Topic 6: Buying a property an overview Flashcards
What is a Private treaty?
When a property is sold without it going to auction.
What is an Agent and Principal?
The agent acts legally on behalf of the principal, who grants the agent certain powers.
What is Apparent authority?
Relates to the law of agency and can apply where the agent carries out an action that is outside their agreed remit, but claims that something the principal said or did appeared to give them the authority to carry out that action.
What is Ratification?
Relates to the law of agency and can apply where the agent carries out an action that is outside their agreed remit, but the principal agrees with the agent’s action (ie ratifies it) after the event.
What is Offer in Principle?
Before making a formal mortgage application, a lender takes some basic information from a prospective borrower and performs a credit search and credit score before coming up with a figure that, in principle, it would be prepared to lend. Sometimes referred to as a ‘decision in principle’.
What is Reserve price?
The lowest price that the seller of a property at auction is willing to accept for that property. If the listing ends without any bids that meet the reserve price, the seller is not required to sell the property.
What is Memorandum of sale?
Sets out the basic terms of the sale, and the names of the seller and buyer and their respective solicitors. It is included in the legal pack provided to prospective buyers of a property being sold at auction. The successful bidder is asked to sign the memorandum of sale.
What is Vacant possession?
The right of a purchaser to exclusive use of a property on completion of the sale, after previous occupants including tenants have moved out.
What is Exchange of contracts?
The point of no return in the property conveyancing process. Buyer and seller have agreed and signed contracts for the sale, and their solicitors exchange the contracts. At this point, a formal contract is formed and both parties are legally bound to go ahead with the sale.
What is Completion?
The final stage of the conveyancing process. All the legal work is complete, the buyer’s solicitor pays the balance of the purchase price to the vendor’s solicitor and title is transferred to the new owner.
Explain Energy Performance Certificate?
An energy performance certificate (EPC), detailing a building’s energy efficiency, is required for a new build or when a property is marketed for sale or rent, and is valid for ten years.
The estate agent cannot market a property unless an EPC has been commissioned, although marketing can start before the certificate is received. Failure to commission an EPC before
marketing a property is an offence carrying a fixed penalty.
What is Gazumping?
Sometimes the vendor, having accepted an offer, accepts a better offer from another buyer later on. This is known as gazumping
What is Offer of Advance?
The formal statement of the
terms and conditions on which the lender is prepared to enter into a mortgage contract.
Explain when buildings insurance should be taken out?
Once contracts have been exchanged, the buyer is technically responsible for any damage or loss to the building, even though they don’t yet own it. For this reason it is important
that they insure the building from the point of exchange of contracts. A sensible vendor will make sure they also maintain their insurance – just in case the buyer fails to arrange cover.
What is Conditional Exchange?
Sometimes there may be an issue that needs to be settled or confirmed before
the transaction can be completed, but the two parties do not wish to delay
exchange of contracts. In this case either party may choose to exchange contracts
conditional on a specified event, which means they can withdraw without penalty
if the condition is not met.
