Purchase And Sale Flashcards
- What is an overage ?
is an agreement that the buyer will pay extra, on top of the original purchase price, if and when certain events happen. For example, if the buyer increases the value of the land by obtaining planning permission
- What are purchase conditions and where did you use it in your case study ?
Conditions that need to be met before completing the sale. Subject to red book valuation Subject to ground investigations Subject to assignment rights Subject to satisfactory title Subject to inspection
- What law relates to purchase and sale ?
Estate agency Act 1979 Misrepresentation Act 1967 Consumer Protection from unfair trading regulations 2008 Bribery Act 2010 Equality Act 2010
- What are the principles of the Estate agency Act 1979
- Clarity as the terms of agency (Section 18)
- Honesty and accuracy
- Agreement and liability for costs
- Openness regarding personal interest (section 21)
- Absence of discrimination
- Legal obligations to tell client about offers received
- Keep client money separate
CIVIL matter and can be stopped from trading as an agency if you do not adhere with Act.
- What are different of Asbestos ?
White
Brown
Blue
- What are the different types of asbestos survey ?
Management survey
Refurbishment and Demolition Asbestos Survey
- What are the different methods of sale ?
Formal
Informal
Private treaty
Auction
- What is a CPSE ?
Commercial property standard enquires
- How did you calculate the SDLT ?
Residential: Up to £125k 0% £125k-250k – 2% 250k- 925k – 5% £925k – £1.5m – 10% 1.5m + - 12% Commercial: Up to £150k- 0% £150,001 to £250,000- 2% Remaining amount above £250,001 is 5%
- When would you advise a client to use auction ?
When the client wants to dispose the site in a short space of time
Certainty of sale (subject to meeting reserve figure)
To sell a property or site which could have a high level of interest
- What process would you follow if you were asked to sell a brownfield site ?
- SUK
- Conflicts, independent and terms
- Due diligence
- Marketing
- Customer due diligence
- If interest is high then carry out an informal tender (no obligation)
- Refer all offers to client
- Get approval from client
- Instruct solicitors
- Assist in answering queries
- Finalise sell
- Raise invoice and close appointment.
- If you were selling a property what checks would you do ?
Terms of engagement Conflicts of interest Money laundering checks Due diligence Marketing Recommendation to client
- What would be your role once solicitors are instructed ?
My role will be to inform my client on progress and to assist in answering any queries that arise.
- What type of insurance did you advise your client to take ?
Chancel repair insurance
Building insurance
Indemnity insurance to cover rights which benefited the local church over and beyond the chancel repair
- What are the key sections of the estate agency act 1979?
Section 18- Terms
Section 21- personal interest
- What is the typical timescale of a sale when selling a site and process would you follow ?
2-6 months depending on whether both parties are keen to progress sale
- Would you make the decision on who to go with on a sale of a site ?
I would make my recommendation to the Client but it is ultimately their decision to decide who to go with
- What type of searches are carried out during the purchase process ?
Local search – to obtain a variety of information from the local council, such as whether the property is affected by plans for a new bypass or a planning enforcement notice.
Drainage and water search – does the property have mains water and drainage? The local water company will also provide other useful information, such as the position of pipes.
Environmental search – is the property affected by contamination that could involve costly removal?
Planning search – find out whether the neighbours have got planning consent for a large extension or if a planning application has just been lodged for a new superstore down the road.
Flood risk report – check whether the property is at risk from flooding.
Coal mining, brine pumping, and other mining searches – to find out if the property could be affected by old mine workings or a new opencast mine nearby.
High Speed Rail 2 (HS2) – reveals if your new home will be affected by new rail line.
Chancel repair liability search – check you won’t be liable to pay for the maintenance of your local church.
Land registry pre-completion search – make sure the seller still owns the property on completion.
- When selling a property on behalf of your client, if an offer came in after the final bid date that was higher than the already accepted offer, what would you do in this scenario and how would you advise your client?
It depends on the form a sale used, I will advise my client to follow the original process but it is ultimately my clients decision if the correct clause is included on the marketing of the site.
- What is the benefit of an formal tender
Being open and honest to the public
High level of accountability
- What is the benefit of an informal tender
Will not lead directly to sale.
The vendor is under no obligation to accept any of the bids.
- Which method would you prefer to use if you were working for a local council ?
Informal tender- as terms are agreed ahead of time and then progresses to completion soon after
- What would you look out for if a plc was buying a property from you ?
Evidence of London stock exchange Listing
- What is in the UK commercial real estate agency 1st edition 2016 PS?
Outlines the principles that shape the culture of fairness and transparency that underpin all activities undertaken by real estate agents.
Ethics, securing instruction (MLR and Conflicts), disposals, acquisitions and ending instruction.
- What are the requirements of the Misrepresentation act 1967 ?
The act relates to the misrepresentation or false statement which can induce a party to purchase. CIVIL matter.
- How did you factor the inclusion of the Japanese knotweed into your offer price ?
Received a remediation cost and reduced the offer to reflect this.
- What is assignment rights and why was this necessary on your purchase ?
The transfer of a right from one party to another
Reports and floor plans
- What did you include in the heads of terms
Property and address
Parties included in transaction
Buyer and vendors Solicitors details
Amount payable
Timetable
VAT
Expenses
Conditions (assignment rights, access license, stopping up, reliance letters, intellectual property rights)
Deposit
- What due diligence would you do if it was a company ?
Certificate of ownership
Registered business, address and names of shareholders
Identification of directors
- What are the two selling rights
Sole selling rights
Sole agency rights
- What is sole selling rights ?
Means fees are payable if contracts are exchanged in a period when the sole selling rights exist. Fees payable even if someone else sells the property in that period.
- What is sole agency rights ?
Means that the fee is payable only if the agent introduced the purchaser.
- Types of Agency
Sole
Joint
Multiple
- What is sole agency ?
One agency is instructed
- What is joint agency ?
Two agents instructed with the fee split between them both in an agreed manner
- What is multiple agency
Any amount of agents can be involved but the agent who finds the purchaser gets paid the fee.
What is the Consumer protection Regulations 2008
There are three main sections in the Consumer Protection from Unfair Trading Regulations. These are as follows:
A general ban on unfair commercial practices
A ban on misleading and aggressive practices which are assessed in light of the effect they have, or are likely to have, on the average consumer.
The ‘blacklist’ of commercial practices which will always be unfair and so are banned outright.
The consumer has a right to cancel the contract within a 14-day period and the Regulations set out strict requirements as to how this right to cancel must be communicated to the consumer.
What act relates to the leasing on premises
Landlord and tenant act 1954
What is the difference between a lease and a license
A license passes no interest in the land but only makes lawful what would otherwise be unlawful. License to carry out works, license to enter. Can be terminated by either party.
A lease provides an occupier with an estate in the land
A lease can be assigned
A lease can not be terminated until it expires
What is an overage
In a property transaction, the term “overage” refers to a sum of money which a vendor may be entitled to receive when completing the sale of a piece of land, provided a specified condition is satisfied.
What are the new guidelines on selling homes ?
Stay 2 meters away and wear a face mask
You Can
You can put your home on the market and start to look for properties you want to move into.
People should use virtual viewings before visiting properties in person where possible, in order to minimise public health risks.
You are free to make or accept an offer or reserve a property as normal.
Your legal representative should be able to carry out searches on your property online in order to progress your transaction and you can contact them to discuss likely timescales.
Your surveyor can undertake surveys of the property you wish to purchase.
Removal firms are able to operate, although they may need to adjust usual procedures in order to ensure moves happen as safely as possible.
What are the new guidelines on a landlord taking possession of their property ?
Until 30 September 2020, most landlords will not be able to start possession proceedings unless they have given their tenants three-months’ notice.
. Tell me about an advantage/disadvantage of sale by private treaty/formal tender/informal tender/auction.
Private treaty
a. Advantage
i. Flexible
ii. Parties control the process
iii. Vendor not under any obligation to sell
iv. Confidential
b. Disadvantage
i. Potential for gazumping
ii. Potential to pull out
iii. Abortive costs
Auction
c. Advantage
i. Short timetable
ii. Certainty of sale
iii. Good for unusual property
iv. Used for high interest property
d. Disadvantage
i. Cost of promotion
ii. Lack of confidentiality
iii. Vendor cannot choose purchaser
iv. Intensive and short marketing period
Tell me about the legal processes to complete a purchase/sale.
Offer accepted
b. Draft HOTs
c. Instruct solicitors
d. Any CPSE’s and equeries
e. Exchange
f. Completion (pay SDLT if due)
g. Get invoice paid if applicable
How does Section 18 relate to you’re agency practice? What are the four agency bases?
S.18 (provision of information) – terms of engagement
a. Cost and when client would be liable
b. Nature of agency
c. Other services you intend to offer
d. Confirm will forward any offers (make in writing)
e. Must be a prescribed – or no legal right to sue for fees
Specify all costs/fees in advance , in writing in terms of business or engagement
• sole selling rights
The client will be liable to pay remuneration, in addition to any other costs or charges agreed, in each of the following circumstances:
- if (unconditional contracts for the sale of the property are exchanged for the sale of the property are concluded) in the period during which we have sole selling rights, even if the purchaser was not found by us but by another agent or by any other person, including yourself and
- if (unconditional contracts for the sale of the property are exchanged for the sale of the property are concluded) after the expiry of the period during which we have sole selling rights but to a purchaser who was introduced to you during that period or with whom we had negotiations about the property during that period.
• sole agency
The client will be liable to pay remuneration in addition to any other costs or charges agreed, if at any time (unconditional contracts for the sale of the property are exchanged for the sale of the property are concluded): ∫
- with a purchaser introduced by us during the period of our sole agency, or
- with whom we had negotiations about the property during that period or with a purchaser introduced by another agent during that period.
• joint agency
At least two agents are appointed. Payment will be apportioned as agreed by you, the seller and the other joint agents within an agreed timescale. A joint sole agency will have at least two agents acting as sole agents. Your payment will be divided as agreed, no matter who sells the property, and the timescale for this should be agreed in advance.
• multiple agency
Two or more agents are appointed and payment is paid to the agent who finds the buyer
What is a ready, willing and able purchaser?
A purchaser who is prepared and is able to (exchange unconditional contracts for the purchase of your property. You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, if such a purchaser is introduced by us in accordance with your instructions. This must be paid even if you subsequently withdraw and (unconditional contracts for sale are not exchanged), irrespective of your reasons.
Tell me three key issues raised in the RICS Real Estate Agency and Brokerage Standards / RICS Commercial Real Estate Agency (Purple Book).
Acting Ethically Securing instructions Marketing the property Implementing the disposal Acquisition of property
What are the different types of interest in land?
Freehold, Leasehold, Commonhold
What is the difference between freehold and leasehold?
Freehold is the ultimate ownership, where as a leasehold is subordinate and is liable to rent to the freeholder.
What is a Memorandum of Sale?
Sales agreement, something called head of terms or sale memo. Include terms of sale, price, timeline, schedule of payments, any conditions, names of parties and their solicitors.
What due diligence will you carry out to purchase land
Phase conditions Searches Cpo Planning Ground investigations Restrictive covenants Flood zone
What do you do if you have an unregistered Title ?
Detective title insurance
Why would you measure the boundary of a site ?
Title plans may not be accurate
To ensure there are no ransom strips
To ensure that development is within the red line
