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APC JE > Case Study > Flashcards

Case Study Flashcards

1
Q

What is the legislation for a DAR?

A
  • The Charites (Dispositions of Land: Designated Advisers and Reports) Regulation 2023. (26th April 2023)
  • Stems from Section 119 of The Charites Act 2011 (super seeded by sections 19 & 20 in 2022 act).
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2
Q

5 adviser steps set out in the The Charities (Dispositions of Land: Designated Advisers and Reports) Regulations 2023?

A
  1. The Value of the Land
  2. Any steps to enhance the value
  3. Whether and how the land should be marketed.
  4. Anything else which could be done to ensure that the terms on which the disposition is made are the best that can reasonably be obtained for the charity.
  5. AOM that we think should be brought to the Charity Trustees.
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3
Q

Who can provide a DAR ?

A
  1. MRICS
  2. National Association of Estate Agents
  3. CAAV
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4
Q

When did the last changes to the Charities act 2022 come into force? and what are they?

A
  • 7 March 2024
  • when a charity sells to another charity they now must adhere to standard disposal procedures.
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5
Q

Licence vs Lease what are the 3 differences?

A
  1. Lease provides an occupier with an estate -License gives them lawful permission of use.
  2. A lease is assigned- a License is normally a personal right that cant be assigned.
  3. Lease cant be terminated until a set point - a License usually can be revoked at any point.
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6
Q

What are the 4 requirements for it to be a lease?

A
  1. Exclusive occupation
  2. Payment of rent
  3. Duration for a specified term
  4. For more then 3 years the terms must be in writing, signed and registered as a deed.
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7
Q

What is the period of time that exclusive possession is granted it is likely to become a lease? and what is the case law?

A
  • 6 Months
  • Street v Mountford (1985) - Set out the differences.
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8
Q

Where did you agree the limitations of the report?

A
  • Stated in the ToE
  • it the report (in accordance with VPS 2 and VPS 3).
  • Caveated these with assumptions stated in report aswell.
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9
Q

What is the Market Approach?

A
  • based on comparing the subject asset with identical or similar assets
    (or liabilities) for which price information is available, such as a comparison with market transactions in the same, or closely similar, type of asset (or liability) within an appropriate time horizon.
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10
Q

Basic Methodology for a Residual?

A

GDV - Development Cost = Residual

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11
Q

What is the Residual method known as in IVS?

A

Top-Down Method

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12
Q

What is a Special Purchaser? and case law?

A

A particular buyer whom a asset has a special value because of the advantage that arises from its ownership. That other buyers wouldn’t have.
IRC V Clay (1914)

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13
Q

What is Special Value?

A

The amount that a Special purchaser would be willing to pay above market value.

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14
Q

Marriage value?

A
  • An additional element of value created by the combination of two or more assets.
  • Where the combined value is more than the sum of them separately.
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15
Q

What is the definition of Market Value ?

A

The estimated amount for which an asset or liability should exchange on
the valuation date between a willing buyer and a willing seller in an arm’s
length transaction, after proper marketing and where the parties had
each acted knowledgeably, prudently and without compulsion

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16
Q

Do you account for special purchasers interest in Market Value?

A
  • No, it ignores distortion of special value.
  • It does include FUTURE hope value though.
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17
Q

How did we agree Special Purchasers interest in the valuation?

A
  • It was was a comment on special purchasers intrest for negotiations.
  • Was in writing before in our LOE.
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18
Q

What is a Special Assumption?

A
  • An assumption that differs from the actual facts existing at the valuation date.
  • Needs to be agreed in writing beforehand.
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19
Q

Whats an Overage?

A
  • Used by Vendor to receive additional funds after the sale has been completed.
  • If an agreed ‘Trigger Event’ takes place.
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20
Q

What are trigger event in an overage?

A
  • Planning permission granted
  • Implementation of planning
  • Disposal of the property at a higher price
  • Disposal of a completed development.
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21
Q

What is the process for Auctioneering?

A
  • TOE
  • COI
  • MLC with vendors and purchasers
  • Due diligence
  • Document must be available
  • Condition of sale, memorandum of sale and all notices are to be published
  • Reservation price (10%)
  • Contract exchange at the fall of the gavel
  • Particulars must be in accordance with legislation
  • Guidance on online auctions
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22
Q

What actions are required by a purchaser ahead of Auction day?

A
  • view the property and consider a structural survey
  • Take the proper legal advice and complete a due diligence exercise
  • Read the Notice to Prospective Buyers
  • Arrange a deposit of 10% and insurance for exchange
  • Provide ID for money laundering procedures
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23
Q

What is private treaty?

A
  • Where parties are free to negotiate in their own time without commitment in the open market.
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24
Q

Misrepresentation act?

A
  • 1967
  • False/fraudulent or mis misrepresentation of information during the pre-contractual enquires by a vendor or agent.
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25
Q

Estate Agents Act?

A
  • 1979
  • Applies, during the sale or purchases of freehold or leasehold properties with a capital value.
26
Q

Estate agency act offence and penalties? (4)

A
  • Acting dishonest.
  • Not providing clarity in the TOE
  • Not disclosing personal interest.
  • Not telling the client about other offers received.
  • Warning order
  • Prohibitions order and/or fine.
27
Q

Misrepresentation act offence and penalties?

A
  • Civil offense actionable by tort.
  • Action can be limited by an effective disclaimer clause.
  • Sued for financial damages
  • Contracts rescrinded.
28
Q

Consumer Protection Regulations?

A
  • 2008
  • Applies during te entire agency and leasing process.
29
Q

Consumer Protection Regulations offence and penalties?

A
  • Criminal offence not treating consumers fairly
  • providing misleading marketing information.
30
Q

What has the act prior to the Current DAR legislation?

A
  • The Charities (Qualified Surveyors’ Reports) Regulations 1992, (1 Jan 1993)
31
Q

What type of property do you have to do a DAR for?

A
  • Freehold disposals (Section 119)
  • Leaseholds that are +7 years (Section 119)
  • Leaseholds that are - 7 years (Section 120)
32
Q

What is an arms length transaction?

A
  • is one between parties who do not have a
    particular or special relationship
33
Q

Can a DAR be done internally?

A
  • Section 21 of the Charities Act 2022
  • Yes, but they must have the same qualifications
34
Q

What’s a Ristritive covernant?

A
  • Ristriction on the Land.
  • Is a deed
  • held with the land.
  • usually a right not to do something.
35
Q

What Terms did you suggest the overage on?

A

-25 years
- 25% uplift

36
Q

What are the limitations of your inspection?

A
  • No material impact
    EG: -Contamination, Asbestos
37
Q

How did you determine the Net Developable area?

A
  • The planning officer said that the neighbour was restricted to the size of there development as it couldn’t be disproportionate.
  • Used that ratio and applied it to our plot
38
Q

What happens to the tenancy if you sell to the neighbor?

A
  • Tenancy is extinguished.
39
Q

Guidance that we follow as valuers for charities act?

A
  • VPGA 8 of RICS Valuation Global Standards: UK National Supplement (2023)
  • Come into force 1st May 2024
40
Q

Did you submit anything else with your report?

A

Yes
- A statement saying that i have the appropriate experience and expertise to advise the charity.

41
Q

What is site coverage? and what was it in this case?

A

The ratio between the plot size and the buildings GEA
7.5%

42
Q

What needs to be included as part of the DAR report?

A
  • Statement saying the valuer has the appropriate experience and expertise.
43
Q

Where do you get guidance on DAR reports?

A

VPGA 8 - Red Book Global Standards: UK national supplement 2023 edition

44
Q

What’s that Charites act?

A

Section 119 of The Charites Act 2011 (super seeded by sections 19 & 20 in 2022 act).

45
Q

Name some over types of valuation that are expect from red book compliance?

A

Nothing is from the VPS standards
SLIME

statutory
Litigation
Internal accounting
Marketing
Expect witness

46
Q

How did you rank you comparables?

A

In accordance with the hierarchy of evidence

47
Q

Where do you find the hierarchy of evidence?

A

Comparable evidence in real estate valuation, 2019

48
Q

when did the DAR regulation come into play?

A

April 2023

49
Q

Who can do a DAR?

A

RICS member
Central Association of Agricultural Valuers
National Association of Estate Agents

50
Q

RICS Guidance for Estate Auctioneering?

A

Auctioneers Selling real estate in England and Wales, 2018

51
Q

What is the charity no longer wanted to sell, what happens to the fee?

A

Abortive fee- if we had buyer, this its 100%
Useless disturbance or a premium they had paid prior

52
Q

Additional RICS guidance for Auctioneering?

A

RICS Professional Statement: Auctioneers Selling Real Estate at Auction England and Wales including Common Auction Conditions, 2018

53
Q

What’s in a Legal Pack

A
  • Title Register
  • EPC
  • Terms and condition of sale
  • Law
  • Deed
54
Q

What was your fee? and the legal pack?

A

£1,500
Overall £3,000

55
Q

How much would the planning process be?

A

Quote from Planners of:
£3,000

56
Q

is a auction completion window legally binding?

A

Yes

57
Q

Head of terms for property sale?

A

Vendor
Purchaser
Solictors
Condations
Exchange date
Completion date
Price

58
Q

What’s the difference between an overage and restrictive covenant?

A

Overage - get a proportion of the increase in value
Resistive covenant - limits its use

59
Q

Why a overage and nor restrictive covenant?

A
  • No use to the client
  • Money incentive on the land
  • No incentive on the resistive covenant
60
Q

Case study for one bid over?

A

Greenbank v Pickles (2001)
- Doesn’t value the willingness

APC JE (23 decks)

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