Purchase and Sale Flashcards
What is the full name of the Blue Book?
UK residential real estate agency- 6th edition, September 2017
What are the methods of sale?
- Private Treaty
- Formal Tender
- Informal Tender
- Auction
- (Off Market)
What is the relevant legislation relating to Purchase and Sale of property in the UK?
- Bribery Act 2010
- Equality Act 2010
- Estate Agents Act 1979
- Consumer Protection from Unfair Trading Regulations
2008 (when dealing with consumers) - Business Protection from Misleading Marketing
Regulations 2008 (when dealing with businesses).
What is the difference between formal and informal tender?
INFORMAL TENDER
- the asking price will not be stated
- Written offers will be invited (sealed bids) and a closing date for such offers published
- All offers are opened at the same tim
- Generally, the vendor is not committed to accepting the highest or any offer
- The offer is not binding and on acceptance of any offer the transaction proceeds subject to contract.
FORMAL TENDER
- Each tender document from the bidders must include the full legal contract for sale and all bids have to include a bankers draft as a deposit on the contract.
- The bids are opened by the vendor or agent (representative).
- As soon as the “best bid” is selected, the bankers draft is accepted and contracts are automatically exchanged.
- The successful bidder is then committed to the contract and will have to complete the sale on the appointed date.
- If the successful bidder fails to complete the sale they will forfeit their deposit and further costs may
be incurred.
What are included in ToB for Agency Instructions?
● Contracting parties
● Period of contract
● Sale or acquisition payment conditions
● Joint agents
● Sub agents
● Fees and payment of fees
● Other costs and charges
● Cancelled instructions
● Discounts and commission
● Money Laundering regulations
● Complaints handling
● Storage of documents / use of photo graphs under data protection
What are the different inerests in land?
Freehold – fee simple absolute in possession. This is the highest possible ownership interest that can be held in real property.
Leasehold – a term of years absolute. A less level of ownership.
What are the interests in land or status’ you might sell a property with subjet to?
Vacant Possession – no tenancies or occupations arrangements in place.
Subject to Tenancy – tenant in place and the tenancy will transfer over with the sale
Positive Covenants - the covenant requires positive expenditure by the person bound, in order to fulfil its terms. The burden of the covenant does not run with the land.
Restrictive Covenants – a covenant imposing a restriction on the use of land so that the value and enjoyment of adjoining land will be preserved. The burden of the covenant runs with the land.
Overage / Clawback – provision to reclaim a proportion of development value upon grant of planning or other condition being satisfied.
What are some factors effecting the market?
Timing
Location
Local issues
National issues
Economics
What is a typical fee structure?
Commission based.
Commission on sales depends on the client and the size of the sale or purchase.
Can range from 0.5 – 2%. Normally, it will be around 1-1.5%.
What are the implications of the Estate Agency Act 1979
The Estate Agents Act 1979
Provides that estate agents are honest, accurate and clear with terms.
● Act in best interests of clients.
● Fair treatment of buyers and sellers.
● Transparency of actions.
● Advance notice to client of:
Fees
Additional charges
Declaring Personal interests
Being truthful in negotiations
Informing clients about offers
Upholding enforcement of act where given warning order
Office of Fair Trading
What are the Consumer Protection from Unfair Trading Regulations 2008?
Prohibits engagement in Unfair commercial practices when dealing with consumers.
Will be in breach of regulations if the consumer would have made a different transactional decision because of the advice given to them.
5 Main categories
● Giving misleading information to consumers.
● Failing to give necessary information.
● Acting aggressively in sales techniques.
● Failing to act with reasonable expectations of acceptable trading practice.
● Engaging in any of the 31 banned practices under CPR.
CPR expects average consumer to be informed but not to have read the small print or be aware of the key points. Assumes they ask questions and may make their own checks but will trust the advice and information given.
What is the process of a sale?
Inspection
Submit market appraisal to client
Sign ToB and ToE
Marketing
Report offers
Agree Sale
Accept offer
Instruct solicitors
Exchange
Complete
What is the conveyancing process?
Preliminary negociation
HoT drafted by agent and both solicitors instructed
Due Dilligence by solicitors
Exchange contracts (10 % deposit and agent fee paid)
Requisition on Title (completion) - document transfer and money transfers
Particulars for sale would include
● Introduction
● Method of sale
● Tenure and Occupation
● Outgoings
● VAT
● Town and Country Planning
● Wayleaves, Easements, Covenants
● Sporting, Timber and Minerals
● Services
● Nitrate Vulnerable zones
● Basic Payment Scheme
● Ingoing valuation
● Holdover Provisions
● Overage if any
● TUPE
● Particulars
● Location of Land
● Viewings
Particulars for letting would include
● Lotting
● Location
● Description of the land
Buildings
Services
● Environmental Schemes
● Basic Payment Scheme
● Early Entry
● Holdover (if any)
● Ingoing Valuation
● TUPE (Transfer of undertakings (Protection of Employment)
● Timber, Minerals and Sporting Rights
● Wayleaves, Easements and Rights of Way
● Plans and Schedules of Areas
