Purchase and Sale L1

Question 1

What are the methods of sale?

Answer 1

Private Treaty
Informal Tender
Formal Tender
Auction

Question 2

When us the private treaty method of sale used?

Answer 2

Used in most estate agency transactions

Question 3

When is informal tender used?

Answer 3

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

Question 4

When is formal tender used?

Answer 4

Used by statutory bodies to allow accountability

Question 5

When is auction method used?

Answer 5

Tricky properties

Question 6

Advantages of private treaty?

Answer 6

• Confidential
• Parties control process
• Vendor not obliged to sell

Question 7

Disadvantages of private treaty?

Answer 7

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

Question 8

Advantages of informal tender?

Answer 8

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

Question 9

Disadvantages of informal tender?

Answer 9

• Does not lead directly to sale due to ontracts

Question 11

Advantages of formal tender?

Answer 11

• Can lead directly to contract for sale

Question 12

Disadvantages of formal tender?

Answer 12

• No opportunity for further bid

Question 13

Advantages of Auction?

Answer 13

• Quick sale
• Certainty of sale (if reserve is met)

Question 14

Disadvantages of Auction?

Answer 14

• Lack of confidentiality
• Vendor cannot chose purchaser
• Cost of promotion

Question 15

How do you undertake AML checks?

Answer 15

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

Question 16

What do you include in sales particulars?

Answer 16

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

Question 17

What legislation do you have regard to when undertaking agency work

Answer 17

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

Question 18

What is the estates agents act 1979?

Answer 18

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

Question 19

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

Answer 19

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

Question 20

What is CPR, 2008?

Answer 20

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

Question 21

What are the penalties of breaching CPR, 2008?

Answer 21

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

Question 22

How can you be in breach of CPR, 2008

Answer 22

• Misleading information
• Failing to provide important material information

Question 23

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

Answer 23

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

Question 24

What is the Misrepresentation Act 1968?

Answer 24

• Deters people from giving false information

Question 25

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

Answer 25

- 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

Question 26

What do the heads of terms involve?

Answer 26

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

Question 27

What do the terms of engagement involve?

Answer 27

1. Property / Site name 2. Marketing and disposal strategy 3.Timeframe 4. Guide price 5. Fees 6. Terms of business

Question 28

What is a property registration form?

Answer 28

- Ask vendors to fill put accurately to keep in line with CPR 2008.

Question 29

What happens if a purchaser fails to complete?

Answer 29

- Can serve a Notice to Complete which gives deadline - Vendor can re market property - Vendor can sue for damages

Question 30

What are the forms of purchase vehicles?

Answer 30

Joint venture Special Purpose Vehicle (SPV)

Question 31

What is an SPV?

Answer 31

- Special Purchase Vehicle - Company formed to buy a property - Reduces payment of SDLT

Question 32

What are the main elements of a sales instruction?

Answer 32

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 11. Issue invoice

Question 33

What is the estates agents act

Answer 33

Estates agent act 1979

Question 34

What does the Estates Agents Act 1979 say?

Answer 34

Act in best interest of clients Section 1 - client due diligence Section 18 - give clients correct information