Purchase and sale

Question 1

What happens if a purchaser fails to complete a transaction?

Answer 1

• Vendor can serve a Notice to complete on the purchasr giving them a Deadline to complete (legal costs for this are to be paid by potential purchaser)
• If deadline passed then vendor can rescind the contract and remarket the property
• any deposit can be retained by the vendor
• Vendor may be able to sue for damages to claim for any loss in value (and associated costs) following sale of the property to another party at a lower price

Question 2

How would you undertake an aquisition?

Answer 2

• Conflicts check
• AML checks
• Terms of Engagment
• Undertstand client objectives and agree search peramiters
• consider search techniques (cold calling/ advertising/ websites)
• measurment and valuation
• Check planning use/ conditions/ any proposed developments in the local planning register
• Due dilligance - Asbestos, legal title, contamination, any tenents covenent, flooding- any issues that would have an effect on the marketability and valuation of the property - consider conditional offer.
• Arragne for structural survey
• If tennents check for any rent arrears
• if tenents covenant approval information to be supplied to landlord/vendor
• negotiation
• instruction of solicitors

Question 3

What are 4 different types of purchase vehicle?

Answer 3

1. Special Purchase Vehicle (SPV) - complany formed specifically to purchase a property to reducre SDLT
2. Offshore Unit Trusts
3. Real estate Investment Trusts (REITs) - company taz resident in the UK whwich is listed on a Stock Exchange and has at least 75% of its business in property investment
4. Joint venture between two parties

Question 4

What are the 4 mothods of sale?

Answer 4

1. Private Treaty
2. Informal Tender
3. Formal Tender
4. Auction

Question 5

How do you decide which method of sale to use?

Answer 5

• Depends on client objectives
• Public accountability
• Curent and likley future market conditions
• Likley level of demand for the property / likley target market
• Timing requirments

Question 6

What are the advantages of private treaty?

Answer 6

• Flexibility
• Parties controll the procces
• Vendor not under any obligation to sell
• Vendor has controll over who they sell to
• Confidential

Question 7

What are the disadvantages of private treaty?

Answer 7

• Potential for guzumping and guzundering
• May be late decissions not to buy/sell
• Asssociated abortive costs

Question 8

What are the advantages of informal tender?

Answer 8

• Can be used during private treaty if lots of intrest in property / encourage bids
• Further negotiations can follow
• vendor useually states they are under no obligation to accept any or the highest offer

Question 9

What are the disadvantages of informal tender?

Answer 9

• Further negotiations can follow - buyer can reducuce offer
• will not lead direct to a contract for sale
• not legally binding

Question 10

What details must be included in an informal tender (best bids) offer letter?

Answer 10

• Required date and time of receipt of written offer
• Name and address of applicants solicitors
• if the offer is subject to any conditions (survey, planning, board approval)
• confirmation of finance arrangments
• confirmation that offers of a variable nature will not be considered
• Vendor reserves right not to accept highest or any

Question 11

What is included in HOT/ MOmorandum for sale agreement ?

Answer 11

• Subject to contract
• Property
• Vendor
• Vendors Solictor
• Purchaser
• Purchasers solicitor
• Agents
• Purchase price
• Parking
• Service charge
• Tenure
• Resovation deposit
• Timescale
• Conditions (subject to planning, subject to contract, subject to board approval)
• Legal costs (each party to bear there own costs)