Topic 6 - Buying a Property: An Overview Flashcards
Alan has agreed to pay Toyah £130,000 for her flat, and Toyah has agreed. In relation to contract law, these actions represent:
offer and acceptance.
consideration.
intention.
offer and acceptance.
Rashid has previously been happy for his agent Nirmal to authorise contracts on his behalf, even though several were outside the remit of their written agency agreement. Last week Nirmal authorised a contract but Rashid has refused to honour it. How might Nirmal be able to avoid personal liability for any legal action? By claiming:
ratification.
endorsement.
apparent authority.
apparent authority - Ratification occurs when the agent acts outside their actual authority, but the principal agrees after the event that their action was acceptable.
Apparent authority occurs when the agent carries out a number of actions outside their remit with the principal’s full knowledge, which gives the impression that the principal is happy that the remit has been extended.
Which of the following statements is true in relation to estate agents?
There are no restrictions on an estate agent acting as an agent for both the buyer and seller.
Online estate agents charge lower fees because they do not carry out valuations or arrange viewings.
Estate agents with a high-street presence usually charge vendors commission based on a percentage of the sale price.
Estate agents with a high-street presence usually charge vendors commission based on a percentage of the sale price. - The estate agent is an agent of the vendor not the buyer, although they may choose to advise both parties on areas where a conflict does not exist. Online agents arrange valuations though local valuers, and viewings can be arranged online.
An estate agent is insisting he is legally entitled to his commission, even though the property was sold to a buyer introduced directly to the vendor by a friend. Which type of agreement must the vendor have signed with the agent?
Sole agency.
Fixed price.
Sole selling rights.
Sole selling rights. - With sole agency, the agent has exclusive rights to sell the property but will not be entitled to a fee if the vendor finds a buyer. How the fee is calculated is not relevant in the context of the question. Sole selling rights means the agent has exclusive rights to sell the property and will receive the fee even if the vendor or a third party finds a buyer.
An energy performance certificate must be:
issued before a property can be marketed for sale or rent.
commissioned before a property can be marketed for sale or rent.
issued before contracts are exchanged for a sale or signed for rental agreements.
commissioned before a property can be marketed for sale or rent. - The certificate must be commissioned before a property is marketed but does not need to be issued at that point.
Which of the following would be special conditions in a mortgage offer letter, as opposed to standard conditions? Select all that apply.
- Requirements in relation to completion of roads and access.
- The period for which the offer letter remains valid.
- That the offer is subject to a satisfactory report on title.
- Retention conditions.
- Requirement for the redemption of any existing mortgages on, or before, completion.
6.That the lender can vary the terms of the offer for legitimate reasons.
1,4&5 - Special conditions relate directly to the property or borrower in the specific context of the purchase, and would not necessarily appear in all offers. Standard conditions are those that will apply in all the lender’s mortgage offers, and do not specifically relate to the particular purchase.
Jared and Tanya have received a final mortgage offer from their lender. Which of the following is true?
They have ten days to decide whether to accept the offer or change their minds.
There are limited circumstances in which the lender can withdraw the offer.
Borrowers and lender can withdraw from the arrangement before completion for any reason.
There are limited circumstances in which the lender can withdraw the offer - Jared and Tanya have seven days to accept the offer, which is binding on the lender and cannot be withdrawn except in certain circumstances. Once they have signed the offer the lender is committed to provide the agreed funds, assuming the purchase goes ahead.
Select whether each of the following statements is true
- It may be possible to exchange contracts on the condition that the buyer could withdraw later without penalty if they cannot sell their property.
- The buyer should put buildings insurance in place on exchange of contracts.
- Contracts may contain a long-stop date condition to allow the buyer an extension if there are problems with their mortgage.
- The buyer pays a refundable deposit on exchange of contracts.
- Both parties are legally bound to complete the transaction once contracts are exchanged.
- Only the vendor is responsible for any damage to the property between exchange of contracts and completion.
1,2&5 - A long-stop date condition would apply to contracts for a new property, and allows the buyer to withdraw from the contract without penalty if the developer fails to complete building by a certain date.
Technically the buyer is responsible for any damage after exchange of contracts, although a sensible vendor would maintain cover just in case.
The deposit paid on exchange is not refundable.
Kevin makes a successful bid for a flat at a property auction. Which of the following applies?
He has to exchange contracts within 28 days of the auction.
He must have a mortgage agreed or funds available before making the bid.
All legal work must start immediately after the auction.
He must have a mortgage agreed or funds available before making the bid. - Contracts are exchanged and deposits paid on the day of the auction. Some legal work has to be done before exchange of contracts.
Katrina has made a successful bid for a property through the modern method of auction. This means she:
has a maximum of 56 days to complete the purchase.
must pay a refundable 5% deposit when her bid is successful.
must exchange contracts on the day her bid is accepted.
has a maximum of 56 days to complete the purchase. - Katrina has 28 days to exchange contracts and a further 28 days to complete, for a total of 56 days. She must pay a non-refundable reservation fee of 5% when her bid is successful.
In a contract to buy and sell property, both vendor and buyer give a consideration. True or false?
True: the buyer’s consideration is the money for the purchase; the vendor’s is the property to be purchased.
John is acting as agent for Donna. John carries out a transaction that appears to be outside his authorisation but Donna confirms that she is happy with what he did. The technical term for this is:
ratification.
retrospective authority.
additional authority.
apparent authority.
ratification.
Fred and Eileen are about to put their house on the market and are considering whether to agree a sole agency arrangement with an estate agent or a joint sole agency in the hope of achieving a quicker sale. What would be the likely disadvantage to Fred and Eileen of the joint sole agency approach?
Each agent is likely to take a different approach.
The commission each agent charges is likely to be higher than if they had sole agency.
The approach is likely to be less reliable.
The commission each agent charges is likely to be higher than if they had sole agency.
Who is liable to sanctions for a sales brochure that exaggerates the size of the main living room?
The estate agent.
The vendor.
The vendor’s solicitor.
The estate agent.
Once a lender has issued an offer of advance and the applicant has accepted it, the lender is bound to go ahead with the transaction. True or false?
False. There are a number of situations in which the lender may withdraw the mortgage offer, including dishonesty on the part of the applicant, a material change in their circumstances such that the lender is not satisfied that the mortgage is still affordable for them, material defects in the condition of the property or defects in the title.
