When must I sign an agreement (contract) as a deed?
A tenancy agreement is just like any other contract, so as soon as both tenant and landlord have signed the agreement, it becomes a legally binding contract on both parties. A court will then enforce the contract, ensuring that the parties keep to their obligations under the contract.
Letting agreements (contracts) can also be made orally, but this casual arrangement is a dangerous practice for both landlords and tenants: proof the contract actually exists becomes an issue as does things like commencement date, deposit taken, rental amount etc.
The famous Samuel Goldwyn quote applies here: 'A verbal contract isn't worth the paper it's written on!
This article is based on English law and is not a definitive interpretation of the law, every case is different and only a court can decide; always seek expert advice before acting or not.
In practice, if proof were ever needed of the existence of an oral contract, it can and only can emanate from the actions of the parties, i.e.: tenancy agreed and keys handed over, tenant moves in, rent received by landlord, contract exists.
Having no written agreement becomes a problem if an eviction is needed. It precludes the use of Section 21 – the paper-based process – and requires the use of Section 8, a court hearing where the landlord is then faced with the prospect of proving the tenancy existed without proper evidence – a written agreement.
Some contracts are required by law and must be in writing. For example, contracts for the sale of land (conveyances of legal title) or to provide a guarantee (used for guarantors), so there are two types of written contract under English law: (1) simple contracts, which can be made orally and do not need to be signed and witnessed as a deed, and (2) deeds.
It's worth bearing in mind that in the case of a guarantor agreement, no Consideration exists between the guarantor and the landlord, so it must be signed as a deed.
It is also important to remember that the parties to any contract must be given time to read and digest the contents and to know and understand what they are agreeing to. They will sign to that effect but to avoid any argument it is worthwhile providing contracts in advance of signing.
Simple Contracts should be signed by the parties or one party at least, though it is not always essential, considering that a simple contract may be concluded orally. Unsigned contracts are perhaps less risky than oral agreements but still it is advisable for both parties to have a definitive signed document, in case there is a future dispute.
Signing in counterpart means that duplicate contracts or deeds are printed so that there is a separate copy for signing by each party. Alternatively, one copy of the contract or deed is printed and signed by all parties to it.
There are advantages to using two identical copies (counterparts) when people are in different locations. Also, there is no need to make copies and send them on later, it's simply a matter of exchanging the counterpart copies. However, when using counterparts, ideally the contract should have a clause allowing this. A Counterparts clause will expressly state that the parties agree that they may only receive a copy signed by the other party.
A deed is contacts also, similar to a simple contract, as it is a commitment by one party to do something. They include contracts such as deeds of assignment or deeds of trust, and in these cases are legal requirements.
However, the requirements for a deed are different to those of a simple contract. Although there is the requirement of Offer, Acceptance, and Consideration) - an intention by the parties to be legally bound - (as is the case with a simple contract), deeds are generally enforceable despite a lack of Consideration.
A deed therefore MUST, be executed in writing, must be clear from the face of the documents that it is in fact a deed (simply because it says it is a deed) and is intended to be a deed by both parties, to be validly executed as a deed, signed WITNESSED and delivered.
Delivery is this relationship does not mean physical delivery of the document, it simply means that under an established Common Law principle, that a deed is delivered when the parties make it clear of their intention to be bound.
Property conveyances must be in writing and signed as a deed, as must property leases for over 3 years - s 52(1) of the Law of Property Act 1925. The lease agreement therefore must (1) make it clear that it is intended to be a deed, (2) that it is validly executed as a deed by signature and witnessed, and (3) it is delivered as a deed, that is it is served on or handed to the other party.
In other words, the contract as a deed must state clearly that is it a deed and that the parties sign as a deed and that crucially there is a witness signature by someone independent, who is not a related party
Most ASTs of course are for less than three years, so a simple contract either orally, or advisedly in writing, will do. They do not need a witness, though there's no harm in having one and some would insist on it for good reason, to prevent a party to the contract from denying its signature.
Under a simple contract each party has to provide 'consideration' for it to be valid. Consideration is the price paid by each party usually for the provision of goods or services by one party and the provision of value (usually money) by the other – landlord provides a roof over the tenant's head and loses the use of the property for a time; the tenant provides monetary payment by way of rent.
Agreements by deed do not require consideration in order for them to be legally binding. So, for example, an interest free loan between family members would need to be drafted in the form of a deed or it is likely to be unenforceable due to lack of consideration from one party.
In any UK jurisdiction, to ensure that a contract is legally binding, it need only be "signed as a deed, in the presence of... and delivered..." to be a deed.
Making sure your contract is indeed a deed
1 - The agreement must be documented in writing;
2 - The agreement must make it clear that it is intended to be a deed – this is known as the “face value requirement”, though the front of the contract does not need to say deed.
3 - The agreement must comply with the specific execution requirements for deeds, i.e, signed and witnessed as a deed.
4 - The agreement must be “delivered” as a deed.
It simply requires those very words and the signature of the person making the deed, along with a witness signature and details: name, address, occupation. Witnesses must be unrelated and independent from the parties and the agreement. The signatures should be on the document itself in a space provided and the full names of the signatories printed there.
There is nothing to stop a simple contract being signed and witnessed if you wish, and indeed there are some advantages as stated above.
Another difference between the two types of agreement is that a simple contract has a statutory limitation period (for taking legal action) of six years, whereas for deeds it’s twelve years.
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