Flashcards in Purchase & Sale Deck (54)
• the environmental impact of buildings
• efforts to reduce carbon emissions
• the use of innovative forms of construction
• evolving Building Regulations requirements
• improved specifications
• incentives and
• what are described as ‘first-owner benefits’.
UK Finance disclosure form (CML), what should be collected?
Council of mortgage lenders form produced by agent.
Initial information - details of vendor and purchaser, verification of address, plot number and postcode of the subject property.
The Property - type, style, location, surrounding, services & amenities, nearby sites, commercial units, ground conditions, flooding, invasive plants.
Construction - type, stage, completion date, sustainability, features, materials, inspection.
Legal - tenure, term, rent, service/estate charges, purchase schemes, resale restraints, warranties.
Pricing - agreed price and date, incentives, stage release and purchaser profile (whether the owners are occupiers/investors, first-time
buyers, downsizers, etc).
Comparables - type, date, location, special features/specification, incentives, tenure, schemes such as Help to Buy or part-exchange and lender activity: it may be important to note which lenders are active on site to ensure that your lender client does not become overexposed affordable housing.
What RICS guidance relates to agency work?
RICS Real Estate Agency and Brokerage 2016 – Global PS, in its 3rd Edition
What legislation relates to agency work?
Estate Agents Act 1979
Misrepresentation Act 1967
Money Laundering Regulations 2017
Consumer Rights Act 2015
Consumer Protection from Unfair Trading Regulations 2008
Business Protection from Misleading Marketing Regulation 2008
Town and Country Planning Regulations 2007
What is the RICS Real Estate Agency and Brokerage PS 2016?
A mandatory professional statement that outlines the principles for fairness and transparency in agency.
Includes information on ethics, securing instructions, acting for the seller (marketing), acting for the seller (agreeing the sale or lease), acting for the buyer, ending an instruction.
What do you understand about your general duty of care?
Under Global Agency and Brokerage PS, Ethics section.
Duty of care to seller and buyer throughout the period of your instruction. Must carry out work with reasonable skill, care and diligence.
- Aim to achieve the best possible outcome for client
- Not release or misuse client’s confidential info without their permission
- Not to appoint sub-agent
- Ensure proper staff training
- Not the accept instruction beyond field of experience
What RICS agency guidance is there for Residential agency?
Separate PS applies – UK Residential Real Estate Agency PS 2017, or the Blue Book
Provides a summary of code of practice in all aspects of property marketing for residential property.
What is the Estate Agents Act 1979 and who does it apply to?
Applies to disposal or acquisition of an interest in freehold property, leasehold property and land.
What are the principles of the EA Act 1979?
1. Honesty and accuracy
2. Clarity on TOEs, incl. type of agency sec.18
3. Agreement on prospective liabilities/costs in advance
4. Transparency regarding personal interests sec.21
5. No discrimination
6. Tell client about all offers received in writing
7. Keep client’s money separate
What are the key sections in the EA act 1979?
s. 18 – agree TOEs / liabilities
s. 21 – disclosing a personal interest
What is the redress/penalty system under the EA Act 1979?
Act policed by local authorities Trading Standards Office.
- Negative licensing (right to be an agent revoked)
- Warning order (less punitive, usually for first offence)
- Prohibition order (stops an agent practising)
What are the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and what do they apply to?
They replaced the Misdescriptions Act.
They prohibit unfair Business to Consumer trade practices.
Apply to all lettings and sales.
Duty owed to ‘consumers’ = ACTUAL buyers and vendors (clients), and POTENTIAL clients, viewers, buyers.
Duty to: give accurate and necessary material – good and bad - and not make any misdescriptions, not exert undue pressure, make no omissions.
What are the penalties for breaching the CPR 2008?
Policed by local authorities TSO.
Unlimited fine, prohibition order, compensation up to £25k.
What changes did the Consumer Rights Act 2015 introduce?
Lettings agents must display summary of fees in their office and on their website.
What is ‘caveat emptor’?
Principle in common law – ‘let the buyer beware’. The buyer alone is responsible for satisfying themselves on all matters relating to the property.
What is the Misrepresentation Act 1967? Who has a duty of care?
Relates to misrepresentation of information during pre-contractual enquiries to induce the party to purchase. The vendor and/or agent can be sued for damages – it is a civil offence and a form of negligence.
The Agent has a duty of care to check all info is reliable.
What are the 3 types of misrepresentation?
Fraudulent, negligent and innocent
Explain the key differences between the Misrep Act 1967 and the CPR 2008?
The CPR are a criminal offence if breached, whereas the Misrep Act is a civil offence.
CPR cannot be limited by a disclaimer (exclusion clause), Misrep can.
What rules are there around marketing signage?
Town and Country Planning Regulations 2007.
Planning consent required for boards over a certain size, PDR for anything below.
Must not project more than 1m.
Must be removed 14 days after completion of transaction.
Size limits: Commercial: 2sqm (flat), 2.3sqm (V-board). Resi: 0.5sqm (flat), 0.6sqm (V-board).
Must get consent from owner to erect.
Planning needed for: illuminated boards, listed building / conservation areas.
Some occupiers cannot register for VAT, such as charities.
What are capital allowances?
The practice of allowing a company to get tax relief on tangible capital expenditure by allowing it to be expensed against its annual pre-tax income
What is the Land Registration Act 2002?
Registration with Land Registry is required when:
- Freeholds transferred
- Legal lease over 7 years are granted
- Legal lease with more than 7 years to run are transferred
Introduced ‘squatters rights’ - anyone who occupies registered land without permission from the owner and treats it as his own for 10 years is entitled to apply to be registered as owner
Introduced electronic conveyancing
What are the four methods of sale?
1. Private treaty (most common in England and Wales)
2. Informal tender
3. Formal tender
What are the factors to consider in choosing which method of sale to use?
Current market conditions
Likely level of demand
What is private treaty? What are its advantages and disadvantages?
Parties are free to negotiate in their own time, without commitment in the open market.
Private = confidential negotiations.
Advantages: Flexible, parties control the process, vendor under no obligation to sell until exchange, confidential
Disadvantages: can be late decisions not to proceed, associated abortive costs, potential for gazumping/gazundering
What is informal tender? What do you include on sales process letter?
Usually used when good level of interest prior to/at beginning of marketing.
Best and final bids used to conclude negotiations, with a prescribed timescale.
Any bids received after deadline must be reported, but advise unethical and not to accept.
Not legally binding until contract.
Inviting best and final bids must include:
- Bid deadline (date and time)
- Applicant solicitor details
- Financing arrangements
- Details of any conditions
- *Statement that variable bids (e.g. escalator) will not be considered
- *Statement that vendor reserves right not to accept highest, or any, offer made
What is formal tender?
The process of sealed bids; parties bid blindly and there is no opportunity for further negotiation or changes to bids.
Full marketing and legal pack must be provided in advance.
Letter must be provided to parties setting out the information required in their bid.
Binding on both parties, unless statement that vendor reserves right not to accept highest, or any, offer made
Often used by statutory bodies to exercise control, accountability and provide transparency.
What are the differences between informal and formal tender?
Single bid vs. multiple.
Cannot change bid vs. further negotiations and BAFOs.
Could lead directly to a sales contract vs. cannot.
High level of accountability vs. usually less onerous terms
What are the advantages and disadvantages of selling at auction? When is it normally used?
Usually used for unusually property that is hard to accurately value. Used when likely a high level of interest to drive bids
Advantages: quick disposal, certainty of sale (subject to reserve figure achieved), useful for unusual properties with high interest levels, bids are legally binding at the hammer fall.
Disadvantages: High costs of promotion, no confidentiality, cannot select purchaser, intensive marketing period.