Flashcards in Estate Agency (Purchase and sale; Leasing/letting) Deck (60)
What professional statement did the RICS release for global agency practices?
RICS Global Real Estate Agency and Brokerage, 2016
What RICS professional statement sets out mandatory standards for those involved in agency and real estate management work?
RICS UK Commercial Estate Agency, 2016
What does the RICS UK Commercial Estate Agency, 2016 contain?
12 core principles which agents must observe
Give an example of some of the principles contained within RICS UK Commercial Estate Agency, 2016.
• Act in an honest, fair, transparent and professional manner
• Ensure clients are provided with terms of business that are fair and clear, with details of the firm's complaints handling procedure
• All advertising and marketing materials must be honest and truthful
• Give realistic assessments of selling prices / rents / financial costs having regard to market evidence and using best professional judgement
What is the key estate agency legislation?
Estate Agents Act 1979
When does the Estate Agents Act 1979 apply?
• Disposal or acquisition of an interest in land
• Freehold property
• Leasehold property with a capital value
• Land as well as buildings
What are the SEVEN key points which the Estate Agents Act 1979 promotes?
1. Clarity as to the terms of the agency (Section 18)
2. Honesty and accuracy
3. Agreement and liability for costs
4. Openness regarding personal interest (Section 21)
5. Absence of discrimination
6. Legal obligation to tell client about offers received
7. Keep clients' money separate
What are the different types of agency and selling rights that can be agreed?
• Selling rights: fee will be owed regardless of whether the agent introduced the buyer
• Agency rights: fee will only be owed if the agent introduced the buyer
• Sole: exclusive rights appointed to one agent
• Joint: two agents are appointed to act together and the fee is split on a pre-agreed basis
• Multiple: more than one agent is appointed but only the agent who finds the buyer is paid a fee
What must you do according to Section 18 of the Estate Agents Act 1979?
• Specify all costs/fees in advance, in writing in the terms of business
• Itemise all payments - no global budget is allowed
What must you do according to Section 21 of the Estate Agents Act 1979?
• Disclose any personal interests - a "connected person" is someone who benefit financially from the transaction such as a relation or business associate
• Any personal interest should be declared on the terms of engagement as a minimum and if appropriate not continue to act
What must you do according to the Estate Agents Act 1979 when you receive offers?
• Must report all offers received to the client, promptly and in writing
• Not able to misrepresent interest/offers - you can only tell the truth regarding offers received
Who polices the Estate Agents Act 1979?
Trading Standards Office
What are the penalties for non-compliance with the Estate Agents Act 1979?
• Negative licensing - the right to be an estate agent can be taken away and not granted
• Prohibition order to prevent the agent practicing
• Warning order gives an agent a written warning not to undertake the action again
What does the Estate Agents (Undesirable Practices) (No 2) Order 1991 dictate?
Estate agents must inform their clients at the time same time as they are informed about their terms of business, as to any service to be offered to prospective purchasers unless offered free of charge
What do the Estate Agents (Provision of Information) Regulations 1991 dictate?
Related to the information that should be provided in writing to the client:
• Service to be provided
What is the 'cooling off' period?
Period of up to 14 days is allowed for clients to change their mind and not instruct an agent in accordance with the Consumer Rights Act 2015
What will the newly proposed Registration of Overseas Entities Bill require? What is the aim of the Bill?
• Will require overseas companies to provide details of their ultimate owners, which will be placed on a public register
• Prevent money laundering and make the UK a world leader on corporate transparency
What are Unexplained Wealth Orders (UWOs)?
Can be applied to the owner of any property asset over £50,000 where the Government has reasonable grounds for suspecting criminal funds have been used
Who do the Consumer Protection from Unfair Trading Regulations (CPRs) 2008 relate to?
Business to Consumer activities
Who do the Business Protection from Unfair Trading Regulations (BPRs) 2008 relate to?
Business to Business activities
Who is owed a duty of care under the CPRs / BPRs?
Potential buyers and vendors, potential clients, viewers and actual buyers
What agency practices do the CPRs / BPRs? relate to?
• Online agency
What must agents do to ensure compliance with the CPRs / BPRs?
• Declare everything known about a property - good and bad
• Not exert undue pressure on potential buyers
• Undertake full due diligence for all new instructions
• Pass any information discovered during the agency process onto all interested parties
Who polices the CPRs / BPRs?
Trading Standards Office
What is the penalty for breaching the CPRs / BPRs?
• Unlimited fine and/or a prohibition order
• Compensation paid to the complainant of up to £25,000
Can you disclaim outside of the CPRs / BPRs?
What does the Misrepresentation Act 1967 relate to?
Misrepresentation or a false statement of fact made by a party during pre-contractural enquiries, which has the effect of inducing the party to purchase
What is the penalty for breaching the Misrepresentation Act 1967?
Vendor and/or agent can be sued for damages and/or the contract rescinded
How can a vendor / agent protect themselves from the Misrepresentation Act 1967?
• Check that the advice, information or opinion provided is reliable
• Exclusion / disclaimer clauses if fair and reasonable