*Purchase and Sale to sort out Flashcards

1
Q

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

A

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

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2
Q

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

A
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.
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3
Q

Who policies the Consumer Protection Regulations?

A

Trading Standards Office of a Local Authority

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4
Q

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

A

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).

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5
Q

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

A

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.
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6
Q

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

A

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.

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7
Q

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

A

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.

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8
Q

What is the Regulation of Property Agents?

A

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.

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9
Q

What governs marketing signage?

A

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

Only 1 board allowed for commercial properties.

Must remove signs 14 days after completion.

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10
Q

What signage does not need planning permission?

A

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

Residential boards under:

  1. 5sqm (flat)
  2. 6sqm (v-board)
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11
Q

What regulations govern AML Checks?

A

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

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

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12
Q

How do you choose which method to use?

A
  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
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13
Q

What are agency instruction agreements?

A

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.

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14
Q

What is Gazundering?

A

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.

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15
Q

What is gazumping?

A

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.

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16
Q

What is SDLT?

A

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.

17
Q

What are the residential SDLT rates?

A

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

18
Q

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

A

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.”

19
Q

How do you seek proof of funds?

A

A written statement from the purchaser’s solicitor.

20
Q

Tell me about a factor which drives property markets.

A

Economy, politics, interest rates

21
Q

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

A

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.

22
Q

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

A

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

23
Q

What is a Memorandum of Sale?

A

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.

24
Q

How did you market the property?

A

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)

25
Q

What did you request with bids? (Durham)

A

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.
26
Q

How can a title restriction be removed?

A

An application to the land registry only

27
Q

How can a restrictive covenant be removed?

A

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.

28
Q

How do positive and restrictive covenants differ?

A

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.

29
Q

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

A

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
30
Q

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

A
  • 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
31
Q

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

A
  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