Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Purchase and Sale > Level 1 > Flashcards

Level 1 Flashcards

Purchase and Sale

1
Q

What is the legal process?

A
  1. Once heads of terms are finalised they are sent to the respective solicitors
  2. The Vendor’s solicitors will produce a draft contract for sale and submit to the purchaser’s solicitors for comments.
  3. They will also provide copies of land registry title docs and other statutory information.
  4. The buyer’s solicitors will assess the draft contract and supporting documentation and reply with any queries or requests for further information.
  5. Once contract are agreed between lawyers, contracts can be exchanged and a deposit is usually made by the purchaser.

(I maintained contact with the lawyers and was available to help with any CPSE (commercial property standard enquiries).

Completion can be simultaneous or delay due to various reasons e.g. Finalise funding / awaiting planning permission / if LLH freeholder consent / Vacant possession. 3-6 months to Land reg.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is completion

A

Is the final step of the legal process of transferring ownership of the property to the aquirer. It is usually the point at which the purchase price for the property is paid and the transfer documents are dated.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What takes place post completion?

A

SDLT, Land reg application , collation of deeds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Why may there be a delay between exchange and completion?

A

Freeholder consent, funding.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How do you register a Freehold title on Land Registry?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How do you register a Leasehold title on Land Registry?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is formal tender

A

This is a ‘sealed Bids’ procedure. It’s used to give a high level of public accountability. Full DD pack needs to be sent. Vendor can state that they are under no obligation to sell. Full DD pack provided prior to blind bids. Importantly there is no opportunity for purchasers to change their bid after the first round.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is informal tender

A

Used when there’s good interest in a property. It is a ‘best bids’ procedure. Details of a bid include: required date and time of a written offer, confirmation of financial arrangements, name and address of solicitor, any conditions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is private treaty

A

Marketing a property with a guide price. It is a private matter and parties are free to negotiate in their own time and without commitment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is included in the Terms of Engagement

A
  1. Address of property
  2. Seller’s name
  3. Remuneration
  4. Joint agents commission(if relevant) is:
  5. Disbursements
  6. VAT
  7. Joint Agents?
  8. Solicitors
  9. Allsop T&C’s
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the difference between a lease and a licence?

A

A lease is a contractual arrangement where a tenant agrees to pay rent to a landlord for exclusive occupation of a property for a fixed term.

A licence is where the landlord grants the tenant permission to use the property or land for a specific purpose. A licence may be a fixed term or ongoing.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the difference between a lease and licence?

A
  1. A lease provides an occupier with an estate in the relevant land - a licence is a permission to make it lawful for them to use the land
  2. A lease can be assigned
  3. A lease cannot be terminated until it expires (unless there is a break clause.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

If an offer is subject to financing what makes an offer more credible and why?

A

proof of funds from a bank

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

If you are acting on an acquisition when do you request AML?

A

Before you submit an offer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a statutory body?

A

A body that is set up by law

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the stamp duty thresholds?

A

0-150,000 - nil
150,001 - 250,000 - 2%
250,000 - above - 5%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is an SPV

A

a vehicle that people use to avoid stamp duty…

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is a REIT

A

A Real Estate Investment Trust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Can you submit a bid after the bids date?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Is a Heads of Terms a legally binding contract

A

No it is subject to contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What must be included in a marketing brochure

A

EPC, Misrepresentation Act and Date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What also must be in your Terms of Engagement

A

Reference to AML, Complaints Handling Procedure and Professional Indemnity Insurance (PII) ( This is ethics)

23
Q

Please provide an example of an offshore unit trust

A

Jersey Property Unit Trust (JPUT)

24
Q

What are the 7 key principles of The Estate Agents Act 1979?

A

(1) Clarity in the Terms of Agency (Section 18)
(2) Honesty and Accuracy
(3) Agreement and Liability for Costs
(4) Openness regarding personal interests (Section 21)
(5) No Discrimination
(6) Legally required to tell client about offers received
(7) Keep Clients money separate

25
Q

Who polices the Estate Agents Act 1979?

A

Policed by the National Trading Standards Estate & Letting Agency

26
Q

What is the Consumer Protection from Unfair Trading Regulations , 2008?

A

It relates to the business consumer.
These regulations offer broader, non specific consumer protection for estate agents

27
Q

What do CPR’s relate to?

A

They relate to potential buyers and vendors and extend their duty of care to viewers etc.

28
Q

What do CPR’s prohibit?

A

They prohibit unfair business to consumer commercial practices

29
Q

What new legislation has come into effect for overseas property owners?

A

Register of Overseas Entities Bill has come into effect as at August 2022. Required foreign companies to reveal their true owners. Applied to all properties purchased since 1998. Attempt to remove corrupt firms that are using the UK to hide their illicit wealth. 6 months to register their true ownership.

30
Q

What is the “Cooling Off” period for an agency instruction? And what regulation enforces it?

A

The cooling off period of up to14 days is allowed for clients who change their minds and do not want to instruct the agent in accordance with current consuder protectiojn regulaiton. under the Consumer Protection Regulation (2008).

31
Q

What are the current Consumer protection regulations in the UK? And what Act do they sit under?

A

Consumer Protection from Unfair Trading (2008), under the Enterprise Act (2002).

32
Q

Under the Consumer Protection Regulations (2008), to whom does the agent owe a duty of care?

A

The client, the purchaser, any potential purchaser, any potential client, all defined as ‘consumers’.

33
Q

Who enforces the Consumer Protection Regulations (2008)

A

The Trading Standards Office of the Local Authority. Maximum penalty is unlimited fine and compensation up to £25,000.

34
Q

What does the Misrepresentation Act of 1967 refer to?

A

The Misrepresentation Act of 1967 refers to false statements or mis-statements, that induce the acquisition of a property during pre-contract enquiries. The vendor or agent can be sued for negligence and the contract rescinded.

35
Q

What is the leading Case with regard to the Misrepresentation Act of 1967?

A

The leading case is Hedley Byrne & Co Ltd v Heller & Partners 1964.
The case relates to reliability on negligent statements.

36
Q

What Three Tests for liability under negligence were created under Hedley Byrne & Co Ltd v Heller & Partners (1964)?

A

(1) Foreseeability – The damage is reasonably foreseeable
(2) Proximity – The relationship can be characterised as sufficiently proximate
(3) Fairness – It can be regarded as fair, just and reasonable for a duty of care to have arisen.

37
Q

What are the Key Differences between the Misrepresentation Act (1967), and the Consumer Protection Regulation (2008)?

A

A. Breach of the BPRs or CPRS (2008) is a criminal offence, breach of the Misrepresentation Act is a civil offence and enforced through Tort. Misrepresentation can be Negligent, Innocent or Fraudulent.
B. Misrepresentation Act relates to pre-contractual enquiries on Freehold / Leasehold transactions whereas CPR 2008 relates to the entire process for both leasing and letting.

38
Q

What are the Rules Surrounding the Erection of Advertising Signage for Property under the Town and Country Planning (Control of Advertisement) (England) Regulations 2007?

A
  1. Planning consent required for commercial boards over 2 m² (flat) and 2.3m² (V-Board).
  2. Only one board per building
    Must not protrude 1m from the face of the property
  3. Residential Board only 0.5m² and 0.6m² (Flat and V)
  4. You need planning consent for illuminated boards, remote board , boards on listed buildings.
  5. Must be removed 14 days after a transaction.
  6. Policed by a local authority – they’ll fine you and charge for removal costs.
39
Q

What are the Three Key pieces of Estate Agency Legislation?

A
  1. The Misrepresentation Act (1967) – Civil Offence, fined under Tort (sued for damages / contract’s rescinded) (disclaimer may be effective in protecting consumer).
  2. The Estate Agency Act (1979) – Warning, or prohibition order
  3. The Consumer Protection Regulation (2008) – Criminal offence, unlimited fine/2 years prison, compensation to complainant and prohibition.
40
Q

Do you charge VAT on the purchase of a Property?

A

Generally speaking the Property can be regarded as a Transfer of Going Concern (TOGC), meaning that no VAT is due.

A landlord can choose to elect a property for VAT to recover VAT on costs expanded

[Specialist Advice Always Recommended]

41
Q

What are Capital Allowances?

A

These are an important form of tax relief upon capital expenditure for the construction or purchase of commercial property or business assets.

[Specialist Advice Always Recommended]

42
Q

What did the Land Registry Introduce in 2002?

A
  • A framework for the electronic property conveyancing
  • All freeholds and leases over 7 years must be registered
  • New regime for adverse possession (over 10 years)

Works towards the Land Registry’s goal of having all property registered electronically by 2030.

43
Q

What Must All Freehold Transactions Have under the Land Registration Act of 2002?

A

A. A compliant plan with the following characteristics:

  • Drawn to scale of 1:100 or 1:200
  • Have a scale measurement bar
  • Have the scale noted on the plan
  • Include a 1:1250 scale map of the location (for urban areas)
  • Full address including postcode
  • A north point
  • Demise in red outlined on inside edge of the property.
44
Q

What are the advantages and disadvantages of Private Treaty

A

Advantages
- controlled by the parties involved
- flexible
- no obligation for vendor to sell

Disadvantages
- Gazumping
- Gazundering
- late decisions not to buy
- associated abortive costs

45
Q

What are the key differences between formal and informal tender?

A
  • It is possible that a formal tender leads directly to a contract for sale.
  • There is no opportunity for further bidding in a formal tender.
  • Bid is less detailed and there is more scope for further negotiation / a second round of bids.
  • Informal tender is less onerous and is often used as a mechanism to invite all parties to bid
46
Q

How do you decide what fee to charge for agency work?

A

Fee has to be fair to ensure you cover your costs but also make sure fees are competitive.

47
Q

How would you deal with a late bid when undertaking an informal tender?

A

Tell the client but unethical to accept the bid

48
Q

sole selling rights

A

renumeration payable if exchanged in period when sole selling rights exist, even if purchaser not found by agent.

49
Q

Sole agency rights

A

only if you intro a party

50
Q

Multiple agency

A

any number of agents but only successful one get a fee

51
Q

Dual Agency

A

Where agent has contractual agency relationship with both buyer and seller at same time.

Cannot be done under any circumstances
RICS Conflicts of Interest: UK Commercial Property Market Investment Agency, 2017

52
Q

Multiple introductions

A
  • Where agent has competing contractual relationships simultaneously with several buyers.
  • With Terms of Engagement, must be clear whether appointed on an exclusive or non-exclusive basis.
  • If exclusive, other buyers must be informed agent can no longer act for them.
  • If non-exclusive, agent must obtain informed consent and have the necessary information barriers in place.
53
Q

RICS UK Commercial Estate Agency Professional Statement, 2016 – mandatory and sets out 12 core principles which agents must observe.

A
  1. Act in an honest, fair, transparent and professional manner.
  2. Carry out work with due care and diligence.
  3. Ensure clients are provided with terms of business which are fair and transparent.
  4. Do utmost to avoid conflicts of interest.
  5. Not to discriminate unfairly in dealings.
  6. All communications with client are fair, decent, clear, timely and transparent.
  7. All advertising and marketing is honest and truthful.
  8. All client money is held separately and is covered by adequate insurance.
  9. Hold appropriate PII.
  10. Make clear, identity of client.
  11. Give realistic assessments of pricing.
  12. Ensure all meetings, inspections and viewings are carried out in accordance with the clients wishes, having due regard to security and personal safety.
54
Q
A

Purchase and Sale (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions