Purchase & sale Flashcards
Tell me about the legal processes to complete a purchase/sale.
How do exchange and completion work in an auction transaction?
Purchaser is legally bound to purchase property at the fall of the hammer. Deposit is paid and them completion will occur at agreed completion date.
Tell me about factors which drives property markets.
- Demographics - age, race, income, migration patterns and population growth
- Interest rates - low interest rates creates demand for property but drives prices up and conversly high interest rates it lowers demand
- Economy - overall health of the economy
- Government policies and subsidies
Tell me about supply and demand in a property market you are familiar with
- Increased demand and lower supply drives prices up
- Increased supply and lower demand drives prices down
- Equilbrium markets means prices should be stagnent
- Example would be flats in Aberdeen - high supply and low demand means prices are heading downwards
Tell me about government incentives which impact demand in relation to your purchase & sale work.
What are the different types of interest in land?
Absolute ownership in Scotland
Why would you use online marketing for a purchase/sale transaction?
You can reach a wide audience and in turn increase sale oppurtunities
Why would you use a marketing board for a purchase/sale transaction?
Increase brand awareness in areas that matter
Tell me about an information pack you have prepared for a purchase/sale transaction.
Particulars for a property at Hardgate. Contained various details such as type, accomodation, size, amenities and EPC rating. Contained price and selection of photographs.
Tell me about the relationship between VAT and residential property sales.
- Not payable if buying or selling property but if using an agent their fees will incorporate VAT
- When demolishing the entire residential property the costs of demolishing and rebuilding are exempt from VAT. If demolishing part, it may be open to retention of a facade.
- VAT is payable when renovating a residential property
- If converting commercial to residential it can be VAT exempt if certain conditions are met
What other taxes may be payable upon sale of a residential property?
Tell me about the need for sales progression.
What 3 things do you need to make a contract?
Can a verbal contract be legally binding?
What is capacity in relation to contract law?
Does the sale of land have to be in writing and what Act defines this point?
Tell me about the OFT guidance you abide by in relation to the CPRs/BPRs.
Are UK estate agents regulated?
Tell me about your understanding of the Consumers, Estate Agents and Redress Act 2017.
Tell me about approved redress schemes in relation to your estate agency practice.
What other bodies govern / regulate estate agents?
How do these differ from RICS?
What is your opinion about the RICS’ call for a professional regulation scheme for estate agents?
Tell me about the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.
Talk me through the legislative/regulatory requirements relating to auctions.
Talk me through the auction process.
When is an auction sale legally binding?
What due diligence should be carried out pre-auction?
What are the advantages/disadvantages of buying/selling at auction?
What are the RICS Common Auction conditions?
What are the key principles?
Under these, when is completion set for?
How do you find out about an auction property?
Should you view an auction property before buying?
What is/are an Important Notice to Bidders/Memorandum of
Sales/general conditions of sale?
What would the legal pack contain?
What might be a special condition of sale?
What is a guide price?
What is a reserve price?
Which of these are confidential?
How do these differ?
What is an addendum?
What fees are typical for an auctioneer?
Can you sell a property before or after auction?
How does finance work for auctions?
What deposit is typically payable and when?
How can you bid at auction?
What is a proxy bid?
When is insurance required for in relation to an auction purchase?
Is VAT payable on auction properties?
What are the key principles of RICS Guidance Note Auctioneers Selling Real Estate (6th Edition)?
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What are the EPC requirements at auction?
Do you have to check anything in relation to an auction venue?
What does the Sale of Land by Auction Act 1867 say?
How are arrears dealt with in relation to auction properties?
What should be included in auction particulars?
What is the power to sell?
What are the requirements around the Auctions (Bidding Agreements) Acts 1927 and 1969?
Why are POA listings unlawful?
What information must and/or should be included on agency particulars following the recent guidance on POA listings?
What legislation relates to agency work in Scotland?
How does the buying and selling process work in Scotland?
What are missives?
When is a Home Report required in the selling process?
Explain a factor which impacts upon sale value/sale terms.
Explain an example of when you have provided marketing/sale strategy to a client.
Talk me through an example of when you have purchased/sold a property.
Gairn Mews - what was your involvement here?
Summary of Experience - Level 2 - Green
- Was tasked with the taking the prospective purchaser around the propery and answering any queries they had about it
- The property was a fairly small flat so not the most intensive viewing experience
- Client asked about parking arrangements
- I made the client aware that the parking was on an allocated basis and that there is one allocated space pertaining to the subjects
Gairn Mews - what was your involvement here?
Summary of Experience - Level 2 - Green
- Was tasked with the taking the prospective purchaser around the propery and answering any queries they had about it
- The property was a fairly small flat so not the most intensive viewing experience
- Client asked about parking arrangements
- I made the client aware that the parking was on an allocated basis and that there is one allocated space pertaining to the subjects
Caroline Place - how did you discuss the received offer and did you provide any advice? How did you conclude that it was an acceptable offer?
Summary of Experience - Level 2 - Green
- I discussed the offer with the person I was shadowing
- They were experience and aware of the clients required criteria for offers
- We discussed whether this offer was in line with what the client was hoping to achieve for the property
- On this occasion, it met the criteria of the client and my colleague and I reached the conclusion that the offer was acceptable
- My client passed the offer on to the client who then accepted it
- I did not provide advice to the client
Discuss your involvement at Hardgate? What details of the property did you record? What are the minimum requirements for marketing particulars?
Summary of Experience - Level 2 - Green
- I was tasked with taking notes on the property. These details included type, accomodation, level of finish, condition and any unqiue selling factors such as gardens etc.
- The minimum requirement is an EPC
Forest Avenue - how did your role assist the buyer on this occasion?
Summary of Experience - Level 2 - Green
The report prepared was more detailed than the Home Report produced on the property. It also provided the client with advice relating to various factors such as condition. Whilst there were no suprises in the report as it was not too different to the Home Report in terms of condition, the client had a better understanding of the work required in the property, rather than just merely being aware of the existince of defects/condition issues.
Did your advice impact the decision making process?
Summary of Experience - Level 2 - Green
In this case the advice provided was nothing that would have caused the client to make changes in their offer. All defects and advice relating to these defects were noted in the Home Report so there were no suprises to the purchaser.
What are your level 2 examples?
Summary of Experience
- Viewing of flat at Gairn Mews - attended viewing during secondment. Was tasked with showing viewer around and answering queries viewer had with property.
- Involved in sale of house at Caroline Place - Written offer came in from purchasers solictor and I was involved in discussing offer with the person I was shadowing. We concluded that the offer was in line with the sellers expectations. Colleague then passed offer onto seller so they could make a decision.
- Take on of property on Hardgate - Took various notes on the property in order to prepare valuation and marketing particulars.
- Level 2 of flat on Forest Avenue - Inspected property and prepared report on condition for potential purchaser. Survey allowed me to provide client with information that would assist them in the purchase of the property.
Can you explain the Estate Agents Act 1979?
Summary of Experience - Level 1 - Green
- Key piece of legislation in UK relating to purchase and sale of property
- Regulates work as an esate agent
- Aims ensure agents work in the best interest of their clients and that buyers and sellers are treated fairly
- Applies to anybody acting in estate agency work
Under the Estate Agents Act 1979, when are you considered an agent?
Summary of Experience - Level 1 - Green
Anybody who introduces and or negotiations people who wants to buy or sell property under the instruction of a client
What are the penalties for breaching the Estate Agents Act 1979?
Summary of Experience - Level 1 - Green
- Can be banned from agency work
- If ban is ignored prosecution can occur and fines can be issued
What factors affect the value of a property?
Summary of Experience - Level 1 - Green
- Location
- Type
- Size
- Accomodation
- Level of finish
- Condition
- Amenities (garden, parking etc)
What is LBTT?
Summary of Experience - Level 1 - Green
- Land & Building Transcation Tax
- Tax payable when you purchase property over £145,000
How does LBTT work for first time buyers?
Summary of Experience - Level 1 - Green
Only payable if the purchase price is more than £175,000
What percentage of LBTT do you pay?
Summary of Experience - Level 1 - Green
Depends on the price of the property being purchased. Lowest band is 2% and highest is 12%.
What is ADS?
Summary of Experience - Level 1 - Green
- Additional Dwelling Supplement
- Tax payable when purchasing additional residential property
What is the rate of ADS?
Summary of Experience - Level 1 - Green
6%
When is ADS not payable?
Summary of Experience - Level 1 - Green
- Purchase price is lower than £40,000
- Replacing main residence
- Buying bare plots
- Buying six or more properties at a single time
What do you understand about Scottish Standard Clauses?
Summary of Experience - Level 1 - Green
Tool used by conveyancers/solictors to assist more straightforward conclusion of missives.
Can you name some things Scottish Standard Clauses relates to?
Summary of Experience - Level 1 - Green
- Check if heating systems work within period of taking ownership
- All documentation is available for alterations that happened in last 20 years
- All warrantees for treatmants etc are available and transferred at date of entry
What was in the marketing particulars?
Purchase & Sale - Level 2
- Description of property and its accomodation
- Room measurements
- Selection of photos
- EPC
- Countil tax band
What are the Consumer Protection from Unfair Trading Regulations?
Purchase & Sale - Level 2
- Set of regulations that controls unfair practises used by traders when dealing with consumers and creates criminal offences for traders to breach them
- Enforced by the Local Authority Trading Standards
What is the punishment for breaching the CPFUTR?
Purchase & Sale - Level 2
- Up to 2 years imprisonment
- Power to prevent or stop breaches
What is a Level 2 Survey?
Purchase & Sale - Level 2
- More exstensive visual inspection of the property without any tests of services
- Focus is assessing the general condition of the main elements of the property
How does a Level 2 differ from a Home Report?
Purchase & Sale - Level 2
- Ability to provide purchaser with advice
- Risk to occupants is not part of Home Report
- Drain covers are lifted in a Level 2
What are some banned practises under the CPFUTR?
Purchase & Sale - Level 2
- Making misleading actions or omissions
- Agressive practises
- General duty to not trade unfairly
Gairn Mews - what was your involvement here?
Purchase & Sale - Level 2
- Was tasked with the taking the prospective purchaser around the propery and answering any queries they had about it
- The property was a fairly small flat so not the most intensive viewing experience
- Client asked about parking arrangements
- I made the client aware that the parking was on an allocated basis and that there is one allocated space pertaining to the subjects
Caroline Place - how did you discuss the received offer and did you provide any advice? How did you conclude that it was an acceptable offer?
Purchase & Sale - Level 2
- I discussed the offer with the person I was shadowing
- They were experience and aware of the clients required criteria for offers
- We discussed whether this offer was in line with what the client was hoping to achieve for the property
- On this occasion, it met the criteria of the client and my colleague and I reached the conclusion that the offer was acceptable
- My client passed the offer on to the client who then accepted it
- I did not provide advice to the client
Discuss your involvement at Hardgate? What details of the property did you record? What are the minimum requirements for marketing particulars?
Purchase & Sale - Level 2
- I was tasked with taking notes on the property. These details included type, accomodation, level of finish, condition and any unqiue selling factors such as gardens etc.
- The minimum requirement is an EPC
Forest Avenue - how did your role assist the buyer on this occasion?
Purchase & Sale - Level 2
The report prepared was more detailed than the Home Report produced on the property. It also provided the client with advice relating to various factors such as condition. Whilst there were no suprises in the report as it was not too different to the Home Report in terms of condition, the client had a better understanding of the work required in the property, rather than just merely being aware of the existince of defects/condition issues.
Level 2 Survey
Did your advice impact the decision making process?
Purchase & Sale - Level 2
In this case the advice provided was nothing that would have caused the client to make changes in their offer. All defects and advice relating to these defects were noted in the Home Report so there were no suprises to the purchaser.
What are your level 2 examples?
Purchase & Sale - Level 2
- Viewing of flat at Gairn Mews - attended viewing during secondment. Was tasked with showing viewer around and answering queries viewer had with property.
- Involved in sale of house at Caroline Place - Written offer came in from purchasers solictor and I was involved in discussing offer with the person I was shadowing. We concluded that the offer was in line with the sellers expectations. Colleague then passed offer onto seller so they could make a decision.
- Take on of property on Hardgate - Took various notes on the property in order to prepare valuation and marketing particulars.
- Level 2 of flat on Forest Avenue - Inspected property and prepared report on condition for potential purchaser. Survey allowed me to provide client with information that would assist them in the purchase of the property.
Can you explain the Estate Agents Act 1979?
Purchase & Sale - Level 1
- Key piece of legislation in UK relating to purchase and sale of property
- Regulates work as an esate agent
- Aims ensure agents work in the best interest of their clients and that buyers and sellers are treated fairly
- Applies to anybody acting in estate agency work
Under the Estate Agents Act 1979, when are you considered an agent?
Purchase & Sale - Level 1
Anybody who introduces and or negotiations people who wants to buy or sell property under the instruction of a client
What are the penalties for breaching the Estate Agents Act 1979?
Purchase & Sale - Level 1
- Can be banned from agency work
- If ban is ignored prosecution can occur and fines can be issued
What factors affect the value of a property?
Purchase & Sale - Level 1
- Location
- Type
- Size
- Accomodation
- Level of finish
- Condition
- Amenities (garden, parking etc)
What is LBTT?
Purchase & Sale - Level 1
- Land & Building Transcation Tax
- Tax payable when you purchase property over £145,000
How does LBTT work for first time buyers?
Purchase & Sale - Level 1
Only payable if the purchase price is more than £175,000
What percentage of LBTT do you pay?
Purchase & Sale - Level 1
Depends on the price of the property being purchased. Lowest band is 2% and highest is 12%.
What is ADS?
Purchase & Sale - Level 1
- Additional Dwelling Supplement
- Tax payable when purchasing additional residential property
What is the rate of ADS?
Purchase & Sale - Level 1
6%
When is ADS not payable?
Purchase & Sale - Level 1
- Purchase price is lower than £40,000
- Replacing main residence
- Buying bare plots
- Buying six or more properties at a single time
What do you understand about Scottish Standard Clauses?
Purchase & Sale - Level 1
Tool used by conveyancers/solictors to assist more straightforward conclusion of missives.
Can you name some things Scottish Standard Clauses relates to?
Purchase & Sale - Level 1
- Check if heating systems work within period of taking ownership
- All documentation is available for alterations that happened in last 20 years
- All warrantees for treatmants etc are available and transferred at date of entry
What rules or regulations could apply to the erection of For Sale/To Let boards?
What types of additional report might a conveyancer obtain? - e.g. coal report, environmental report, plans report etc.
What purchase terms have you advised on?
What are the basic elements of an offer to purchase?
How is a bargain created in Scotland? What are Missives? When is bargain concluded?
What replaced the Property Misdescriptions Act?
What is the definition of Sole Agency, Sole Selling Rights?
What details would you include in an agency ToE?
Mentioned Private Treaty as a method of sale – what other ones are there?
Can you tell me about an agency instruction you have been involved with?
What about an agency instruction?
Can you tell me/give me an example of a CoI?
Have you read the Blue Book? What does it recommend?
What principles does the Estate Agents Act promote?
If a property goes to a closing date for “best bids” what details should be included in letter to noted interests?
Provide an example of two different methods of sale you have been involved in and reasons for the choice?
- Private treaty - most common method of sale adopted in the market I operate in
- Auction - property was in very poor condition so auction helped create competition for it and meant it was sold realtively quickly
What are some advantages/disadvantages of private treaty?
Advantages
* Flexibility - the parties can negotiate in their own time and without commitment in the open market
* Advertising can be limited or extensive to suit the client’s requirements
* It is relatively inexpensive
* The seller is not obliged to sell
* It is a confidential process
Disadvantages
* There is the potential for gazumping or gazundering, both of which are considered to be unethical practices by RICS
* There may be the risk of a late decision not to buy (withdrawals) and associated abortive costs
* The quoting price could be under or over stated, requiring prudent advice on offers put forward or offers considered
What are some advantages/disadvantages of auction?
Advantages
* Short certain timescales can be achieved
* ‘Best price’ can be achieved after wide market exposure
* The property can be sold with certainty over selling terms
Disadvantages
* Expensive advertising costs
* It is not a confidential process
* The marketing period is likely to be short
* A failure to sell might lead to the property becoming ‘blighted’
* There is little control over the identity of the purchaser
Can you tell me what the four methods of sale are?
- Private treaty
- Informal tender
- Formal tender
- Auction
What is private treaty?
- gent prepares descriptive details of property and qoutes defintive asking price.
- Details are circulated and purchasers are invited to purchase at price or submit offer.
- Agreement to purchase is subject to final contracts being prepared and exchanged.
- Majority of sales use this method.
What is auction?
- Interest parties attend an auction and submit bids for property.
- Highest bidder wins and is legally bound to purchase property when hammer falls.
- Buyer pays deposit and purchases property on agreed completion date.
- Used for properties that appeal strongly to cash buyers, have serious defects/condtion issues or are difficult to predict likely sale price.
What is formal tender?
- Sale price is advertised with deadline and interested parties are invited to submit offers by deadline.
- Each tender pack must contain full legal contract for sale and deposit.
- As soon as bid is accepted contracts are automatically exchanged and purchaser is commited to purchase.
- Rarely used as complicated but used for complicated land transfers.
What is informal tender?
- Asking price not stated and guide price given.
- Deadline given and written offers encouraged.
- Offers are opened at same time and vendor is not required to accept highest or lowest bid.
- Offers are not binding and even on acceptance of offer sale is subject to contract.
- Used for properties where competition will be strong or require serious works.
