You may well have heard of instalments when it comes to making payments on a particularly expensive item, such as a car. However, you may not be aware that you can actually choose instalments when entering into a specific type of property contract. What does this mean and is it a good option for you?
The instalment contract does not simply cover how payments are going to be made in relation to a purchase, but it has a number of restrictions and regulations to be considered by any potential buyer. Mainly, a buyer will not be able to receive a certificate of conveyance until all payments have been made. However, they don't always have to put down a financial deposit when this type of contract is drawn up.
The seller may put certain restrictions within the terms and conditions of the contract. As an example, they may not permit a buyer to make certain types of modification to the property until the contract has been fully completed. This has to be laid out in specific detail if it is to be enforceable post-signature.
The seller also has to allow the buyer to complete the terms of the instalment contract and may not terminate early, unless the buyer has gone into default. In this case, a specific type of notice has to be issued and delivered, with the buyer being given a month to bring things back up to date. The seller cannot use the land as a negotiable instrument in order to develop a mortgage while an instalment contract is in place. However, the buyer may give their consent for this type of action, if requested.
As a buyer, you may have the right to request that conveyancing proceeds during the course of the agreement, so long as at least one third of the purchase price has already been paid. This will also depend on whether any payments were in arrears.
With this type of agreement, the buyer has to ensure that the property is well maintained at all times and that they keep up with a maintenance schedule. Generally speaking, any residential property has to be fit for occupation. The buyer must also look to the seller to maintain the right amount of insurance for the property during the course of the agreement.
As you can imagine, there can be a lot of fine print associated with this type of instalment contract. Nevertheless, it can be beneficial to both parties when handled correctly. Always get in touch with an experienced conveyancing solicitor to make sure that nothing is left out.