The Third Edition of the SCPC were published in April 2017 to incorporate updates in law and practice in commercial conveyancing.
The key changes reflected in the new Third Edition are summarised below:
Deposit and Completion Funds
- SCPC 3.2 and SCPC 9.7 have been strengthened to facilitate compliance with anti-money laundering regulations. The following changes have been made with regards to dealing with deposit and completion monies:
1. Payments are to be made by electronic means;
2. Payments are to be made from an account held in the name of a conveyancer at a clearing bank;
3. Payment must be made to an account in the name of the seller’s conveyancer.
- Provisions regarding the VAT treatment of commercial property have been updated. The VAT position has been reversed from the approach taken in the SCPC Second Edition, so that the default position under SCPC 2 is that VAT will be payable. SCPC A1 in Part 2 would need to be specifically applied if VAT will not be payable.
- The optional SCPC B in Part 2, dealing with capital allowances have been updated to reflect changes to the Capital Allowances Act 2001.
Notice to Complete
- SCPC 9.8.1 now clarifies that the earliest that a notice to complete can be served is after 2pm on the completion date (previously it was "on or after the completion date", with no reference to timing).
- New SCPC 9.8.3 has been introduced to apply in circumstances where a buyer has paid less than a 10% deposit, the buyer must top this up when a notice to complete is served on it. There is no equivalent provision to suggest that a buyer who is serving a notice to complete must top up any lower, contractual deposit.
- Where a property is sold subject to a lease with an outstanding rent review, SCPC 6.1.3 provides that if the review date falls more than 2 years before the completion date, the buyer is now excused from involving the seller in resolving stale rent reviews, though the buyer can pursue the seller if it wishes.
- With regards to the conduct of pending Landlord & Tenant Act 1954 lease renewals and determination of interim rents, a new provision SCPC 6.2 has been introduced to provide that it is the responsibility of the seller to conduct negotiations or proceedings up to actual completion, then the buyer will take over. Consent of both parties is needed to any agreement of terms for the renewal lease or the amount of interim rent payable.
- Updates to the insurance provisions provide that if a seller’s insurance policy does not cover a contractual purchaser’s interest in the property, the seller shall extend the cover accordingly at the buyer’s request and expense, if the insurers agree, for the period until completion (SCPC 8.2.2).
- New provision SCPC 8.2.5 is applicable to the sale of leasehold property, where the insurance is maintained by the superior landlord. The seller now must use reasonable efforts to ensure insurance is maintained to completion and must assign any rights the seller may have in the policy monies if there is damage to the building before completion.
- Under SCPC 11.3.5, where consent to let, assign or sub-let is required to complete the contract, but the consent has not been obtained by the contractual completion date, then completion is postponed until five working days after the seller has given written notice to the buyer that the consent has been given or a court has declared that the consent has been unreasonably withheld.
- Under SCPC 11.3.6, either party may rescind the contract by notice to the other, at any time after six months (previously 4 months) from the original completion date, if consent has still not been given and no declaration has been obtained from the court that consent has been unreasonably withheld.
- There are some improved terms for the sale of leasehold property, for example, new SCPC 11.3.2(a) provides that the seller must give the buyer (without delay) a copy of all correspondence with a reversioner in relation to obtaining any consent required to complete the contract.
- The former condition 11, dealing with commonhold has been removed.
The above summary is non-exhaustive list of the updates contained in the SCPC Third Edition and should be read as guidance only. Further, this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.
For further information, please contact Paul Jagger