a Vendor’s Statement and signs on the final page. He attaches information about the property that he locates through free internet searches, based on the kind of information he has seen attached to Vendor’s Statements in his previous
property dealings. He also prepares a contract of sale. He fills in details about the property in the particulars of sale, including the Volume and Folio reference for the Unit. Mr Chan asks his nephew Wallace to manage open-for-inspection times for the Unit, and provides Wallace with a Due Diligence Checklist that he can hand out to prospective purchasers. John Citizen comes to inspect the Unit at the first open-for-inspection on Saturday 14 October 2021, and falls in love with the city and bay views from the Unit’s balcony.
Mr Chan recalls that the parking space for the Unit has its own Volume and Folio reference, but he can’t remember what it is. At the open-for-inspection, Wallace tells John that Mr Chan will insert the relevant details for the car park as soon as he locates them. He puts an asterisk next to the “Land” heading in the contract particulars of sale and the writes the words “car park to be confirmed”.
John enters into a contract of sale for the Unit on 24 October 2021. When John meets you on 28 October, he brings with him a copy of the title for the car park that Mr Chan left in his letterbox with a note saying “car park details for contract”.
A) Advise John whether he has purchased an interest in the car park under the contract.
Now assume the following has occurred...
After entering into the contract of sale on 24 October 2021, John discovers that neither gas nor telephone services are connected to the Unit. After making enquiries he finds out that it will cost $500 to install a phone line. John is also annoyed as he just bought expensive new pots and pans designed specifically for gas-cooking – an unnecessary expense!
B) Assume the sale is going ahead and advise John whether he can terminate the contract of sale, and if so, on what basis.
Tutorial 4
Course: Property Law (LAW 2112)
University: Monash University
