Purchase and Sale

Question 1

What are the four main methods of sale?

Answer 1

1. Private treaty
2. Auction
3. Informal Tender
4. Formal Tender

Question 2

Name some factors you may consider when choosing a disposal method

Answer 2

• Client objectives
• Public accountability
• Current and likely future market conditions
• Likely level of demand
• Timing requirements

Question 3

What is private treaty?

Answer 3

Where the parties are free to negotiate in their own time and without commitment in the open market. It is a private matter.

Question 4

What are the advantages of private treaty?

Answer 4

• Flexibility
• The parties control the process
• Vendor not under any obligation to sell
• Confidential

Question 5

What are the disadvantages of private treaty?

Answer 5

• The potential for gazumping or more likely gazundering
• Late decisions not to buy
• Associated abortive costs

Question 6

What is informal tender?

Answer 6

Used when there is a good level of interest. The agent invites interested parties to submit their bids in writing in accordance with a prescribed timescale

Question 7

What is formal tender?

Answer 7

Often used by a statutory body to give control and transparency over the marketing process. Provides a high level of public accountability or when there may be a strong interest in the property

Question 8

What are the advantages of auction?

Answer 8

• Can be a quick method of disposal
• Certainty of sale, assuming a reserve figure is achieved
• Useful for properties that are difficult to accurately value
• Used for a property which is likely to generate a strong level of interest

Question 9

What are the disadvantages of auction?

Answer 9

• Cost of promotion and publicity
• Lack of confidentiality over the price achieved
• Vendor cannot choose the purchaser
• Intensive nature of a short marketing period

Question 10

What are the three types of agency?

Answer 10

• Joint
• Sole
• Multiple

Question 11

What section of the Estate Agents Act cover the agreement signed by the client in an agency instruction?

Answer 11

Section 18

Question 12

Which regulations cover the money laundering checks in an agency instruction?

Answer 12

Money Laundering Regulations 2017

Question 13

Which two statutory documents should be considered when drafting and approving marketing particulars?

Answer 13

Consumer Protection Regulations 2008
Misrepresentation Act 1967

Question 14

Which act dictates the statutory cooling off period of 14 days?

Answer 14

Consumer Rights Act 2015

Question 15

Which two sections of the Estate Agents Act 1979 are the most important during agency instruction agreements?

Answer 15

Section 18 and 21

Question 16

The case in which an oral agreement was legally binding

Answer 16

Wells v Devani

Question 17

Name some forms of purchase vehicles

Answer 17

• Special purchase vehicle (SPV)
• Offshore unit trusts
• Real Estate Investment Trusts
• Joint ventures

Question 18

What does Section 21 of the Estate Agents Act 1979 cover?

Answer 18

Section 21 of the Estate Agents Act 1979 specifies what ‘interests’ must be declared by the agent

Question 19

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

Answer 19

Clarity as to the terms of the agency (Section 18)
Honesty and accuracy
Agreement and liability for costs
Openness regarding personal interest (Section 21)
Absence of discrimination
Legal obligation to tell client about offers received
Keep clients’ money separate

Question 20

What are current SDLT levels for commercial property?

Answer 20

Up to £150,000 - Zero
The next £100,000 (the portion from £150,001 to £250,000) - 2%
The remaining amount (the portion above £250,000) - 5%

Question 21

What is a ready, willing and able purchaser?

Answer 21

if they are prepared and are able to exchange unconditional contracts for the purchase of your property.

Question 22

Can a verbal contract be legally binding?

Answer 22

Verbal contracts are legal in the UK, but in order for them to stand up in a court of law, there are several terms that should be agreed upon and completed, including: An offer should be made by one party and accepted by another. Something of value should be exchanged in return of a promise

Question 23

Does the sale of land have to be in writing and what Act defines this
point?

Answer 23

Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 states: “A contract for the sale of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or where contracts are exchanged in each.”

Question 24

What is SDLT?

Answer 24

Stamp duty land tax (SDLT) is a tax payable by the purchaser on land transactions

Question 25

What are the different types of interest in land?

Answer 25

Leasehold and Freehold

Question 26

What is the difference between freehold and leasehold?

Answer 26

Freehold means that you own the property and the land the property sits upon. A Leasehold means that instead of owning the land you purchase the right to occupy the property for a given number of years (e.g., 99, 125 or 999 years) under a Lease agreement.

Question 27

What are profits a prendre?

Answer 27

A profit a prendre appurtenant is a right the benefit of which is attached to a particular piece of land, in the same way as an easement.

Question 28

What is a Memorandum of Sale/Heads of Terms?

Answer 28

a written confirmation of the essential details of a property transaction.

Question 29

When is an auction sale legally binding?

Answer 29

The highest bidder at a public auction is legally bound to proceed with the purchase at the fall of the auctioneer’s hammer.

Question 30

Why are POA listings unlawful?

Answer 30

Not displaying the asking price is likely to be a misleading omission in that the price is information which the average consumer needs in order to take an informed transactional decision