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APC > Purchase and Sale > Flashcards

Purchase and Sale Flashcards

1
Q

What is the difference between exchange and completion?

A

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.

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2
Q

Who must comply with Estate Agents Act 1979?

A

Anyone instructed to dispose/purchase an interest in land.

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3
Q

What is an Estate Agent?

A

Anyone employed to buy, sell or let residential property.

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4
Q

What are the different types of interests that could be sold or purchased?

A

Freehold - fee simple in absolute

Leasehold - in years absolute

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5
Q

Detail the sale process.

A
  1. MA
  2. ToE signed
    AML checks undertaken
    Conflict of Interest
  3. Take on
    Due diligence checks
    Brochure checked by vendor
  4. Property launched to market (if going public sale)
  5. Viewings arranged
  6. Offer accepted
  7. Buyer ALM checks
    Solicitors information
    Memo of Sale drafted
  8. Conveyancing
  9. Exchange
  10. Completion
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6
Q

What are the factors affecting the value of property?

A
  • COVID-19
  • stamp duty land tax
  • location
  • time
  • local issues
  • national issues
  • economic issues
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7
Q

What application has COVID-19 and the stamp duty land tax relief had on the residential market?

A

• 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.

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8
Q

What is the current SDLT rate for residential properties?

A 
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%
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9
Q

What is the current SDLT for first-time buyers or additional homeowners?

A

First time buyers = 0% payable up to £300,000. 5% payable on the portion between £300,000 - £500,000.

Additional homes = additional 3%.

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10
Q

What is the current SDLT rate for agricultural property?

A

£0 - £100,000 = 0%
£100,001 - £250,000 = 2%
£250,000 plus = 5%

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11
Q

How would you treat agricultural land sold with a cottage?

A

It was fall under residential SDLT Rates.

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12
Q

What property falls under non-residential for SDLT?

A

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

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13
Q

When might you use informal tender?

A
  • High market demand
  • No obligation for vendor to accept highest or any of the bids
  • Often and more recently find
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14
Q

What are the advantages and disadvantages of informal tender?

A

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

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15
Q

When might you use auction?

A
  • 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
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16
Q

What are the advantages and disadvantages of auction?

A

Advantages:

  • if quick sale is required
  • can generate good sale price if there is interest

Disadvantages:
- dependent who is there on the day

17
Q

When might you use private treaty?

A
  • Commonly used method of sale due to its flexibility

- Ability to negotiate

18
Q

What are the advantages and disadvantages of private treaty?

A

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
19
Q

Why might you use formal tender?

A

Formal tender might be used in a situation where a client wants to achieve the best sale price as soon as possible.

20
Q

What are the advantages and disadvantages of formal tender?

A

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
21
Q

What is the key legislation in marketing a property?

A

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

  1. 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

22
Q

What legislation regulates boards?

A

The Town and Country Planning (Control of Advertising) (England) Regualtions 2007

23
Q

What does the board legislation say about Estate Agency boards

A

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.

24
Q

What are the main headings in a Terms of Engagement?

A

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:

  1. Term - 16 weeks
  2. Sole Selling Rights
  3. 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
  4. Fees - Fee payable on gross sale. Reserve the right to adapt the fee if have to go above and beyond the agreed full
  5. Marketing expenses - Responsible for paying market expenses regardless of whether the sale goes through or not
  6. 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
  7. VAT
  8. Other services
  9. Related services
  10. termination of appointment - terminate the agreement within 28 days notice
  11. CPR and BPR
  12. Complaints handling procedure
  13. GDPR
  14. Limited liability
  15. Cancellation of contract
  16. Money laundering
  17. The Equality act
  18. Health and safety
25
Q

Main headings of a market appraisal?

A
  1. General Impression - details of a property.
    Location, local amenities, distance to services, soil type, us.
  2. Marketing Reccomendations
    Lotting, guide price, method of sale, works prior to sale, timing, viewings, planning potential.
  3. Marketing Material
    EPC, Photographs, Brochure type.
  4. Marketing
    Publications, online portals, sale boards
  5. Fees and Terms of Business
26
Q

What do you look for when undertaking due diligence checks?

A
  • 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
27
Q

You state you always gain an EPC when marketing properties. Why do you do this?

A

Energy Performance of Buildings (England and Wales) Regulations 2012

28
Q

What properties are exempt from requiring an EPC when marketing?

A
  • 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
29
Q

What is an EPC?

A

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).

30
Q

Are there any circumstances whereby you can launch a property to the market and not have an EPC?

A
  • If you have ordered the EPC
31
Q

What is the name of the Blue Book?

A

RICS Professional Statement and Guidance, UK; UK Residential Real Estate Agency, 6th edition, September 2017.

32
Q

What are the main headings in the blue book?

A

Professional Statement and Guidance
Real Estate Agency Code
Real Estate Agency and brokerage and real estate management: RICS Professional Statement

33
Q

Who is responsible for ensuring members act in accordance with Real Estate Agency Code?

A

Firms and individuals.

Senior management must ensure there are procedures in place that support code.

34
Q

What is the Real Estate Agency Code?

A

Members shall:

  1. Conduct business in an honest, fair, transparent and professional manner
  2. shall act with due skill, care and diligence and ensure that staff have the necessary skills to undertake tasks
  3. must ensure terms of engagement for clients are clear and fair, compliant with law and codes of practice e.g. CHP
  4. do their utmost to avoid conflicts of interest, although when they do arise, deal with them openly, fairly and promptly
  5. shall not discriminate unfairly in any dealings
  6. communication with clients must be transparent, timely, clear and fair
  7. advertising and marketing material must be decent, honest and truthful
  8. client monies must be held apart from other monies, in a appropriately designated account, covered by adequate professional indemnity insurance
  9. must have adequate and appropriate PII
  10. must ensure all parties who members are working with are aware of the scope of services
  11. 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
  12. 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.
35
Q

What is a bribe? When might you be bribed when buying/selling properties?

A

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.

APC (12 decks)

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