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P&S Flashcards

1
Q

What is the Estate Agents Act (1979)?

A

Regulates all agency work for land and freehold and leasehold sales.

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2
Q

What are the 7 key principles of the Estate Agents Act (1979)?

A

1) “Clarity on the Terms of Agency (S.18)

2) Honest and Accuracy

3) Agreement of liability for Costs

4) Openness regarding Personal interests (S. 21)

5) Absence of Discrimination

6) Legal obligation to tell the client Offers

7) Keep client’s Money separate

  • Clients have a 14 day cooling off period upon instruction of an agent.”
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3
Q

Who policies the Estate Agents Act?

A

National Trading Standards Estate & Letting Agency Team

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4
Q

“What are the penalties for breach of the Estate Agents Act (1979)?”

A

“Prohibition Order
Warning Order”

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5
Q

“What is a connected person under the Estate Agents Act (1979)?”

A

“Someone who could benefit financially from the transaction, such as a family member or a business associate.”

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6
Q

What is the RICS guidance on estate agency?

A

“RICS Global Real Estate Agency and Brokerage Professional Statement (2016).

RICS UK Commercial Estate Agency Professional Statement (2016).

RICS UK Residential Real Estate Agency Professional Statement (2017) (The Blue Book).”

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7
Q

“What are the key principles of the Consumer Protection from Unfair Trading Regulations (2008)?”

A

“Extends the duty of care owed to potential clients, viewers, buyers and actual buyers (all consumers)
Agents must declare everything known about the property
Agents can’t put undue pressure on potential buyers.”

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8
Q

Who policies the Consumer Protection Regulations?

A

Trading Standards Office of a Local Authority

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9
Q

What are the penalties for breaching the Consumer Protection from Unfair Trading Regulations (2008)?

A

“Criminal Offence:

Maximum fine

Prohibition Order

2 years in prison.”

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10
Q

Key principles of the Business Protection from the Misleading Marketing Regulations (2008)?

A

“BPRs offer businesses protection from business-business transactions.

Mirrors CPRs.

Prohibits misleading business-business activity.

Imposes restrictions on how businesses compare their products to products of another company.”

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11
Q

“Key principles of the RICS Global Real Estate Agency and Brokerage Professional Statement (2016)?”

A

“Professional Statement

All RICS members involved in the sale, letting and leasing of real estate must follow.

Includes:

Ethics
Securing instructions
Acting for the seller
Acting for the buyer
It is similar to the UK specific professional statement - RICS UK Commercial Estate Agency (2016).”

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12
Q

“What are the key principles of the RICS UK Commercial Estate Agency Professional Statement (2016)?”

A

“Provides mandatory standards for those involved in agency work.

Has 12 core principles:

Act in an honest, fair and transparent manner
Ensure client’s are provided with Terms of Business
Do upmost to avoid conflicts
Have adequate PII
Do not discriminate unfairly any dealings
Also advices on key agency matters i.e. acting ethically, securing instructions, marketing, gifts etc”

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13
Q

“What are the key principles of the RICS UK Residential Real Estate Agency Professional Statement (2017) (The Blue Book)?”

A

“Provides a mandatory summary of the code of practice in all aspects of property marketing for residential.

Comprises the following material:

Relevant estate agency legislation
Standards & ethics
Proper marketing
Acting for the vendor, purchaser and landlord.”

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14
Q

“What are the key principles of the Misrepresentations Act (1967)?”

A

“Relates to the misrepresentation or a fake statement made by a party during pre-contractual enquiries, which has an effect of inducing the party to purchase.

Agent has a duty of care to check the advice and information given.”

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15
Q

What are the penalties of the Misrepresentations Act (1967)?

A

“It is a civil offence - a form of negligence.

Can be sued for financial damages and/or contract recinded.”

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16
Q

“What are the main differences between CPR (2008) and Misrepresentation Act (1967)?”

A

“CPRs are a criminal offence.
Misrepresentation is a civil offence.

Misrepresentation Act relates to misrepresentation during the pre-contractual enquiries by the vendor and their agent to potential purchasers.

CPRs relate during the entire agency sales & lettings process.”

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17
Q

When is planning permission needed for marketing signage?

A

“1) If it’s above the allowed sizing
2) Illuminated boards
3) Remote boards
4) Boards on listed buildings & in conservation areas”

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18
Q

What do AML Checks consist of?

A

“Public Limited Company:
- London Stock Exchange Listing

Publicly Accountable Body:
- Government ownership / control

Private individual:

passport/driving license
proof of address i.e. utility bill from last three months
PLC:

certificate of incorporation
full name
registered number
registered office
business address
name of stakeholders with 25% + holding
report any discrepancies to Companies House”

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19
Q

When is VAT Applicable?

A

“A landlord/vendor can choose to opt a property for tax, in order to recover VAT on costs spent.

However. this then creates issues for tenants, who now have to pay VAT on rent and service charge.

Always advise to see a specialist.

Some occupiers can’t register for VAT i.e. charities”

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20
Q

What regulations govern AML Checks?

A

“Money Laundering, Terrorist Financing and Transfer of Funds and Regulations (2019)

RICS Professional Statement Countering Bribery, Corruption, Money Laundering & Terrorist Financing (2019).”

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21
Q

What are the 4 methods of sale?

A

“Private Treaty
Informal Tender
Formal Tender
Auction”

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22
Q

What is a sale by private treaty?

A

“Parties are free to negotiate on their own time, without commitment in the open market.

It is the most popular method.”

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23
Q

What are the pros and cons of private treaty?

A

“Pros:

flexible
parties control the process
no obligation to sell
confidential
Cons:

potential for gazumping/gazundering
late decisions not to buy
associated abortive costs”

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24
Q

What is informal tender?

A

“Best offers/bids’

Used when there is a good level of interest. It used either at the start or to bring negotiations to a close.

Agents will invite parties to submit a bid or a ‘best and final’ bid and will ask for details to include:

applicants solicitor
finance arrangements
any conditions attached to the offer”

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25
Q

What are the pros and cons of informal tender?

A

“Pros:

flexible
possibility of negotiating a higher bid
Cons:
- can be difficult to manage bids”

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26
Q

What is formal tender?

A

“t is often used by a statutory body / when there may be public interest in the property.

Applicants bid blindly with a prescribed form, without knowing other bids.

All bids are to be opened in front of client/independent witness/line manager.

No opportunity for prospective purchaser to increase the bid after submission of offer.”

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27
Q

What are the pros and cons of formal tender?

A

“Pros:
- completely transparent

Cons:
- no flexibility”

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28
Q

What are the differences between formal and informal tender?

A

Informal tender: further negotiations can follow, can change bid.
Formal tender: single bid only

Informal tender: will not lead to direct to a contract for sale
Formal tender: can lead to a contract for sale”

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29
Q

What is an auction?

A

If a quick sale is wanted.

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30
Q

What are the pros and cons of an auction?

A

“Pros:

1) quick sale
2) certainty of sale (assuming reserved price is achieved and its sold)
3) good method for unusual properties that are hard to value
4) used when good interest is expected

Cons:

1) cost of promotion and publicity
2) no confidentiality on price achieved
3) vendor cannot choose purchaser
4) intensive nature of a short marketing process”

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31
Q

What is the Auction Process

A

1) Terms of Engagement are agreed in writing in advance

2) Conflict of Interest checks undertaken prior to accepting instruction

3) AML Checks completed for all vendors and proposed purchasers in advance

4) Clarity provided on auctioneer’s right to refulse bids, regulate bidding increments, accept proxy, telephone/internet/ postal bids & sign contract on behalf of vendor

5) full DD completed prior to offering property for sale

6) conditions of sale, memorandum of osale and notices to bidders pubhised by auctioneer

7) Reserve Price set

8) Contracts exchange at fall of the gavel

9) Auction particualrs in catalogue must be prepared in accordance with CPR 2008 and Misrepresentation Act 1967

10) insurance required from purchaser on day of exchange

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32
Q

Actions by purchaser for post-exchange auction

A

1) view property and consider structural survey

2) take proper legal advice & due diligence

3) read Notice to Prospective Buyers

4) arrange insurance & 10% deposit for exchange

5) provide ID for AML procedures

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33
Q

What would you do if you got a late bid?

A

“Under the Estate Agents Act (1979), I must disclose all offers received to the client.

It is the client’s choice on how they handle it and would like to proceed”

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34
Q

What are the three bases of agency?

A

1)”Sole agency

2) Joint agency (share fee on a pre-agreed basis)

3) Multiple agency (successful agent gets the fee)”

35
Q

What are sole selling rights?

A

“The estate agent is entitled to the fee if there is any disposal of the property while the agreement is in force, regardless of who found the buyer or had negotiations with them.

This is the typical clause.”

36
Q

What are sole agency rights?

A

“The estate agent is only due a fee if they introduce a purchaser within the instruction term.

Less advantageous for the agent as if client finds the purchaser, they will not get a fee.”

37
Q

What happens if a buyer fails to complete?

A

“Vendor can serve a notice to complete - giving the buyer a deadline. The legal cost is to be paid by the buyer.

If this deadline is passed, the vendor can rescind the contract and remarket.

The vendor may be able to sue for damages for any loss in value following the sale to another party at a lower price.”

38
Q

What are agency instruction agreements?

A

They are a requirement of the RICS Rules of Conduct (2007) and the Estate Agents Act (1979) (sections 18 & 21)

There is a statutory cooling off period of 14 days.

The agreement must be signed and returned to the agent before marketing can commence.”

39
Q

What must agency instruction agreements include?

A

“Agency basis (sole / joint)
Agency rights (sole selling / sole agency)
Proposed fee
Marketing costs & disbursements
Confirmation of no COIs
Money Laundering regulations requirements
Timescale for the payment of fees and disbursements
Details of CHP”

40
Q

What is Gazundering?

A

“Where a buyer lowers their offer at the last minute, just before contracts are exchanged.

The seller, conscious of refusing the new lower price means they are back at square one and the chain may fall apart, often feel forced to accept the new lower offer.”

41
Q

What is gazumping

A

Gazumping occurs when a buyer has had an offer to purchase a property accepted, but before the sale is completed the seller accepts a better offer from another buyer.

42
Q

What are heads of terms?

A

“They provide an executive summary of the purchase.

They provide a framework for contract, purchase timescales and any pre-exchange conditions.

They are not legally binding.”

43
Q

What goes into Heads of Terms?

A

“Vendor’s agent
Vendor’s solicitor
Purchaser
Purchaser’s solicitors
Purchase price
The property
The deposit
Timing
Purchaser’s obligations
Rights
Costs”

44
Q

What is the role of an agent after Heads of Terms?

A

“They ensure timescales are adhered to.

Liaising with both parties and the solicitors to ensure everything is going smoothly and going to time.”

45
Q

“What do you do with Heads of Terms once they have been signed off?”

A

You exchange them with the two parties and you send to their solicitors.

46
Q

“What agreements and contracts are available for the purchase of land?”

A

1) Option Agreement

2) Promotion Agreement

3) Joint Venture

4) Unconditional Contract

5) Conditional Contract

6) Development Agreement”

47
Q

What is an unconditional contract?

A

“It is the simplest form of contract as the buyer agrees to buy it as it is.

It is often unsuitable for a development site, unless planning permission has already been obtained.

On exchange the buyer agrees to complete on the purchaser of the land on the completion date specified in the contract.

This arrangement provides certainty for both parties.”

48
Q

What is a conditional contract?

A

“This allows the buyer to agree to buy the property, subject to certain conditions being satisfied i.e. STP.

Once conditions are satisfied within the timescales specified in the contract, the contract becomes unconditional and the buyer must complete by the set date in the contract.”

49
Q

What is a joint venture agreement?

A

“A development agreement is a form of JV. However, can take many forms.

A special purchase vehicle will be incorporated for the purposes of owning and/or carrying out the development which may be owned and controlled by either 2+ companies or individuals who wish to pool resources & limit personal liability for a project.”

50
Q

What is a development agreement?

A

It is a collaboration between a landlord and developer.

The landowner supplies the land and the developer seeks planning and to build out the development.

Developer contributes to initial planning and build costs.

They then split profits between parties.

It is a form of JV”

51
Q

What is overage?

A

“It is a clause within a contract relating to the uplift in GDV or floorspace of a site STP, within an agreed timeframe,

A pre-arranged % of price is paid back to the vendor.”

52
Q

What are the forms of purchase vehicles?

A

“Special purchase vehicle companies
- a company formed to buy a property to reduce the payment of SDLT

REITs
- a company tax resident in the UK which is listed on the stock exchange and has at least 75% of business in property investment.

JVs between 2+ parties.”

53
Q

What is SDLT?

A

It is a tax that is applied to the purchase of all property.

There are different residential and commercial bands.

Varying eligibility criteria depending on if you’re i.e. a first time buyer or a 2nd home buyer.”

54
Q

hat are the residential SDLT rates?

A

“£0 - £125k = 0%
£125 - £250k = 2%
£250 - £925k = 5%
£925k - £1.5m = 10%
£1.5m + = 12%”

55
Q

What are the commercial SDLT rates?

A

“£0 - £150k = 0%
£150 - £250k = 2%
£250k + = 5%”

56
Q

What are the recent changes to SDLT?

A

“1st July 2020 - buyers didn’t have to pay on first £500k

1st July 2021 - this reduced to £250k

1st October 2021 - this reduced to pre-covid levels to £125k.”

57
Q

Suggested timeline of a sales instruction?

A

1) Receive instructions from client

2) Check competence and Conflict (CCT)

3) Issue agency instruction agreement

4) Receive signed agreement back (S. 18 EAA 1979)

5) Money laundering checks

6) Gather information & undertake due diligence

7) Check VT position

8) Inspect property

9) Prepare marketing report & recommendations

10) Get marketing materials signed off

11) Undertake marketing

12) Negotiate

13) Draft HoT

14) Liaise with lawyers during legal process

15) Invoice”

58
Q

“What’s included in particulars to avoid issues with
Misrepresentation Act?”

A

“A disclaimer stating:

“They assume no responsibility for any statement that may be made in these particulars. These particulars do not form part of any offer or contract and must not be relied upon as statements or representations.””

59
Q

How do you seek proof of funds?

A

A written statement from the purchaser’s solicitor.

60
Q

What happens at exchange?

A

Buyer pays a deposit and the sale/purchase contract becomes legally binding

61
Q

What happens at completion?

A

The balance of the payment for the property is passed over to the seller’s solicitor and ownership
transfers to the buyer.”

62
Q

What do you know about the estate agents act?

A

Aims to promote honesty, accuracy, clarity and openness in the agency process. It also aims to discourage discrimination.

T – Clarity on terms of agency – s18 – specify all costs
H – Honesty and accuracy
I – Openness for Personal interests – s21
D – Absence of discrimination
O – Tell clients all offers
C – Agreement and liability for costs
C – Keep clients’ money separate

63
Q

Summarise Uk Commercial Real Estate Agency 2017

A

chapters covering all aspects of commercial agency

Scope
Standards & Ethics
Securing instructions
Disposals: Marketing the property
Implementing the disposal
Acquisitions
Ending the instruction

64
Q

What is included in Real estate agency and brokerage 3rd edition, August 2016

A

Professional Statement,

8 chapters

1 Ethics
2 Securing instructions
3 Acting for the seller: marketing the property
4 Acting for the seller: agreeing the sale or lease
5 Acting for the buyer
6 Ending the instruction
7 Safety and security
8 Agency management

65
Q

Summarise RICS Guidance Note Valuation of Development Property October 2019

A

The Guidance Note explores the due diligence ensuring that appropriate assumptions and special assumptions can be made.

It also discusses how to assess development potential, including seeking advice from external specialists, e.g. planning consultants.

Finally, it looks at the four main options for development property, which are likely to influence the valuation approach and outcome. These are to develop, develop in phases, sell or dispose, and defer or wait.

66
Q

Summarise Guidance on Comparable evidence in RE Valuation 2019

A

Guidance on

comparable sources
hierarchy of evidence (best is a transaction on the subject property)
recording comparable evidence
comparable analysis
CATEGORIES EVIDENCE INTO A,B AND C

67
Q

Summarise Sustainability and ESG in commercial property valuation and strategic advice, 3rd Edition?

A

Almost a companion to the RED BOOK 2022

Covering ESG and sustainability and the role of the valuer

Includes detail to support valuers in the process covering sustainability characteristics, considerations & risks

end to end sustainability:
valuation purposes
instructions
TOE
Basis of Value
reporting
comparable evidence
valuation methods & considerations
Appendix A covers key definitions such as benchmarking and BREEAM

68
Q

Summarise surveying safely guidance note

A

Effective from 1st Feb 2019

Has 9 key sections which set out good practice principles for the management of health and safety for RICS-regulated firms and RICS members

They include; Personal responsibility, assessing hazards and risks, occupational hygiene and health, visiting premises or sites and fire safety.

69
Q

Summarise RICS professional guidance, UK Complaints handling 1st edition, July 2016

A

This guidance note is to provide residential surveyors and valuers with information to assist in handling complaints and direct them towards more detailed guidance from RICS.

you should have:

Robust terms of engagement
CHP policy
Escalation procedures
ADR
Good record keeping

70
Q

What do you know about RICS Conflicts of Interest 2017 professional statement

A

Is a professional statement
It covers what a conflict of interest is and what dual agency is

A member must not advise or represent a client where a conflict arises without informed consent
Three conflicts:
* Party conflict
* Personal conflict
* Confidential information conflict

71
Q

What does the NPPF say on inclusivity?

A

Designing the built environment, including buildings and their surrounding spaces, to ensure that they can be accessed and used by everyone.

consideration:

proximity and links to public transport;
parking spaces and setting down points in proximity to entrances;
the positioning and visual contrast of street furniture and the design of approach routes to meet the needs of wheelchair users
and people with visual impairments; and
whether entrances to buildings are clearly identified, can be reached by a level or gently sloping approach and are well lit

72
Q

What are purchase conditions and where did you use it in your case study

A

conditions needed to be met before completeing the sale

Obtain Reserved Matters Approval
subject to investigations etc.

73
Q

When would you advise a client to use auction ?

A

When the client wants to dispose the site in a short space of time
Certainty of sale (subject to meeting reserve figure)
To sell a property or site which could have a high level of interest

74
Q

What process would you follow if you were asked to sell a brownfield site ?

A

SUK
Conflicts, independent and terms
Due diligence
Marketing
Customer due diligence
If interest is high then carry out an informal tender (no obligation)
Refer all offers to client
Get approval from client
Instruct solicitors
Assist in answering queries
Finalise sell
Raise invoice and close appointment.

75
Q

hat would be your role once solicitors are instructed ?

A

Inform Client on progress and assit with enqs

76
Q

What is the typical timescale of a sale when selling a site and process would you follow ?

A

2-6 months depending on whether both parties are keen to progress sale

77
Q

Would you make the decision on who to go with on a sale of a site ?

A

I would make my recommendation to the Client but it is ultimately their decision to decide who to go with

78
Q

What is the preferred method of sale for a local autoirty

A

Informal tender- as terms are agreed ahead of time and then progresses to completion soon after

79
Q

What due diligence would you do if it was a company ?

A

Certificate of ownership
Registered business, address and names of shareholders
Identification of directors

80
Q

What act relates to the leasing on premises

A

Landlord & Tenant Act 1954

81
Q

What is a ready, willing and able purchaser?

A

A purchaser who is prepared and is able to (exchange unconditional contracts for the purchase of your property. You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, if such a purchaser is introduced by us in accordance with your instructions. This must be paid even if you subsequently withdraw and (unconditional contracts for sale are not exchanged), irrespective of your reasons.

82
Q

ell me three key issues raised in the RICS Real Estate Agency and Brokerage Standards / RICS Commercial Real Estate Agency (Purple Book).

A

cting Ethically
Securing instructions
Marketing the property
Implementing the disposal
Acquisition of property

83
Q

What do you do if you have an unregistered Title ?

A

Defective Title Insurance

APC (13 decks)

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