Purchase and sale Flashcards
Advantages and disadvantages of Private treaty
Advantages
1. Flexibility
2. parties control the process
3. Confidential
4. Vandor not under any obligation to sell
Disadvantages
1. Potential for Gazumping or Gazundering
2. Late decision not to buy
3. Associated abortive costs.
What is Gazundering and Gazumping?
Gazundering - lower the amount of an offer that one has made to (the seller of a property), typically just before the exchange of contracts.
Gazumping - make a higher offer for a property than the chosen seller and thus succeed in acquiring the property.
Explain informal tender process
Used when there is a good level of interest in a property.
It’s not a legally binding process so either party can withdraw at any point up to the contract
All bids should be opened in front of the client or independent witness/ line manager
All interested parties submit their offers within the prescribed time
details should include,
1- Required date and time of receipt of written offers,
2 - Solicitors’ details.
3 - Confirmation of finance arrangements
4 - Details of any conditions attached to the offer.
5- Vendor reserves the right not to accept the highest or any offer made - important without this statement could become binding tender.
Explain Formal tender
Vendors can state they are under no obligation to accept the highest bid
Often used by a statutory body to give control and transparency
Full marketing material including legal pack must be provided in advance of the tender process
Applicants bid blindly in a prescribed form
No Opportunity to change the bid after submission
Usually, no immediate exchange of contracts but the client can use blind bidding to decide the party and proceed to the contract.
What is the difference between informal and formal tender?
Formal Tender
1 - provides a potential purchaser with a single chance to bid for a property
2 - High level of accountability
3- No opportunity for a further bid
4 - possible for the formal tender to lead directly to a contract of sale
5 - The highest figure is accepted - unless the vendor reserves the right to refuse and or all offers
Informal tender
1 - Further negotiations can follow on
2 - Usually less onerous as terms/conditions are prepared
3 - The informal tender will not lead directly to contract
4 - The vendor does usually state they are under no obligation to accept the highest or any offer received.
what are the advantages of the Auction process
1 - Achieving a relatively short timetable for the disposal
2 - Certainty of sale - assuming reserved figure is achieved.
3 - Useful method for unusual property which is hard to value
4 - used for property which is likely to generate a strong level of interest.
What are the disadvantages of the Auction process?
1 - Cost of promotion and publicity
2 - lack of confidentiality
3 - Vendor cannot choose the purchaser
What is the different types of agency?
Sole agency - only one agent
Joint agency - two or more joint agents sharing a fee on a pre-agreed basis
Multiple agency - Any number of agents but only the successful agent gets the fee.
what is the Timeline of a sale?
1 - Recieve instruction from the client
2 - Check competence and independence
3 - Issue and receive agency instruction agreement in accordance with s18 Estate Agents act 1979
4 - Complete and record money laundering checks - Money laundering regulations 2017
5 - Gather information - Inspection, details, leases, title documents, planning information, OS plans
6 - Undertake due diligence - Read the lease, Planning, legal, tenant covenant status
7 - Check VAT position with the vendor
8 - Inspect and measure
9 - Research market and comparable data.
10 - Undertake valuation
11 - Obtain approval of the contents of the marketing particulars - Consumer protection regulations 2008 and misrepresentation act 1967
12 - undertake marketing
13- Negotiate the sale - draft HoTs and instruct lawyers
14 - assist with inquiries
15 - issue invoice upon completion
what must be included in an agency instruction agreement?
1 - Agency basis - sole/ Joint
2 - Agency rights - sole selling or sole agency rights
3 - Proposed fee
4 - Marketing costs and disbursement
5 - confirmation of no conflicts of interest
6 - Money laundering regulation requirements
7- Timescale for the payment of fees
8 - Details of the practices’ complaints handling procedure.
Must be signed and returned to the agent before marketing can commence
What are sole selling rights and sole agency rights to a fee
remuneration is payable if contracts are exchanged in a period when sole selling rights exist even if the purchaser is not found by the agent.
The fee is payable even after the sole selling rights period has ended and the purchaser was introduced by the firm during this period.
Waht is a ready and willing purchasers clause?
Defined by the estate agents act 1979
when the applicant is ready and able to proceed but the vendor withdraws
and abortive fee may be charged by the agent.
What happens with a failure to complete a transaction
The vendor can serve a notice to complete on the purchaser giving them a deadline to complete.
If this deadline passed the vendor can rescind the contract and remarket the property
Provide examples of case law on restrictive covenants
Bath Rugby Ltd V Greenwood and others 2021 or Alexander Devine Childrens
