Optional - Purchase and Sale (L3) Flashcards
Level One
What are the four methods of sale?
Private Treaty - open market, no commitment, parties control process
Informal Tender - closing date inviting best and final offers
Formal Tender - similar to informal but includes legal pack and quick exchange
Auction - no control over purchaser, short marketing, costly and public
Level One
What different objectives might a client have when selling their property?
- Speed of sale
- Highest price possible
- Control over who it goes to
Level One
What is joint agency?
This is where two or more agents enter into an agreement to market the property together with the fee achieved being split between each party
Level One
What is multiple agency?
This is where more than one agent is engaged to market and sell the property, with only the successful agent getting 100% of the fee
Level One
Talk me through a sales instruction from start to finish
- Enquiry
- Inspection
- Appraisal
- Agreement
- Vendor AML
- Gather marketing material
- Launch to market
- Negotiations
- Accept an offer
- Buyer AML
- Introduce legal parties
- Financial and legal due dilligence
- Exchange and completion
Level One
Talk me through the AML process
In accordance with the Money Laundering Regulations (2017), we must understand the risks involved in dealing with different buyers and sellers and mitigate those risks to avoid being complicit in money laundering.
- Regular Due Diligence:
Individuals - photo ID; proof of home address; credit report to confirm no enhanced due diligence is necessary
Companies - as above, but for all beneficial owners; need to understand ownership structure and if private/public
Vendors - as above, but proof they have the right to sell/lease; proof of ownership - Simplified Due Diligence:
Not all checks will need to be complete if we can re-use above due diligence; appropriate for listed companies on LSE or is on our Trusted Major Client List - Enhanced CDD:
If there is a higher perceived risk of money laundering or terrorist financing; owner or family member is a PEP (Politically Exposed Person); not dealing face to face; provides false information
In addition to regular due diligence; additional proof of address; look for red flags; closely examine every aspect of the deal
Level One
What are some of the 12 core principles that UK based chartered real estate agents must follow?
- Honesty
- Competency
- Transparency
- Avoid conflicts
- Do not discriminate
- Client money held securely
- Marketing is honest and truthful
- Hold appropriate PI cover
- Be realistic when using professional judgement
- Ensure face to face dealing are conducted with regard to security and safety
Level One
Tell me more about the Estate Agents Act 1979
Applies to sale and acquisition of land and property. Seven key principles:
1. Clarity on the terms
2. Honest and accurate
3. Agreement and liability for costs
4. Openness about conflicts of interest
5. No discrimination
6. Legal obligation to tell client offers received
7. Keep client’s money separate
Non compliance is a warning or fine. Not a criminal or civil offence.
Level One
Tell me more about the Misrepresentation Act 1967
- Relates to a false statementof fact made during pre-contractual enquiries.
- Can be sued for damages.
- Misrepresentation can be innocent, negligent or fraudulent.
- Civil offence
Level One
Tell me more about CPR 2008
Consumer Protection from unfair trading Regulations, 2008
- Replaced the Property Misdescriptions Act
- Broader and not related directly to Property
- Agents must show duty of care and have an audit trail
- Agents must not exert any pressure
- Agents must declare everything known (good and bad)
- Failure to comply is a criminal offence with compensation of up to £25,000 due
- Policed by Trading Standards
Submission: Level One
What guidance note do the 12 core principles come from?
RICS UK Commercial Estate Agency (2016)
Submission: Level One
What is it called when you introduce solictors at the point of an agreed deal?
Heads of Terms or Memorandum of Sale
Submission: Level One
What is the law regarding signage?
A lot of our sales are confidential so do not require a sign. I am aware that there are certain restrictions on size, you must have landowner’s permission and you must remove 14 days after sale.
If I needed to put one up, I would check the sizes on Town and Country Planning (Scotland) Act 1997
Submission: Level One
What does your Company’s disclaimer say with regard to sales particulars?
They are provided as a convenient guide to the Property for prospective purchasers and Christie & Co offers no assurances on the accuracy of the contents.
Is it the responsibility of any purchaser to verify the accuracy of any statements relied upon by completing their own due dilligence and seek independent advice before completing on any transaction.
Submission: Level One
Are you aware of any case law relating to Misrepresentation Act 1967?
Hedley Byrne (1964) serves as a warning to professional services firms that they can have a responsibility to more than just their direct clients.
Set precedence for three tests of negligence:
1. Proximity - is the relationship close?
2. Fairness - is it fair that a duty of care arises?
3. Foreseeability - how reasonably obvious was the potential damage?
