It is nine months since a new, agreed-upon standardised sale and purchase agreement was circulated to all the law firms on the Island, time enough to reflect upon its impact on property transactions in Bermuda.

The final version of the document was the result of over two years grafting and drafting by a sub-committee of four local property lawyers with the input and opinion of numerous other property law experts. It arrived in law offices with the request that ‘all sale and purchase agreements should now be issued in this form'.

The objectives of the founding fathers within the sub-committee were to:

ensure that the standard agreement is generally used in an unamended form by all property attorneys on the Island;

ensure that any transaction-specific matters are dealt with by way of “special conditions” in the agreement; and

persuade real estate agents not to produce any sale and purchase agreements.

The final version of the agreement consists of the particulars of the parties to the transaction, the definitions of various legal terms used, what has been agreed between the parties, and a set of general conditions that will be common to all property transactions in Bermuda. A final section allows for the inclusion of a set of special conditions that enable the standard agreement to be tailored to suit a specific transaction. Some observers have wondered why those objectives needed to be addressed, and in particular question the harm of real estate agents and property lawyers producing a variety of sale and purchase agreements. I am not among the doubters, as I see the standardised agreement as having three important benefits. The new agreement provides certainty. During my time practising in Bermuda I have come across clauses that have been confusing, possibly ambiguous and even unconscionable.

One clause stated that if the purchaser was unable to obtain financing for the purchase within fourteen days, the vendor could keep the deposit. Once I queried this it turned out that this was not what was agreed between the parties at all and in fact it was agreed that the purchaser would have the deposit returned if he was unable to obtain financing.

The standard agreement will hopefully end this uncertainty by providing a set of “customary” general conditions on which to commence negotiating the terms of the agreement.

Secondly, the speed of transactions should be enhanced. I have often heard that lawyers take too long to approve the sales contract. But that is understandable if a lawyer has to scrutinise every word of what can be a lengthy ten to 15 page document. With the standard agreement, a lawyer will know the general conditions like the back of their hand and will only have to concentrate on the special conditions. This should have the result of speeding the process of agreeing the terms of the contract.

Finally, the cost of property transactions should be reduced through the use of the standardised agreement. Most lawyers charge on a time spent basis for agreeing the terms of the contract. Since less time will be spent reviewing the contract, legal fees will be lower.

In future, I expect that the standard agreement will have a considerable impact on property transactions in Bermuda. It is already being widely used by the majority of conveyancers on the Island and a number of the Island's real estate agents have given the standard agreement their blessing as well.

At present, however, it still has some way to go before being fully accepted. That is because property law in Bermuda has been very slow to evolve when compared to other areas of law and the current system is working very well. It appears to me that the minority who have not adopted the standard agreement have made their decision based on their comfort with the status quo and not due to any particular flaw with the standard agreement.

However, the creation of a standard document that is familiar and easily understood by both the legal community and the public alike will serve all parties involved. That is why I expect that good sense - and client demand - will prevail, and the standard document will become the norm rather than the exception in property transactions. It is in the public's interest that such a transition is made.

Attorney Declan McKervey is a member of the property department at Appleby Spurling & Kempe. You can write to him with your questions at dmckerveyask.bm. Copies of Mr. McKervey's columns can be obtained on the Appleby Spurling & Kempe web site at www.ask.bm. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.