Purchase and Sale (Level 2) Flashcards
What are the four methods of sale?
- Private Treaty
- Informal Tender
- Formal Tender
- Auction
What factors would be considered when recommending what method of sale to use?
- Clients objectives
- Public accountability (Gov , Charity)
- Current and likely future market conditions
- Timing Requirements
What is the private treaty method of sale?
- Parties are free to negotiate in their own time and without commitment.
- Most popular method.
Advantages - Flexibility
- Greater control of process
- No commitment
- Confidential
Disadvantages
- Late decisions to pull out of deal
- Associated abortive costs
- Gazumping and Gazundering
What needs to be included in the letter asking for best and final bids?
- Statement - ‘the vendor is under no obligation to accept the highest or any bids at all’
- Date and Time for Bids to be submitted.
- Name of Purchaser
- Confirmation of Finance Agreement
- Details of any conditions attached.
- Applicants solicitor details.
When is a formal tender used?
- Statutory body to provide high level of public accountability and control over the marketing process.
What can a vendor issue if a purchaser is taking a prolonged time to complete?
- Notice to Complete - giving the purchaser a deadline to complete (any legal costs of doing this are paid by the prospective purchaser).
What happens if a purchaser does not complete a transaction by the deadline included in the notice to complete?
- 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 any loss in Value if it is later sold at a lower price.
What is the difference between exchange and completion?
- Exchange - exchange of contracts makes the matter legally binding between the buyer and the seller.
- Completion - when legal ownership is transferred over and monies are paid.
What are the six principles of the Estate Agents Act 1979?
- Clarity of terms of engagement (Section 18)
- Honesty and accuracy when describing the property.
- Openness regarding personal interests (Section 21)
- Absence of discrimination
- Legal obligation to tell the client about offers received
- Keep clients money separate.
Applies to both FH and LH.
Sole selling rights VS Sole Agency Rights?
Sole Selling Rights - This means that a fee is paid during the period for which those rights last (as agreed between the parties), even if a purchaser is found by another agent or the client.
Sole Agency Rights - no fee is paid during the sole agency period if the client finds a purchaser.
What is included in marketing particulars?
- Address
- Description and Location
- Business Rates
- EPC
- Price
- Tenure
- Pictures
- Agent Details
What legislation governs marketing particulars?
- Consumer Protection from Unfair Trading Regulations 2008.
- (Formally Misdescriptions Act 1991)
- Criminal offense to mislead parties
Is there any legislation on marketing boards?
Town and Country Planning (control of advertisements) regulations 2007.
- 1 board per property
- Removed 14 days after sale/letting has completed.
- Commercial Size : 2 sqm flat, 2.3 sqm V Board.
- Must not project 1m from the face of building.
What is the misrepresentation Act 1967?
- False statement of fact made by a party during pre-contractual enquiries which have effect of inducing the party to purchase.
- Can be sued for damages.
- Civil offence.
- Disclaimer of marketing particulars may be effective in protecting vendor and agent.
What do you include on a memorandum of sale?
- Property
- Vendor (+ Solicitor and Agent)
- Purchaser (+ Solicitor and Agent)
- Tenure
- Agreed Sale Price
- VAT
- Deposit
- Timeframe
- Conditions
