Purchase and Sale Flashcards
What is the difference between exchange and completion?
Exchange is when the sale becomes binding. Contracts are exchanged and deposits transferred.
Completion is the date that parties physically move and transfer legal ownership.
Who must comply with Estate Agents Act 1979?
Anyone instructed to dispose/purchase an interest in land.
What is an Estate Agent?
Anyone employed to buy, sell or let residential property.
What are the different types of interests that could be sold or purchased?
Freehold - fee simple in absolute
Leasehold - in years absolute
Detail the sale process.
- MA
- ToE signed
AML checks undertaken
Conflict of Interest - Take on
Due diligence checks
Brochure checked by vendor - Property launched to market (if going public sale)
- Viewings arranged
- Offer accepted
- Buyer ALM checks
Solicitors information
Memo of Sale drafted - Conveyancing
- Exchange
- Completion
What are the factors affecting the value of property?
- COVID-19
- stamp duty land tax
- location
- time
- local issues
- national issues
- economic issues
What application has COVID-19 and the stamp duty land tax relief had on the residential market?
• COVID-19
o my local area includes BC, which was brought to media attention early in COVID-19 days. Saw significant increase in applicants looking to move north and out of cities, increasing demand.
o Change of lifestyle - people wanting to move from cities
• SDLT
o tax band was raised to £500,000.
o Increased demand.
What is the current SDLT rate for residential properties?
Up to £125,000 - 0% £125,000 - £250,000 - 2% £250,000 - £925,000 - 5% £925,000 - £1,500,000 - 10% £1.5 plus - 12%
What is the current SDLT for first-time buyers or additional homeowners?
First time buyers = 0% payable up to £300,000. 5% payable on the portion between £300,000 - £500,000.
Additional homes = additional 3%.
What is the current SDLT rate for agricultural property?
£0 - £100,000 = 0%
£100,001 - £250,000 = 2%
£250,000 plus = 5%
How would you treat agricultural land sold with a cottage?
It was fall under residential SDLT Rates.
What property falls under non-residential for SDLT?
commercial property, for example shops or offices
property that isn’t suitable to be lived in
forests
agricultural land that’s part of a working farm or used for agricultural reasons
any other land or property that is not part of a dwelling’s garden or grounds
6 or more residential properties bought in a single transaction
When might you use informal tender?
- High market demand
- No obligation for vendor to accept highest or any of the bids
- Often and more recently find
What are the advantages and disadvantages of informal tender?
Advantages:
- often yields competitive bids
- can bring marketing to a close
- vendor not obliged to accept the highest bidder
Disadvantages:
- not legally binding until contracts are exchanged
When might you use auction?
- Quick sale required
- Where you expect there to be significant interest
- Where you have attempted a period of marketing and no interest
- Certain types of properties e.g. redundant buildings
What are the advantages and disadvantages of auction?
Advantages:
- if quick sale is required
- can generate good sale price if there is interest
Disadvantages:
- dependent who is there on the day
When might you use private treaty?
- Commonly used method of sale due to its flexibility
- Ability to negotiate
What are the advantages and disadvantages of private treaty?
Advantages:
- flexibility
- commonly use so generally less complex as parties understand the process
Disadvantages:
- not binding until the exchange of contracts
- ability for the purchaser can negotiate up to the point of exchange and reduce costs
Why might you use formal tender?
Formal tender might be used in a situation where a client wants to achieve the best sale price as soon as possible.
What are the advantages and disadvantages of formal tender?
Advantages:
- very quick process as contracts are exchanged after tender documents are received
- security for vendor
Disadvantages:
- Complex process
- Requires bidders to pay for costs of contracts which may be offputting to some
What is the key legislation in marketing a property?
Bribery Act 2010
Estate Agents Act 2010
Equality Act 2010
Consumer Protection from Unfair Trading Regualtions 2008
Business Protection for Misleading Material Regulations 2008
Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 - 14 day cooling-off period
- Estate Agents (Provision of Information) Regulations 1991 - Must supplier definition of a ready willing and able purchaser before contracts are signed. Must be given in the prescribed form.
a. A purchaser who is prepared and is able to (exchange unconditional contracts for the purchase of your property)
The Town and Country Planning (Control of Advertisements)(England) Regulations 2007
What legislation regulates boards?
The Town and Country Planning (Control of Advertising) (England) Regualtions 2007
What does the board legislation say about Estate Agency boards
Residential - the board must not exceed 0.5 square metres in area, or a total of 0.6 square metres for two joined boards.
Agricultural/Industrial/Commercial - the size of the board must not exceed two square metres in area, or 2.3 square metres for two joined boards.
Sale of goods or livestock - the board must not exceed 1.2 square metres in area
Not more than 4.2m high and 1m wide.
What are the main headings in a Terms of Engagement?
Our firm’s headings include:
Overview on first page with:
- Property name and address
- Client name
- Guide Price
- Type of Agency
- Commission
Marketing Costs:
- Photos
- Brochure
- Floor Plan
- Site Plan
- Advertising e.g. newspaper
- Online portals
Other costs:
- viewings
- expenses and travel
THEN:
- Term - 16 weeks
- Sole Selling Rights
- Payment of fees and expenses - if sole selling rights, will still get the fee if the seller finds a buyer through another agent or themselves
- Fees - Fee payable on gross sale. Reserve the right to adapt the fee if have to go above and beyond the agreed full
- Marketing expenses - Responsible for paying market expenses regardless of whether the sale goes through or not
- Payment of accounts
a. payment due to us on exchange of contracts
b. reserve the right not to proceed with marketing the property unless the marketing fees are paid
c. you agree to instruct your solicitor to pay our fees
d. Unpaid fees - 4% interest rate applies - VAT
- Other services
- Related services
- termination of appointment - terminate the agreement within 28 days notice
- CPR and BPR
- Complaints handling procedure
- GDPR
- Limited liability
- Cancellation of contract
- Money laundering
- The Equality act
- Health and safety
Main headings of a market appraisal?
- General Impression - details of a property.
Location, local amenities, distance to services, soil type, us. - Marketing Reccomendations
Lotting, guide price, method of sale, works prior to sale, timing, viewings, planning potential. - Marketing Material
EPC, Photographs, Brochure type. - Marketing
Publications, online portals, sale boards - Fees and Terms of Business
What do you look for when undertaking due diligence checks?
- Title plan e.g. restrictive covenants, whether the land is registered, any cautions on title.
- Previously sold
- Planning
- Listed Building
Land:
- Flood risk
- Planning
- Magic Maps e.g. NVZ, CSS schemes on the land, National Park, SSSI, SAC (Special Area of Conservation) SPA (Special Protection Area), NVZ, Scheduled Monument.
- Soil Type
- Land Grade
You state you always gain an EPC when marketing properties. Why do you do this?
Energy Performance of Buildings (England and Wales) Regulations 2012
What properties are exempt from requiring an EPC when marketing?
- places of worship
- temporary buildings that will be used for less than 2 years
- stand-alone buildings with total useful floor space of - - less than 50 square metres
- industrial sites, workshops and non-residential agricultural buildings that do not use a lot of energy
- some buildings that are due to be demolished
- holiday accommodation that’s rented out for less than 4 months a year or is let under a licence to occupy
- listed buildings - you should get advice from your local authority conservation officer if the work would alter the building’s character
- residential buildings intended to be used less than 4 months a year
What is an EPC?
An Energy Performance Certificate (EPC) is a survey and a record of how energy efficient your property is. An EPC is issued after a survey has been conducted by a qualified Domestic Energy Assessor (DEA).
Are there any circumstances whereby you can launch a property to the market and not have an EPC?
- If you have ordered the EPC
What is the name of the Blue Book?
RICS Professional Statement and Guidance, UK; UK Residential Real Estate Agency, 6th edition, September 2017.
What are the main headings in the blue book?
Professional Statement and Guidance
Real Estate Agency Code
Real Estate Agency and brokerage and real estate management: RICS Professional Statement
Who is responsible for ensuring members act in accordance with Real Estate Agency Code?
Firms and individuals.
Senior management must ensure there are procedures in place that support code.
What is the Real Estate Agency Code?
Members shall:
- Conduct business in an honest, fair, transparent and professional manner
- shall act with due skill, care and diligence and ensure that staff have the necessary skills to undertake tasks
- must ensure terms of engagement for clients are clear and fair, compliant with law and codes of practice e.g. CHP
- do their utmost to avoid conflicts of interest, although when they do arise, deal with them openly, fairly and promptly
- shall not discriminate unfairly in any dealings
- communication with clients must be transparent, timely, clear and fair
- advertising and marketing material must be decent, honest and truthful
- client monies must be held apart from other monies, in a appropriately designated account, covered by adequate professional indemnity insurance
- must have adequate and appropriate PII
- must ensure all parties who members are working with are aware of the scope of services
- ensure that where provided as part of a service, members should give realistic assessments of buying, selling and rental values, associated costs of occupancy and financial outcome of any risks, using best professional judgement
- when undertaking meetings, viewings and inspections, have due regard for the client’s reasonable and lawful wishes and regard for the safety and security of all parties.
What is a bribe? When might you be bribed when buying/selling properties?
A bribe is an offer, promise, giving, demanding or accepting of an advance as an inducement for an action that is illegal unethical or a breach of trust.
