A terms contract spreads the price over a period. The buyer pays instalments and the transfer passes on the final instalment, with a caveat protecting the buyer in the interim, and sometimes possession is given during the term, known as preliminary settlement, which is when adjustments are made. They were common when finance was hard to obtain and are seldom used now, but the mechanism still needs to be understood, and the contract includes a terms contract condition to satisfy the Act.
Where the contract is a terms contract because the buyer must make more than a set number of payments, the vendor must provide an additional vendor statement setting out the cost of that vendor finance under Schedule 2 of the Sale of Land Act 1962. That extra disclosure does not apply where the contract is a terms contract only because possession is given before final settlement.
This is the kind of matter CMK Legal's property and conveyancing team handles.
The instalment structure and the vendor finance disclosure make a terms contract materially different from a normal cash contract. Adjustments are usually made at preliminary settlement when possession passes, not at final settlement.
Law referenced: Sale of Land Act 1962 (terms contracts, sch 2 additional vendor statement).