*Purchase and Sale to sort out

Question 1

What is a connected person under the Estate Agents Act (1979)?

Answer 1

Someone who could benefit financially from the transaction, such as a family member or a business associate.

Question 2

Are there any updates to the Estate Agents Act (1979)?

Answer 2

Estate Agents (Undesirable Practices) Order (1991) 
- Estate agents must inform their clients at the same time they are informed of Terms of Business, as to any additional services to be offered to prospective purchasers, unless they are free. 

Estate Agents (Provision of Information) Regulations (1991) 
- This information must be provided in writing as to the services provided and the remuneration.

Question 3

Who policies the Consumer Protection Regulations?

Answer 3

Trading Standards Office of a Local Authority

Question 4

Key principles of the RICS Global Real Estate Agency and Brokerage Professional Statement (2016)?

Answer 4

Professional Statement

All RICS members involved in the sale, letting and leasing of real estate must follow.

Includes:

• Ethics
• Securing instructions
• Acting for the seller
• Acting for the buyer

It is similar to the UK specific professional statement - RICS UK Commercial Estate Agency (2016).

Question 5

What are the key principles of the RICS UK Residential Real Estate Agency Professional Statement (2017) (The Blue Book)?

Answer 5

Provides a mandatory summary of the code of practice in all aspects of property marketing for residential.

Comprises the following material:

• Relevant estate agency legislation
• Standards & ethics
• Proper marketing
• Acting for the vendor, purchaser and landlord.

Question 6

What are the key principles of the Misrepresentations Act (1967)?

Answer 6

Relates to the misrepresentation or a fake statement made by a party during pre-contractual enquiries, which has an effect of inducing the party to purchase.

Agent has a duty of care to check the advice and information given.

Question 7

What are the penalties of the Misrepresentations Act (1967)?

Answer 7

It is a civil offence - a form of negligence.

Three tests to decide whether an agent is liable for negligence:
Foreseeability - damage is foreseeable
Proximity - relationship is sufficiently proximate by law
Fairness - fair and reasonable for a duty of care to arise

Can be sued for financial damages and/or contract recinded.

Question 8

What is the Regulation of Property Agents?

Answer 8

A working group has made recommendations for the government on a new regulatory framework for property agents.

Published in 2019.

Proposes that all agents be regulated by an independent regulator with mandatory qualifications for agents and code of practice.

All qualifying agencies are to be licensed and abide by the new code of practice.

Transparency of costs and charges now priorities.

No date has been announced for the proposed legislation.

Question 9

What governs marketing signage?

Answer 9

The Town and Country Planning (Control of Advertisement) Regulations 2007

Only 1 board allowed for commercial properties.

Must remove signs 14 days after completion.

Question 10

What signage does not need planning permission?

Answer 10

Non-residential boards under:
2sqm (flat)
2.3sqm (v-board)

Residential boards under:

0. 5sqm (flat)
1. 6sqm (v-board)

Question 11

What regulations govern AML Checks?

Answer 11

Money Laundering, Terrorist Financing and Transfer of Funds and Regulations (2019)

RICS Professional Statement Countering Bribery, Corruption, Money Laundering & Terrorist Financing (2019).

Question 12

How do you choose which method to use?

Answer 12

1. Client objectives
2. Desired timescale
3. Public accountability
4. Current and likely future market conditions
5. Anticipated level of demand
6. Likely target market

Question 13

What are agency instruction agreements?

Answer 13

They are a requirement of the RICS Rules of Conduct (2007) and the Estate Agents Act (1979) (sections 18 & 21)

There is a statutory cooling off period of 14 days.

The agreement must be signed and returned to the agent before marketing can commence.

Question 14

What is Gazundering?

Answer 14

Where a buyer lowers their offer at the last minute, just before contracts are exchanged.

The seller, conscious of refusing the new lower price means they are back at square one and the chain may fall apart, often feel forced to accept the new lower offer.

Question 15

What is gazumping?

Answer 15

Gazumping occurs when a buyer has had an offer to purchase a property accepted, but before the sale is completed the seller accepts a better offer from another buyer.

Question 16

What is SDLT?

Answer 16

It is a tax that is applied to the purchase of all property.

There are different residential and commercial bands.

Varying eligibility criteria depending on if you’re i.e. a first time buyer or a 2nd home buyer.

Question 17

What are the residential SDLT rates?

Answer 17

£0 - £125k = 0%
£125 - £250k = 2%
£250 - £925k = 5%
£925k - £1.5m = 10%
£1.5m + = 12%

Question 18

What’s included in particulars to avoid issues with Misrepresentation Act?

Answer 18

A disclaimer stating:

“They assume no responsibility for any statement that may be made in these particulars. These particulars do not form part of any offer or contract and must not be relied upon as statements or representations.”

Question 19

How do you seek proof of funds?

Answer 19

A written statement from the purchaser’s solicitor.

Question 20

Tell me about a factor which drives property markets.

Answer 20

Economy, politics, interest rates

Question 21

Tell me about supply and demand in a property market you are familiar with.

Answer 21

Redbridge – demand exceeds supply. Particularly for larger (3 bed+) homes. Emphasis from the LPA to push through schemes with larger homes rather than the 1/2beds which developers prefer.

Question 22

Tell me about government incentives which impact demand in relation to your purchase & sale work.

Answer 22

Help to buy – e.g. 5% deposit on new-builds for first time buyers. Increases the demand for small new build properties.

Question 23

What is a Memorandum of Sale?

Answer 23

The memorandum of sale is an important document, it confirms the point at which a property sale has been agreed by both the buyer and the seller (vendor). The memorandum of sale should be issued by the estate agent as soon as the property offer is formally agreed.

Question 24

How did you market the property?

Answer 24

Marketing on rightmove/zoopla and the agent’s website. Agent also send a marketing shot out to potential purchasers which they had already established a relationship with. I also recommended marketing on local property websites/blogs (businessdurham.co.uk)

Question 25

What did you request with bids? (Durham)

Answer 25

Submit their best bid; - Required date and time of the receipt of the written offer - Name and address of the applicant’s solicitor - Confirmation of finance arrangements - Details of any conditions attached to the offer - Confirmation that offers of a variable nature will not be considered - The vendor reserves the right to not accept the highest, or any, offer made.

Question 26

How can a title restriction be removed?

Answer 26

An application to the land registry only

Question 27

How can a restrictive covenant be removed?

Answer 27

Express Release – you may be able to negotiate an express release of the restrictive covenants from the owner of the benefiting land however, the owner will most likely require a cash payment for this release; or Land Registry Application – in some cases the restrictive covenants will have a time limit on their effect or were not registered as land charges (if unregistered) so are ineffective. In which case you can apply to the land registry to remove the entry from the register of the property; or Indemnity Insurance – if the restrictive covenants are very old then it is more than likely that you will be able to pay a one off premium for legal indemnity insurance to cover the risk of building on the property and then subsequently receiving a notice of breach; or Upper Tribunal (Lands Chamber) – if you cannot obtain an express release or insurance cover for the risk of breach, then you can make an application to the Upper Tribunal (Lands Chamber) for the modification or discharge of the restrictive covenant in question. The Upper Tribunal can order payment of compensation to those who benefit from the restrictive covenants, or make up for any reduction in the price received for the land due to the imposition of the covenant.

Question 28

How do positive and restrictive covenants differ?

Answer 28

A negative obligation is often referred to as a restrictive covenant. Restrictive covenants are rules preventing certain things from being done on the land, such as keeping animals or using the property for business purposes. Positive covenants - are obligations to do something, such as keep contribute to a maintenance fund or maintain a wall.

Question 29

What is the difference between a restriction on title and a restrictive covenant?

Answer 29

This basically prevents the owner of the property from registering a disposal of the property at the Land Registry without complying with the terms of the restriction. Such restriction on title is often used to protect overage and claw back provisions, for example. In the Stanwell Road matter, the restriction on title was a standard restriction put on title when the property was owned by a charity (hence the reason for the ease of its removal) the restrictive covenant it may not be possible to get title indemnity insurance so bear this in mind if you choose to go down this route. - A restrictive covenant is an agreement to restrict the use of land in some way for the benefit of other land - They are usually enforceable by successors as they run with the land - To remove a restrictive covenant an application has to be made to the Upper Tribunal (Lands Chamber) but the grounds for discharge are very strict. In some instances, title indemnity insurance can be procured

Question 30

When can you apply to the land registry to have a restriction removed?

Answer 30

* If a restriction is no longer required – rule 97 of the Land Registry Rules 2003, anyone can apply to cancel a restriction * As mentioned earlier the Land registry can remove a restriction if they feel it be superfluous

Question 31

Can you run me through the structure of a report on title?

Answer 31

1. INTERPRETATION 2. SCOPE OF THE REVIEW AND LIMITATION OF LIABILITY 3. EXECUTIVE SUMMARY 4. THE PROPERTY 5. MATTERS BENEFITING THE PROPERTY (Rights, easements or covenants over other property) 6. MATTERS BURDENING THE PROPERTY (Covenants positive or restrictive) 7. SEARCH RESULTS 8. CONCLUSION