Kiteleys Solicitors

Kiteleys Solicitors. 7 St. Stephen's Court, 15-17 St. Stephen's Road, Bournemouth, Dorset. BH2 6LA. Telephone 01425 278866.
Kiteleys Solicitors is the trading style of Kiteleys Solicitors Limited registered in England and Wales, registered number 03113721. VAT Registration No: 658 8813 79.
This firm is authorised and regulated by the Solicitors Regulation Authority. A list of directors is available for inspection at our registered office.

Confidentiality Agreements – Property

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Law stated as at 1st July 2013

What is a Confidentiality Agreement?
This is a preliminary agreement which parties can enter into at the beginning of negotiations for the sale and purchase of a property (commercial or residential). It is sometimes called a Non-disclosure Agreement. The intention is to give sellers the security to be able to disclose certain material facts about the property being sold, without the fear that the buyers may pass on that information to others.

Why have one?
They are particularly useful where there is an associated business with confidential information, such as client lists and accounts, that need to be kept secret, or for a business whose location is vital. For high net worth individuals in the public eye, they can assist in keeping media intrusion at bay, although an individual’s home address may be discovered at some stage through other sources (including the electoral roll), confidentiality at least protects the disclosure of information about properties that a buyer has considered purchasing or needs to negotiate on.

What does a Confidentiality Agreement do?
It defines what information should be considered confidential and the obligations of the recipient of that information (in this case the buyer). It sets out certain important exclusions, such as the disclosure of information to assist with the purchase, such as consultations and legal advice from a solicitor, mortgage company (if applicable) or surveyor.

What form does the Agreement take?
It can be a relatively simple document consisting of three to four pages setting out the intentions of the parties. It usually lasts for a fixed period (e.g. one year).

Why are they are not more common?
With a property transaction, a great deal of information will be in the public domain once the property is purchased, such as the identity of the owner from Land registry records. Properties can often be held in trust of within companies owned by the seller to avoid this, but this is not always efficient for Capital Gains Tax. Having said this, if a buyer requires a transaction to remain within a veil of secrecy, a confidentiality agreement is an essential part of the legal toolkit.

What are the loopholes?
As mentioned above, information already in the public domain is not covered. Further, when a buyer breaches an obligation of confidentiality and that information is given to others as well (whether or not under a confidentiality agreement), it will not always be apparent to the seller where the breach has occurred and who has committed it. It is always important, therefore, to keep records of anyone to whom particularly sensitive information is circulated, numbering and accounting for any copies made.
How much will a confidentiality agreement cost?
Assuming that the buyer is happy with the draft provided, an agreement will usually take around an hour or two to draft, depending on the range of information and whether there is a business involved. You will need to contact your solicitor to obtain further details of our hourly rates of charge for this type of work.

Conclusion
The important thing to do is to make clear to your buyer at the earliest stage that you will be expecting any information given about the property to be kept confidential and that you will be requiring a confidentiality agreement. It would be wise to do this before any offer is accepted in principle. If this is negotiated correctly at the beginning then we could produce a confidentiality agreement very quickly and there is no reason why this should not be signed within a couple of working days. Even after signing the agreement, it is advisable to stamp every document ‘Confidential’ to ensure that there is no doubt as to what is confidential.

DISCLAIMER :
Nothing in this guide constitutes specific legal advice on a particular matter and should be used for general reference only. It is no substitute for legal advice from a qualified professional.

  • Daniel Stanton

    Daniel Stanton
    Associate Solicitor

  • George Crofts

    George Crofts
    Solicitor

  • Roger Turner

    Roger Turner
    Consultant Solicitor

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Call us on 01425 278866 or enquire online.

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Kiteleys Solicitors. 40 Haven Road, Canford Cliffs, Poole, Dorset. BH13 7LP. Telephone 01425 278866.
Kiteleys Solicitors is the trading style of Kiteleys Solicitors Limited registered in England and Wales, registered number 03113721. VAT Registration No: 658 8813 79.
This firm is authorised and regulated by the Solicitors Regulation Authority. A list of directors is available for inspection at our registered office.