Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Unit 3 - CeMAP 2 > Law and Process > Flashcards

Law and Process Flashcards

1
Q

Caveat Emptor

A

Let the buyer beware

  • Neither party is required to disclose information to the other party unless asked to do so
  • If asked they must answer honestly
  • Property seller is at risk if they don’t disclose all the risks
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Utmost good faith

A
  • In effect prior to April 2013 for insurance companies
  • Applicant signed a disclaimer saying all info was included and correct
  • If consumer didn’t disclose key info, the insurance company could refuse all claims
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

New consumer insurance disclosure & representations act 2012

A
  • Protects consumers
  • Insurance companies could refuse claims based on information they hadn’t asked for
  • It’s now the responsibility of the insurance company to ask the relevant questions
  • They can’t reject claims if the client answered honestly
  • Insurance companies can cancel policies if the information isn’t correct or partially pay if the claim as a remedy if the insured has taken reasonable care
  • Insurer cannot cancel a life policy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Law of Agency

A

Agent can conclude contracts and act in other proceedings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Apparent Authority

A

When an agent acts beyond their scope

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Ratification

A

When the principle agrees & accepts when an agent has overstepped.
If the client doesn’t ratify the agent is liable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

House Buying Process Stage 1 (how much they can borrow)

A 
- Mortgage in principle will outline: 
\+ How much they can borrow
\+ How much they can spend on a home
\+ What deposit they'll need (up to 40%)
\+ What the additional fees and stamp duty will be
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Estate Agents - Sole Selling Rights

A
  • 1.5-3% of sale price as commission

- Get a fee regardless of whether they sell the house

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Estate Agents - Sole Agency

A
  • 1.5% commission
  • One agent has the right to sell
  • Sometimes 2 agents will split the commission
  • They are guaranteed to sell the property and so the commission is less
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Estate Agents - Joint Sole Agency

A
  • Higher fee
  • Usually two agents and they split commission
  • No fee if they don’t find a buyer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Estate Agents - Multiple Agents

A
  • Charge higher fee 3% roughly
  • The agent that sells the property gets the fee
  • Increased competition so the fee is higher
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Estate Agents

A
  • Commission usually 1.5-3% of sale price
  • Values the property, advertises, negotiates & liaises with solicitor
    Now offer more services inhouse
  • Removals
  • Mortgages
  • Insurance
  • Surveys
  • Financial Advice
  • Relocation services
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

EU Consumer Protection Amendment (CPR)

A
  • Protects consumers from mis-description from agents
  • Clients can seek redress for firms misleading, aggressive practises.
    CPR includes
  • Ban on unfair practises
  • Rules on aggressive practises like exaggerating the level of interest to push up pricing
  • CPR lists unfair practises like withholding information.

Legislation doesn’t apply to financial services or consumer credit as these are covered in MCOB

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Energy Performance Certificate (EPC)

A

EPC includes a report on property energy usage, Co2 emissions & how to reduce Co2 emissions

  • Required when building is built, marketed for sale or rented.
  • Needed for all heated or cooled buildings
  • If separate units, each units needs it’s own

EPC must be commissioned before a property is marketed
Marketing can commence before the certificate is received

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

House Buying Process Stage 2 (Private Treaty)

A
  • Sale between buyer and seller

- Conveyancing, the legal transfer of property from the seller to buyer, this occurs when stamp duty is paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Gazumping

A

Seller has accepted your offer, then accepts a higher offer.

This is not illegal, just bad practise.

17
Q

Legal work - Offer of Advance

A

Between mortgage application & offer of advance (mortgage offer) there is a detailed underwriting process.

  • Offer of Advance is an invitation to enter into an agreement, this is not the agreement.
  • Offer is legally binding on the lender, not the borrower.

Can be withdrawn for the following reasons:

  • False or inaccurate info has been provided
  • Applicants financial situation has changes (redundant)
  • Property becomes less suitable (damage/drop in value)
  • Offer in principle can be offered contingent on further checks
18
Q

Included in Offer of Advance

A
  • Personal details of Applicant
  • Details of property (tenure/value etc)
  • Details of loan (amount, repayment method etc)
  • Standard warranties (non-warranty disclaimer)
    + Lender states the reasonableness of the price, the title report & how long the offer is valid.
  • Specific conditions (additional security i.e. guarantor, local planning, essential work, those not party to the mortgage)

Lender provides ESIS with the offer including loan details and detailing 7-day reflection period.
- Borrower signs this document

19
Q

House Buying Process Stage 2 (Exchange of Contracts)

A
  • Arranged by solicitors
  • Solicitor arranges contracts for sale, when parties sign they are exchanged
  • Both are now legally obligated to complete the transaction
  • At exchange a deposit is paid, usually 10%
  • This is the consideration time as assets have been exchanged
  • Date is set for completion, usually 28 days to allow for legal time
  • Long stop date is for longer gaps to complete on things like new builds. This is conditional and a buyer can void with no charge.
  • Some people exchange conditionally on searches
20
Q

Auctions

A
  • Reserve price is min price, if reserve isn’t reached the property doesn’t sell
  • Buyer must have everything in place prior to the auction, incl mortgage offer & deposit
  • Survey should be completed & initial legal work
  • Vendor Solicitor Pack provided ahead of auction for this
  • Winner of the bid pays 10% deposit on the day & exchanges
  • If defects are detected after exchange the buyer will not be released unless it was because of deception by the the vendor
  • If property is not in good condition, lender may place a retention of funds until the work is carried out
  • If the buyer pulls out, they will lose their deposit and may be required to pay back losses if the vendor sells at a lower price.
21
Q

Auctions - Vendor Solicitor Pack

A

Includes

  • Memorandum of sale
  • Local & Land Searches
  • Special condition of sale
  • Proof of title & lease
22
Q

Auction buyer considerations

A
  • Large initial outlays
  • Property may require remedial work
  • Loss of 10% deposit if they pull out
  • Uncertain whether the bid will be a success
23
Q

Modern Method of Auction

A
  • Held online, similar to Ebay
  • Pay 5% reservation fee
  • Reservation fee is just an auction fee and doesn’t go toward the cost of the house
  • Buyer has 28 days to exchange and 28 days to complete
  • Reservation fee is only refunded if the vendor defaults. If the buyer pulls out, they lose it.
24
Q

Conveyancing

A
  • Legal transfer of property or land

- Carried out by solicitor or conveyancer

25
Q

Conveyancer

A
  • Can only deal with property transfer

- Required 2 yrs practical training and a further 3 yrs experience to be licensed

26
Q

Solicitor Conveyancing Process

A

Solicitors can deal with property & other matters
- Deals with all financial aspects incl stamp duty
- Solicitor checks title to verify any encumbrances and make sure the seller has the right to sell
Encumbrances - burden of claim on the property like another mortgage.
- Checks relevant registers to ensure good root of title (certificate of title)
- Confirms all checks are satisfactory with a report
- Report confirms borrowers name and search results
- Defects of title need indemnity insurance to protect lenders security
- Solicitor needs professional indemnity to protect against litigation for negligence.

27
Q

House Buying Timeline

A
  • Calculate Budget
  • Find Property
  • Offer of Advance
  • Assessment of Security
  • Searches
  • Sellers property information incl in sale
  • Sellers information pack
  • Prepare the mortgage deed - legal contract
  • Draft sales contract - Vendors Solicitor preps
  • Exchange of contract - point of no return
  • Before completion
    + Vendor Solicitor Settlement Figure
    + Mortgage deed signed 2 days before
  • Draft transfer deed
  • Completion
  • Balance is paid by BACS transfer
    After completion
  • Solicitor pays SDLT within 30 days
  • Solicitor applies for registration of new owner at land registry
  • Solicitor sends bill to buyer for services and dispersements (fees they have paid on the buyers behalf)
  • Life policies
28
Q

Searches

A 
- Land registry search 
\+ Charges
\+ Proprietorship 
- Land charges register 
\+ Spousal 
\+ Puisne 
- Local land charges registry search 
- Enquiries to local authority 
\+ Both for obligations/restrictions and road changes
- Bankruptcy search 
\+ Lenders solicitor on buyer
- Commons registration search
\+ To check land is not common land
29
Q

Sellers Information Pack

A
  • Provided before exchange of contracts * completed by vendor
    Includes…
  • Property boundaries
  • Disputes with neighbours - even if resolved
  • Notices effecting property
  • Guarantees on boilers etc
  • Services (all utilities)
  • Joint responsibilities like maintenance
  • Arrangements and rights
  • Changes to property
    + To prove planning permission
    + If planning permission is not granted, they need to seek it retrospectively
  • Planning or building control issues
  • Anything else to do with the mechanics of the sale
    Vendor must answer all questions honestly or be held liable.

Unit 3 - CeMAP 2 (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions