Purchase and Sale Flashcards
What is the RICS professional statement in regards to Agency work?
RICS - Global Estate Agency & Brokerage (2016)
Name some of the 12 core principles that Estate Agents must follow? (DAAFT)
Do not discriminate
Avoid conflicts
Act in an honest manner
Fair and clear terms of business
Transparency
- Act in an honest, fair, transparent and professional manner
- Due skill, care, diligence.
- Fair and clear terms of business.
- Avoid conflicts
- Do not discriminate.
- Clear communication with clients
- Honest marketing materials
- Realistic advice
- Have due regard to security and safety.
What advice does the statement offer ?
The statements provides advice in areas of estate agency such as:
- Acting ethicallY (duty of care, gifts etc)
- Securing Instructions (legal requirements - AML)
- Marketing the property (legal requirements)
- Implementing the Disposal (methods of sale and legal requirements)
- Acquisition of property (conflicts, client communication).
What is the main Estate Agency legislation? and what does it cover?
Estate Agents Act 1979
It covers the:
- disposal / acquisition of land
- Freehold property
- Leasehold property
What are the main principles of the Estate Agents Act 1979? (CHAD)
Clarity as to terms of agency
Honesty
Accuracy
Do not discrimatme
- Clarity as to the terms of agency
- Honesty and accuracy
- Agreement and liability of costs
- Openness
- Absence of discrimination
- Legal obligations
- Keep clients money separate.
What is a ‘cooling off period’ ?
A cooling off period is allowed for clients who change their minds and no longer want to sell a property. The cooling off period is 14 days.
Tell me about the Consumer Protection from Unfair Trading Regulations (2008) ?
- This act relates to Business to Consumer
- They relate to the duty owned to ‘consumers’
- They prohibit unfair business practice to consumers
- ## Agents must declare everything the know about the property.
What is the Misrepresentation Act ?
This act relates to false statements, which has an affect on the sale / purchase.
The vendor or agent can be sued.
Misrepresentation can be fraudulent, negligent and innocent.
Where do you check to see if a marketing board requires planning ?
Town & Country Planning Regulation 2007
When is planning consent needed for a board ?
When it is over 2.3m high.
How high should a board be installed ?
Not above 4.6m due to health safety issues.
When is planning consent needed for a board?
- It’s over 2.5m high
- If the building is listed
When should a marketing board be removed from a premises ?
Within 14 days of deal conclusion.
When does the Misrepresentation Act 1967 apply ?
When there are false/ fraudulent statements made during the sale/ lease process.
When does the Estate Agents Act 1979 apply?
During the entire sale/lease process.
When does the Consumer Protection Regulations (2008) apply?
During the entire sale/lease process.
What is a Transfer of Going Concern ?
It may be possible to not charge VAT on the sale price.
What are the 4 main methods of sale ?
- Private Treaty
- Informal Tenders
- Formal Tender
- Auction
How do you choose which method to use ?
- Clients objectives
- Public accountability
- Current and likely future market conditions.
- Likely level of demand for the property
- Timing requirements
What is a private treaty ?
Private treaty is the method employed by most estate agents, preparing descriptive details of the property and quoting a definitive asking price.
Potential buyers may view the property and either agree to buy at the asking price or submit an offer to purchase.
It’s a flexible process and the parties can control the process.
The vendor is under no obligation to sell.
What is an Informal Tender ?
It involves buyers being invited to submit competitive bids by a specified date. The bids are put forward in a sealed envelope, so buyers are unaware of what their rivals are bidding.
The vendors is under no obligation to accept.
What is a formal tender ?.
Each tender form received from prospective purchasers includes a legally binding contract for sale, with an accompanying deposit. Once the favoured bid has been accepted by the vendor, the deposit is accepted and the contracts for sale are exchanged.
What are the differences between a formal tender and informal tender ?
An informal tender:
- Used during private treaty negotiations
- Further negotiations can follow on
- no obligation accept any offers
A Formal tender;
- Single chance for purchaser. No further negotiations
- High level of accountability
- Usually leads to direct contract of sale.
Why is auctioneering used ?
- To achieve a quick sale
- Certainty of sale.
- Good option for unusual property.
What are the disadvantages of Auctioning
- May sell for very low
- Cost and publicity of sale
- Vendor cant choose purchaser.
What types/basis of estate agency are there?
- Sole Agency
- Joint Agency
- Multiple agency (successful agent gets fee)
Describe the process of a sale from start to finish?
- Receive instructions
- Check competence
- Check conflict
- Issue agreement letter
- AML checks
- Collate info
- Inspect & measure
- Assemble comps and market evidence
- Produce and issue MR
- Prepare brochure and order marketing materials
- Viewings/ negotiations
- Accept offer/ closing date
- Draft heads of terms
- Monitor legal process.
What is included on a marketing report ?
- Agency basis
- Fee
- Competency confirmation
- Conflicts Check
- Outline the need for AML
- Location
- Description
- Accommodation
- Realistic sale price
- Marketing strategy
- T+C’s
What are the differing forms of special purchase vehicles ?
- Offshore trusts such as Jersey Property Unit Trusts
- REITS (Real Estate Investment Trusts)
- JV’s
What keys part of the Estate Agents Act should surveyors be aware of ?
Section 18 - Terms of Engagement
Section 21 - Cooling off period ‘14 days’
What is included in heads of terms?
- Date
- Subject to Contract
- Vendor/Purchaser info
- Agents/Solicitors details
- Price
- Funding
- Conditions
- VAT
- Timescales
- AML
What are the basis of Agency?
- Sole Agency
- Joint Agency
- Multiple Agency
What are the 3 main offences in regards to Money Laundering ?
- Tipping Off
- Assisting
- Failing to report
Who is the G+S Money Laundering Reporting Officer ?
Fraser Lang
Legislation to be aware of in purchase and sale ?
- Money Laundering & Terrorist Financing Regulation (2020)
- Customer protection from unfair trading regulations (2008)
- The Estate Agents Act (1979)
- Bribery Act 2010
