Purchase and Sale Lv1 Flashcards
Tell me about the four methods of sale.
Private Treaty, Informal tender, formal tender and auction
Tell me about an advantage/disadvantage of sale by private treaty
“Advantages
- Flexibility
-Parties in control of the process
-No obligation until exchange contracts
Disadvantages
-Gazumping
-Late decisions not to proceed and associated costs
- Can be slow, no defined closure “
Tell me about an advantage/disadvantage of sale by auction
“Advantages
-short timescale to disposal
-Certainty
-usefulness for unusal
-transparency
Disadvantages
-Expensive for vendor compared to private treaty
-cost of promotion
-lack of confidentiality
-Intensive marketing
-public may create stigma if fail to sell”
Tell me about an advantage/disadvantage of sale by formal tender
“Formal is a single bid
-High level of accountability
-Detailed terms provided prior
- May lead to direct contract”
Tell me about an advantage/disadvantage of sale by informal tender
” Can be used durng private treaty to obtain the best offer and bring to a close
- Further negotatiations Can follow
-Less onerous terms
-Will not lead to direct contract
-Vendor is not under any obligation to accept best offer, as long as this is stated”
“Tell me about your understanding of legislation relevant to your agency
practice.”
Estate Agents Act 1979, Bribery Act 2010, Misrepresentation Act 1967 and the Consumer Protection from Unfair trading regulations 2008
Tell me about your understanding of the Estate Agents Act 1979.
“Important sections s.18 agree TOE (fees, agency basis and defintition, services, marketing
s.21 Disclosure of interest”
What are the 6 key principles of the Estate Agents Act 1979?
“1) Clarity on TOE
2) Open and transparent
3) No discrimination
4) Pass on all offers in writing
5) Keep client’s money separate”
How does Section 18 relate to your agency practice?
Important sections s.18 agree TOE (fees, agency basis and defintition, services, marketing
What are the four agency bases?
Sole letting rights, Sole Agency, Joint agency, multiple agency
What are the differences between the four agency bases?
“Sole letting rights - Fee due if [let during agency agreement. Private introductions included
sole Agency- Exc right to introduce tenant in agency period but NOT inc. private introductions
Joint agency- split fee
Multiple agency- first to get sale gets fee”
Where are these defined?
Estate Agents Act 1979
How does Section 21 relate to your agency practice?
Disclosure of interest
What 3 things do you need to make a contract?
The offer, The acceptance, exchange of value i.e cash
Can a verbal contract be legally binding?
No
What is capacity in relation to contract law?
Individulas who enter into a contract must have the capacity to enter into a contract, otherwise it is voidable
“Does the sale of land have to be in writing and what Act defines this
point?”
Yes, Estate agents Act 1979
“Tell me about key points of the Consumer Protection / Business
Protection Regulations”
“Must not mislead ““average consumer”” no caveat emptor
- Particulars must be accurate
- Mind what you say! - no omissions”
What is an average consumer/material information?
The information which the average consumer needs, according to the context, to take an informed transactional decision
What are considered to be unfair practices under this legislation?
If a seller makes a false statement of fact about the property and the buyer relies on this. The buyer may have a claim against the seller
How does the Misrepresentation Act 1967 relate to your agency practice?
If a seller makes a false statement of fact about the property and the buyer relies on this. The buyer may have a claim against the seller
What does the Unfair Contract Terms Act 1977 say?
Act to impose further limits on the extent under law civil liability for breach of contract, of for negligence or other breach of duty can be avoided by means of contract terms
“Tell me three key issues raised in the RICS Real Estate Agency and
Brokerage Standards / RICS Commercial Real Estate Agency (Purple Book)”
“Outlines principles for fairness and transaparency in agency
-Acting for the buyer
-Ending the instruction
-Safety and security
-Agency management
-Ethics
-Securing instructions
-Acting for the seller: marketing the property
-Acting for the seller: agreeing the sale or lease “
Tell me about a factor which drives property markets.
Demographics of the area
“Tell me about supply and demand in a property market you are familiar
with”
“i.e Covid affected the market
Skills shortages
supply issues in manufacturing
inflation
working from home
transport problems “
What are current SDLT levels for commercial property?
“Up to £150,000 zero
The next £100,000 2%
The remaining amount 5%”
What is SDLT?
Tax when you buy property or land over a certain price
What are the different types of interest in land?
Freehold and leasehold
What is the difference between freehold and leasehold?
Freehold you own the property. Leasehold you own for a certain period of time
What are profits a prendre?
a right the benefit of which is attached to a particular piece of land, in the same way as an easement.
What are rentcharges?
Essentially a rentcharge is an annual sum paid by the owner of land or property to another person who has no other legal interest in the land or property.
What legislation relates to rentcharges?
Rentcharges Act 1977
What are the implications if a rentcharge is not paid in full
Statutory right for the developer to grant a lease to trustees over the property
Tell me about CPSEs and the sale process.
CPSEs are a set of questions, which sellers are asked to provide
What is a Memorandum of Sale?
A Memorandum of sale is a written confirmation of the essential details fo a property transaction
Should you view an auction property before buying?
Yes
What would the legal pack contain?
Title documents, Land reg and local searches, special conditions of sale
What might be a special condition of sale?
Penalty cluases, release of depsoit clauses
What is a guide price?
A general indication of the minimum the seller wants to achieve for the sale of their property
What is a reserve price?
The minimum amount that a seller will accept as the winning bid
What is an addendum?
An attachement to a contract that modifies the terms and conditions of the orginal contract
What is a proxy bid?
that you advise the auctions team as to your maximum bid, and the auctioneer will bid on your behalf
Is VAT payable on auction properties?
Yes
“What are the key principles of RICS Guidance Note Auctioneers Selling
Real Estate (6th Edition)?”
“ethics
common auction conditions
Acting for the legal owner
fees/expenses
provision of information
sales prior
reporting bids prior
auctioneers terms for taking deposits
terms of appointment
venue
online communication
conditional contracts
reserve price
Guide price
VAT
Rental arrears
auctioneering relationship with buyers/bidders
money laundering regs
publication of auction results
Data protectiob
Sale of qualifying investments under L&T Act 1987”
