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APC 2023 > Purchase & Sale > Flashcards

Purchase & Sale Flashcards

1
Q

What are the four methods of sale? Brief synopsis

A

Private treaty - Most popular in Eng & Wales, private matter, no time constraints

Formal tender (sealed bids) - Applicants bid blindly and all bids opened in front of client/line manager/independent witness. High levels of accountability. Vendor does not have to accept the highest bid. Often used by Statutory bodies.

Informal tender - Used alongside private treaty, calling for best bids to conclude negotiations. Not legally binding if the vendor remembers to state that they do not have to accept the highest bid.

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2
Q

What is the difference between formal and informal tender?

A

Formal tender only offers one chance to bid, The highest figure is accepted unless stated by the vendor that this is not essential, Higher level of accountability.

Whereas, informal tender can be used during private treaty negotiations to get best bids, it does not lead to a direct contract of sale

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3
Q

What is the process for a sales instruction

A
  1. Receive Instruction
  2. Check competence & Independence
  3. Issue Agency instruction agreement to client (TOE’s)
  4. Receive signed agreement (required by EA Act 1979)
  5. AML checks
  6. Gather information (inspection details, leases, planning info, floor plans etc)
  7. Due diligence (Read lease, environmental, planning, no materials that will be detrimental to the sale)
  8. Inspect/measure
  9. Market research & comps
  10. Value the freehold (not red book)
  11. Prep marketing report
  12. Obtain written approval of marketing particulars (Consumer protection regs & misrep act 1967)
  13. Market
  14. Negotiate sale, HOT’s and instruct lawyers
  15. Assist with any legal queries
  16. Invoice for fees
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4
Q

What does an agency instruction need to clearly set out?

A
  1. Agency basis (sole or joint)
  2. Agency rights (sole selling or sole agency)
  3. Proposed fee
  4. Marketing costs + disbursements
  5. Confirmation of no COI’s
  6. Money Laundering regs requirements
  7. Timescales for fee payment
  8. Details of the firm’s complaints handling.
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5
Q

What is the statutory cooling off period after agreeing terms of engagement

A

14 days (Consumer rights act 2015)

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6
Q

What are sole selling rights?

A

A clause agreed to suggest that even if the purchaser is not identified by the agent but by another party, that remuneration is still payable.

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7
Q

What is the ready able and willing purchaser’s clause?

A

This is a clause that suggests an abortive fee is payable to the agent if the purchaser is ready to proceed and the Vendor pulls out of the deal.

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8
Q

What legislation do you have regards for when undertaking agency instructions?

A

Estate Agents Act 1979

Misrepresentation Act 1967

Consumer Protection Regulations 2008

Consumer Rights Act 2015 - 14 day cooling off period

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9
Q

What is TOGC?

A

Transfer of a going concern - when a freehold property is sold with the benefit of the existing lease, a business of property rental is transferred to the buyer

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10
Q

What were the rules regarding Agency Boards for your disposal in Bath?

A

Agency Boards in Bath are banned as it is a world heritage site and in order to not take away from the stonework.

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11
Q

What were the rules regarding Agency Boards for your disposal in Bath?

A

Agency Boards in Bath are banned as it is a world heritage site and in order to not take away from the stonework.

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12
Q

What can a vendor do if a sale is held up?

A

Serve a Notice to Complete on the purchaser with a deadline to complete. Legal costs paid by the purchaser

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13
Q

What forms of purchase vehicle can be used to buy property?

A

Special purchase vehicle - a company formed especially to avoid SDLT payments

REIT’s - A UK tax resident company that is listed on a stock exchange and has a minimum percentage invested in property of 75%

Joint ventures

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14
Q

What do Consumer Protection from Unfair Trading Regulations 2008 set out?

A

Requires candidates to treat consumers fairly and to avoid engaging in unfair commercial practices, such as providing false information in marketing material or not acting in good faith.

Penalties are an unlimited fine and/or prohibition order.

Up to £25,000 can be payable to the complainant

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15
Q

What are the penalties for breaching each of the Acts relating to estate agency?

A

Negative licensing - Right to be an estate agent taken away

A warning order - written warning to the agent not to undertake the action again

Prohibition order - tops an agent practising

These are criminal offences

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16
Q

What do you know about leasehold reform?

A

This is the discussions surrounding making it easier for leaseholders to purchase the freehold

17
Q

How did you advise your client over the length of leasehold to sell the commercial unit for?

A

The residential flats above were already sold on 250 year leases. Therefore we aligned with this for continuity. And we valued this using sales comparables and applying a capital value basis but checked this using rental comparables multiplied by an appropriate yield and capitalised it.

18
Q

What do you include in your Heads of Terms for a sale?

A

Freeholder

Purchaser

Price - VAT

Demise

Guarantor?

Details of the leasehold interest (125 years subject to a ground rent of 1 peppercorn

Subject to contract

Solicitors details

Cash purchase

19
Q

What is the maximum penalty for breaching consumer/business protection regulations?

A

Unlimited fine and/or a prohibition order

Compensation may also have to be paid to the complainant up to £25,000

20
Q

What key points does the estate agents act 1979 set out?

A

Section 18: Clarity on the terms of agency and when fees become payable within the terms of engagement

Honesty and accuracy

Agreement and liability for costs

Keep clients money separate

Section 21: Agents must disclose any personal interests they have to the client and within the Heads of terms

21
Q

What are the differences between consumer protection regulations 2008 and the misrepresentation act 1967?

A

Consumer protection regulations are policed by the local authority and the penalty fine is up to £5,000 for any breach

Breach of Misrep act is a civil offence but the vendor and/or agent can be sued for damages and/or the contract rescinded.

22
Q

What are the laws surrounding agency boards?

A

Planning consent required for agency boards over 2 sq. m (flat) and 2.3 sq. m v-boards and only one board per building.

They must not project more than 1m from the building and not above 4.6m from the ground.

Planning consent is also required for:
illuminated boards
remote boards
Boards erected on listed buildings and in conservation areas

They must be removed 14 days after completing a transaction

Must have owners approval

Policed by the local planning authority. They can remove them and issue fines

23
Q

Who polices the Estate Agents Act 1979?

A

National Trading Standards Estate & Letting Agency Team (NTSELAT)

24
Q

What are capital allowances?

A

A form of tax relief on capital expenditure for construction or purchase of commercial property or business assets.

25
Q

Talk me through your disposal in Hoxton

A

Class F1 disposal (existing use under class E) - Long leasehold (ground floor). Marketed via the local council. Database I’d collected of schools, museums etc invited to attend open morning.

Received 3 offers, sought best and final offers (informal tender). Then Identified the best offer, ran AML checks on the Purchaser and instructed solicitors.

26
Q

Talk me through your acquisition in Nuneaton

A

Data Centre client, needed security. Purchase was subject to planning approval of a secure parameter. Planning granted and completed.

27
Q

Talk me through your acquisition in redcar

A

0.2 acre plot required. Able to agree a deal in excess of market.
Landlord had hope value in mind and therefore my client needed to offer in excess of market value to secure the plot.

28
Q

Talk me through your disposal in Bath

A

Retail unit long leasehold. Under A1 prior to Use class amendments. Used zoning to append a value of £130k. Found comps to understand yield (4%). Applied a capital value rent/yield x 100 as there were no comparable sales nearby.

Uplift in value following use class amendments as Office was more valuable than retail following covid. Sold for £140k.

APC 2023 (31 decks)

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