When do risks pass to the buyer?

When do risks pass to the buyer?

• A. From date of contract
• B. On completion
• C. On exchange
• D. From date of possession

Answer: (A)

The key idea here is how risk in a property sale is allocated during the pre‑completion period. In this context, risk passes to the buyer from the moment the contract is formed (the date the contract is made). Once there is a binding agreement, the buyer has an equitable interest in the land, and the risk of loss or damage during the period before completion falls on the buyer. Completion finally transfers legal title, but the risk shift occurs earlier, at contract formation. Completion is later than the point at which risk is said to pass, since title and possession don’t move until completion; possession is even later, typically after completion. Exchange is a related moment, but the test specifies the date the contract is formed as the point when risk passes, hence the chosen answer.

The key idea here is how risk in a property sale is allocated during the pre‑completion period. In this context, risk passes to the buyer from the moment the contract is formed (the date the contract is made). Once there is a binding agreement, the buyer has an equitable interest in the land, and the risk of loss or damage during the period before completion falls on the buyer. Completion finally transfers legal title, but the risk shift occurs earlier, at contract formation.

Completion is later than the point at which risk is said to pass, since title and possession don’t move until completion; possession is even later, typically after completion. Exchange is a related moment, but the test specifies the date the contract is formed as the point when risk passes, hence the chosen answer.