Methods Of Disposal Flashcards
Name the four most common methods of sale.
Private treaty, auction, informal tender, formal tender
Define and explain private treaty
Most commonly used method, involves preparing descriptive particulars which quote a definitive asking price, viewings undertaken with offers submitted.
Agreement to buy is subject to formal contracts being prepared between vendor & purchaser & those being signed & exchanged.
If multiple interested parties then B&F employed for best price.
Define & explain auction as a method of sale
Not advertised at a fixed price, IP have to attend and bid for property. Highest bidder buys the property.
Successful bidder is legally bound to purchase when the hammer falls. 10% deposit is payable at this point, generally four weeks to complete.
Finance & surveys have to be undertaken prior to the auction.
Used for props with strong competition, props requiring Reno/redev or with serious defects.
Define informal tender
Asking price not stated, but guide price given, written offers invited (sealed bids) with closing date.
All offers opened at the same time, vendor not committed to accepting the highest or any offer.
Offers NOT binding. If vendor proceeds with offer its SoC.
Used where comp is strong, prop has defects, closure date is required.
Define formal tender
Sale will be advertised with a deadline by which PP must submit their bid.
Each tender doc must include FULL legal contract for sale & all bids have to include bankers draft as a deposit. Bids opened by vendor or agent. As soon as the ‘best bid’ (not always the highest) is selected the bankers draft is accepted & contacts immediately exchanged. Bidder is then legally committed to sale if they can not complete = forfeit of deposit.
Rarely used as v complex
LEGALLY Binding
Define sole agency
Single EA is appointed to market property for sale. Agent only entitled to fee if it introduces/has negotiations with the eventual buyer, while the agents agreement is in force.
If vendors does their own deal NO fee payable.
If other agent introduces purchaser, fee payable.
If agent introduces eventual buyer, is dissinstructed and another agent instructed with the original interested party purchasing - fee payable.
Define sole selling rights.
Single agent appointed to market a property for sale. Agent entitled to fee even if they don’t introduce purchaser.
Define joint sole agency
Where more than one agent is used to market the property. Agents agree to split the fee between them.
What does the Estate Agents Act 1979 state you must set out in writing from the start?
-Circumstances in which the vendor will become liable for the agents fee
-Amount of the fee/how it’s calculated
-When the fees due
-Any other fees
-Type of selling (i.e- sole selling rights) & definition
**if you don’t comply contract might be unenforceable
How is SDLT calculated?
VAT + Purchase price
How do you calculate NIY?
(Annual Rent - operational costs)/ property value
What is a positive covenant?
A promise to do something or spend money (i.e a repair etc..)
What is good negotiation?
Being prepared, having supporting documents and confirming next steps
What is S.25 of the LL&T act?
Landlords notice to quit, can be hostile (no renewal) or non hostile (happy to renew)
What is S.26 of the LL&T act?
Tenants right to renew lease - served to request new lease
