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Purchase and Sale PB > Purchase and Sale L1 > Flashcards

Purchase and Sale L1 Flashcards

1
Q

What are the methods of sale?

A

Private Treaty
Informal Tender
Formal Tender
Auction

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2
Q

When us the private treaty method of sale used?

A

Used in most estate agency transactions

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3
Q

When is informal tender used?

A
  • When competition is strong and a choice of buyer is likely or anticipated
  • When a deadline needs to be met
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4
Q

When is formal tender used?

A

Used by statutory bodies to allow accountability

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5
Q

When is auction method used?

A

Tricky properties

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6
Q

Advantages of private treaty?

A
  • Confidential
  • Parties control process
  • Vendor not obliged to sell
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7
Q

Disadvantages of private treaty?

A
  • Late decisions not to buy, no back up
  • gazumping or gazundering
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8
Q

Advantages of informal tender?

A
  • Multiple rounds of bidding
    -Allows for negotiation
  • Vendor not obliged to tale the highest offer.
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9
Q

Disadvantages of informal tender?

A
  • Does not lead directly to sale due to ontracts
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10
Q
A
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11
Q

Advantages of formal tender?

A
  • Can lead directly to contract for sale
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12
Q

Disadvantages of formal tender?

A
  • No opportunity for further bid
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13
Q

Advantages of Auction?

A
  • Quick sale
  • Certainty of sale (if reserve is met)
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14
Q

Disadvantages of Auction?

A
  • Lack of confidentiality
  • Vendor cannot chose purchaser
  • Cost of promotion
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15
Q

How do you undertake AML checks?

A
  • Get proof of address and and ID documents
  • Send to compliance team
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16
Q

What do you include in sales particulars?

A
  • Site / Property details
  • Description / Location
  • Planning info
  • Photos
  • Method of sale
  • Data room link
17
Q

What legislation do you have regard to when undertaking agency work

A
  • Estates Agents Act 1979
  • Money Laundering regulations 2017
  • Consumer Protection Regulations 2008
  • Misrepresentation Act 1967
18
Q

What is the estates agents act 1979?

A
  • Regulates work of estates agents (Selling and buying)
  • Makes agents act in best interest of clients
19
Q

Who does Consumer Protection from Unfair Trading Regulations 2008 (CPR) apply to?

A

Most people you deal with as an estate agent will be a consumer.

20
Q

What is CPR, 2008?

A
  • Consumer Protection from Unfair Trading Regulations 2008
  • Stops businesses engaging in unfair practices
21
Q

What are the penalties of breaching CPR, 2008?

A
  1. Court order
  2. Unlimited fine or up to 2 years imprisonment
22
Q

How can you be in breach of CPR, 2008

A
  • Misleading information
  • Failing to provide important material information
23
Q

What if I don’t have all of the material information for marketing?

A
  • Make customers aware
  • Do all you can to get the information
24
Q

What is the Misrepresentation Act 1968?

A
  • Deters people from giving false information
25
Q

What do you include in your terms of business for disposals?

A
  • Required in line with Estate Agents act 1979
  • Responsibilities (act in line with relulations)
  • Fees (Exc VAT)
  • Timing of payments
  • Limitation of liability
  • Indemnity (not less than £5m)
  • AML info
  • Data protection
  • Complaints handling procedure
26
Q

What do the heads of terms involve?

A
  1. Seller and buyer name
  2. Seller and buyer solicitors
  3. Price agreed
  4. Conditions of sale
27
Q

What do the terms of engagement involve?

A
  1. Property / Site name
  2. Marketing and disposal strategy
    3.Timeframe
  3. Guide price
  4. Fees
  5. Terms of business
28
Q

What is a property registration form?

A
  • Ask vendors to fill put accurately to keep in line with CPR 2008.
29
Q

What happens if a purchaser fails to complete?

A
  • Can serve a Notice to Complete which gives deadline
  • Vendor can re market property
  • Vendor can sue for damages
30
Q

What are the forms of purchase vehicles?

A

Joint venture

Special Purpose Vehicle (SPV)

31
Q

What is an SPV?

A
  • Special Purchase Vehicle
  • Company formed to buy a property
  • Reduces payment of SDLT
32
Q

What are the main elements of a sales instruction?

A
  1. Conflicts Check
  2. Issue terms of engagement and received signed terms
  3. Undertake AML Checks (Money laundering 2017)
  4. Undertake due diligence
  5. Set guide price
  6. Prepare marketing report / data room with disposal recommendation
  7. Client approval of marketing information (CPR, 2008, Misrepresentation Act, 1967)
  8. Negotiate the sale
    9 Draft Heads of Terms
    10 Instruct and assist lawyers
  9. Issue invoice
33
Q

What is the estates agents act

A

Estates agent act 1979

34
Q

What does the Estates Agents Act 1979 say?

A

Act in best interest of clients

Section 1 - client due diligence

Section 18 - give clients correct information

Purchase and Sale PB (3 decks)

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