Purchase and Sale Flashcards
What is the Estate Agents Act (1979)?
Regulates all agency work for land and freehold and leasehold sales.
What are the 7 key principles of the Estate Agents Act (1979)?
Clarity on the terms of Agency (S.18)
Honest and Accuracy
Openness regarding personal interests (S. 21)
Absence of discrimination
Legal obligation to tell the client offers
Keep client’s money separate
Agreement of liability for costs
Clients have a 14 day cooling off period upon instruction of an agent.
Who policies the Estate Agents Act?
National Trading Standards Estate & Letting Agency Team
What are the penalties for breach of the Estate Agents Act (1979)?
- Prohibition Order
- Warning Order
What is a connected person under the Estate Agents Act (1979)?
Someone who could benefit financially from the transaction, such as a family member or a business associate.
Are there any updates to the Estate Agents Act (1979)?
Estate Agents (Undesirable Practices) Order (1991) - Estate agents must inform their clients at the same time they are informed of Terms of Business, as to any additional services to be offered to prospective purchasers, unless they are free.
Estate Agents (Provision of Information) Regulations (1991) - This information must be provided in writing as to the services provided and the remuneration.
What are the key principles of the Consumer Protection from Unfair Trading Regulations (2008)?
- offers broader, non-specific consumer Protection for estate agents agents.
- relates to potential buyers and vendors
- Extends the duty of care owed to potential clients, viewers, buyers and actual buyers (all consumers)
- Need to give accurate and/or necessary ‘material’ information and not make any mis-descriptions.
- Agents must declare everything known about the property
- Agents can’t put undue pressure on potential buyers.
Who policies the Consumer Protection Regulations?
Trading Standards Office of a Local Authority
What are the penalties for breaching the Consumer Protection from Unfair Trading Regulations (2008)?
Criminal Offence:
Maximum fine
Prohibition Order
2 years in prison.
Key principles of the Business Protection from the Misleading Marketing Regulations (2008)?
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.
What is the RICS guidance on estate agency?
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).
Key principles of the RICS Global Real Estate Agency and Brokerage Professional Statement (2016)?
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).
What are the key principles of the RICS UK Commercial Estate Agency Professional Statement (2016)?
Mandatory Professional Statement for RICS members.
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.
What are the key principles of the RICS UK Residential Real Estate Agency Professional Statement (2017) (The Blue Book)?
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.
What are the key principles of the Misrepresentations Act (1967)?
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.
What are the penalties of the Misrepresentations Act (1967)?
It is a civil offence - a form of negligence.
Three tests to decide whether an agent is liable for negligence:
Foreseeability - damage is foreseeable
Proximity - relationship is sufficiently proximate by law
Fairness - fair and reasonable for a duty of care to arise
Can be sued for financial damages and/or contract recinded.
What are the main differences between CPR (2008) and Misrepresentation Act (1967)?
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.
What is the Regulation of Property Agents?
A working group has made recommendations for the government on a new regulatory framework for property agents.
Published in 2019.
Proposes that all agents be regulated by an independent regulator with mandatory qualifications for agents and code of practice.
All qualifying agencies are to be licensed and abide by the new code of practice.
Transparency of costs and charges now priorities.
No date has been announced for the proposed legislation.
When is planning permission needed for marketing signage?
- If it’s above the allowed sizing
- Illuminated boards
- Remote boards
- Boards on listed buildings & in conservation areas
What governs marketing signage?
The Town and Country Planning (Control of Advertisement) Regulations 2007
Only 1 board allowed for commercial properties.
Must remove signs 14 days after completion.
What signage does not need planning permission?
Non-residential boards under:
2sqm (flat)
2.3sqm (v-board)
Residential boards under:
- 5sqm (flat)
- 6sqm (v-board)
When is VAT Applicable?
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
What is Savills PII for agency / consultancy?
£5 million for 6 years after the appointment.
What do AML Checks consist of?
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
What regulations govern AML Checks?
Money Laundering, Terrorist Financing and Transfer of Funds and Regulations (2019)
RICS Professional Statement Countering Bribery, Corruption, Money Laundering & Terrorist Financing (2019).
Who is Savills Money Laundering Officer?
Christine Cox
What are the 4 methods of sale?
Private Treaty
Informal Tender
Formal Tender
Auction
How do you choose which method to use?
- Client objectives
- Desired timescale
- Public accountability
- Current and likely future market conditions
- Anticipated level of demand
- Likely target market
What is a sale by private treaty?
Parties are free to negotiate on their own time, without commitment in the open market.
It is the most popular method.