Topic 6 - Buying a Property: An Overview Flashcards
Bound by Terms:
Once a contract has been agreed and put in place, both parties are bound by its terms.
Failure to do so could mean they are sued for breach of contract and ordered to comply or pay damages.
‘Caveat Emptor’
Most contracts are based on this principle meaning ‘Let the buyer beware’. This means that neither party is required to disclose information to the other unless asked to do so.
‘Uberrima fides’
Utmost good faith. This principle requires disclosure of all material facts by both parties.
An agent should only act within the powers given to them by who?
The principal
Two situations in which the agent may act outside their actual authority without making themselves liable for redress:
- Apparent authority: Where a statement by the principal appears to give the agent wider authority
- Ratification: Where the agent acts outside their actual authority, but the principal agrees afterwards that the action was acceptable
Different ways of estate agents operating:
- Sole selling rights (uncommon)
- Sole agency
- Joint sole agency
- Multiple agency
What is an EPC?
An energy performance certificate required for a new build or when a property is marketed for sale or rent. Failure to commission before marketing a property is an offence.
Marketing can start before certificate is received
If building has separate units each need an epc
Gazumping
When the vendor having accepted an offer, accepts a better offer. It is legal but may be seen as unethical
Offer of Advance
The formal statement of the T&Cs on which the lender is prepared to enter into a mortgage contract
The letter is an offer for the applicant to enter into an agreement and the details will be eventually reflected in the mortgage contract.
The lender’s offer is binding on the lender, and can only be withdrawn in certain circumstances:
- Where the buyer knowingly provided false, inaccurate or incomplete info
- Material changes to the buyer’s circumstances after the binding offer was made, that would affect their ability to pay the mortgage
- A material change affecting the condition or value of the property after the offer was made
Offer letters are highly standardised and typically contain:
- General details confirming the applicant, property and loan
- Standard warranties and conditions, applicable to the vast majority of mortgages and not specific to the property or borrower
- Any specific conditions that might be applicable
It is important that buyers insure the building from when?
The point of exchange of contracts
Either party may choose to exchange contracts conditional on a specified event. What are these?
- Conditional on sale or purchase of another property
- Conditional subject to satisfactory search results
- Conditional on a long-stop date
Buying at auction
Successful bid > Contracts exchanged same day > 10% deposit paid same day > Completion within 28 days
There is often also a reservation fee of up to 5% of the purchase price covering the auctioneer’s costs
For an auction, the vendor’s solicitor will typically prepare a legal pack for bidders to inspect before the auction including:
- Memorandum of sale
- Special conditions of sale
- The local search
- Land Registry search
- Proof of title
- Copy of any lease affecting the property
