Purchase & Sale Flashcards
Describe some lease clauses that might impact value?
Restrictive covenants:
- Permitted Use
- Not to assign / sublet
- No alterations without permission
- Not permitted to trade
Explain the basis of agency, the appropriate proportion and levels and why this is so?
Three types of agency:
- Sole agency (1.2-1.8%) incl vat.
- Multiple agency (3-3.6%)
- Joint agency (3-3.6%)
Competitive - more agents, more they have to hike up their fees.
Describe briefly some legislation related to purchase and sale?
- Misrepresentation Act 1967 - applies to freehold and leasehold and relates to misstatements / false / fraudulent statements & misrepresentations.
- Estate Agents Act - applies to freehold or leasehold properties with capital value. S.18 covers terms of business and s.21 covers declaration of personal interests. Must advise clients of services available / personal interests / nature of agency and selling rights / costs and fees / handling clients money,
- Consumer Protection Regulations - apply during the entire agency sales and lettings process. Extend duty of care to potential clients / viewers / buyers / actual buyers. Must give accurate and necessary material information. Prohibits unfair practices.
What offences are there under the misrepresentation act 1967? What are the penalties for non-compliance?
Civil Offence actionable by tort (can be limited by an effective disclaimer clause).
Penalties include sued financial damages and/or contract rescinded.
What offences are there under the Estates Agent Act 1979? What are the penalties for non-compliance?
- Acting dishonestly.
- Not providing clarity to the terms of engagement or disclosing personal interest.
- Not informing client about offers.
Penalties = warning order / prohibition order and/or fine.
What offences are there under the Consumer Protection Regulations 2008? What are the penalties for non-compliance?
Criminal offence to not treat customers fairly and/or provide misleading marketing information.
Penalties include unlimited fine, prohibition order and prison up to 2 years.
What does s.18 of the estates agent act cover?
Terms of business
- Estate agents must specify all costs / fees in advance
What does s.21 of the estates agent act cover?
Declaration of personal interest
What is a ‘‘connected person’’?
Someone who could benefit financially from the transaction
What are the 7 principles of the Estates Agents Act 1979?
- Clarity as to terms of agency (s.18)
- Honesty and accuracy
- Agreement and liability for costs
- Openness regarding personal interests (s.21)
- Absence of discrimination
- Legal obligation to tell client about offers recieved.
- Keep clients money separate
What is your understanding of Consumer Protection Regulations 2008?
- Regulations apply to lettings and sales
- Agents have duty of care to clients and all interested parties.
- Agents must declare everything known about a property.
- Agents must not exert undue pressure on potential buyers
- Information discovered during agency process must be passed to all interest parties
- Omissions can breach regulations
- Full due diligence required for new instructions
- Policed by Trading Standards Office
- Disclaimers do not apply to this criminal offence.
Which RICS guidance do you refer to when undertaking an agency instruction?
RICS Professional Statement - UK Commercial Estate Agency 2016
(Resi is 2017)
What areas of advice does the RICS Professional Statement - UK Commercial Estate Agency 2016 cover?
- Acting ethically (duty of care / hospitality / gifts / types of agency / H&S)
- Securing instructions - legal requirements, AML, types of agency and H&S
- Marketing the property - Legal requirements, market appraisal and preparing particulars.
- Acquisition of property
- Implementing the disposal (methods of sales and legal requirements)
