Brainscape's Knowledge GenomeTM

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


See full index

APC > Purchase and sale > Flashcards

Purchase and sale Flashcards

1
Q

What is Private Treaty?

A

The agreement for the sale of a property at a price negotiated directly between the vendor and purchaser or their agents. Parties are free to negotiate in their own time.

This is the most popular method of sale.

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

What are the advantages and disadvantages of a private treaty sale

A

Advantages
- flexibility
-control of the process
-no obligation to sell

Disadvantages
-gazumping and gazundering
-late decisions not to buy

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

What is informal tender?

A

Used when a good level of interest to bring marketing to close.

Not legally binding.

Agent invites best bids in writing and asks parties to submit best and final bids in accordance with the timescales set out.

Vendor reserves right not to accept the highest or any offer.

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

What details are required in an offer form?

A

Date
Name of purchaser
Contact details of parties
Offer
Conditions (offer subject to valuation, due diligence, contract)
Funding arrangements
Timings
Solicitors detail
Declaration

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

What is formal tender?

A

Often used by public and statutory bodies to give control and transparency of the process.

Full marketing and legal pack must be provided to all parties before tender.

Applicants bid blindly.

No opportunity to amend or increase offer .

VENDOR CAND STATE UNDER NO OBLIGATION TO ACCEPT HIGHEST BIDS.

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

What is auctioneering?

A

Selling property by auction.

Adv
- Short timescale
-Certainty of sale if reserved price met
-good for unusual properties
-used for when there is strong interest

Dis
-increased costs
-lack of confidentiality
-vendor cannot choose purchaser
-intensive sale process.

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

What are the tree types of Agency?

A
  1. Sole
  2. Joint (two or more share the fee on an agreed basis)
  3. Multiple (multiple agents , only successful one get the fee)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is included within agency instructions?

A

Agency basis (joint or sole)
Agency Rights (Sole selling or agency)
Proposed fee
Marketing costs + disbursements
Confirmation of no conflicts
MLR Reqs
Details of CHP

MUST BE SIGNED AND RETURNED

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

Whats the difference between sole selling and agency?

A

Sole Selling
fee payable if contracts are exchanged in the period in which the rights exist even if purchaser not found by the agent .

Includes purchasers who were introduced by the agent after rights have ended for an agreed period of time. 12 months for Colliers.

Sole Agency
Means fee only if introduced the purchaser. Less advantages for the agent.

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

What is a ready and willing purchaser clause?

A

As detailed in the EA 1979.

Id an applicant is ready and able to proceed and client withdraws, an abortive fee may be due.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What happens if the purchaser fails to complete?

A

Vendor can serve notice to complete on a proposed purchaser with proposed deadline.

If deadline has passed, vendor can rescind contract and remarket

Any deposit will be retained by the vendor.

Vendor may be able to sue for damages if another party purchases and a lower price.

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

What is entailed in an Acquisition?

A

Check conflict
Undertake MLR checks
understand clients objectives and search parameters
searching technique
Due diligence / stat techniques
Arrange conditional offers and surveys
Negotiate and instruct solicitors
Conditional contractors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the different types of purchase vehicles?

A

SPV - a company set-up to buy a property to reduce SDLT

Offshore Trust

REITS - Listed on stock exchange

JV’s - two parties come together

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

What are the SDLT boundaries?

A

Commercial

£0 - £150k = NIL
£150,001 - £250,000 = 2%
Over £250k = 5%

Resi

£0 - £250k = NIL
£250,001 - £925,000 = 5%
£925,001 - £1.5m = 10%
Over £1.5m = 12%

3% additional charge on second homes and Buy to let .

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

What is the Estate Agency Act?

A

Regulates the work that estate agency work.

Key elements inc:

-Clarity within the TOE (sole selling or agency rights)
sole or joint agency

-Disclosure of conflicts or personal interest - a connected person

-agreement on fees and liability
specify all costs in writing

-legal requirement to tell client when offers are received. - Must not misrepresent offers, and must to offer promptly and in writing.

-keep clients money separate

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

RICS UK Commercial Estate Agency Pro Statement- 2016

A

Mandatory professional statement, outlines 12 key principles:

  1. Act honestly, fairly and transparently
    2.carry out work with due care and skill
  2. ensure terms of business are fair and clear and detail CHP.
  3. Do the Utmost to avoid conflicts of interest and deal with them if they arise
  4. do not discriminate
  5. All communications with the client are undertaken in a timely manner
  6. all advertising material is honest and truthful
  7. any client monies held separately
  8. Hold appropriate PII
  9. Make identity of your client
  10. Give realistic assessment of selling prices
    12.Ensure all viewings/meetings are carried out within the clients wishes.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the Misrepresentation Act 1967?

A

Relates to misrepresentation or a false statement given by a party during pre-contractual enquiries.

-Vendor and agent can be sued for damages
-can be fraudulent, negligent or innocent
-Agent has duty of care to check advice is is reliable

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

What are the methods of sale?

A

Asset and share sale.

An asset sale involves the purchase of some or all of the assets owned by a company. Examples of common assets which are sold include; plant and equipment, land, buildings, machinery, stock, goodwill, contracts, records and intellectual property (including domain names and trademarks) The transaction is between the company and the buyer of the business assets. The seller retains ownership of the company structure.

In a share sale, the buyer purchases shares in the company, rather than just the assets.

There are several tax and cost implications but they are better laid out by a solicitor.

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

P&S: What types of interest can be sold?

A

Freehold
Owner owns the property outright and land its built on. Permanent absolute tenure.

Leasehold
Ownership of the property for a fixed period of time. Legal agreement with the freeholder/landlord in the form of a lease.

20
Q

P&S: How do conditions mentioned (Age, condition, location, spec, size) affect marketability?

A

They can affect marketability as the change the way a hypothetical purchaser sees within a property and the capital capital expenditure they would have to outlay to bring it up to current consumer expectations or standards.

21
Q

P&S: What are the elements of the Estate Agency Act 1979?

A

Regulates the work that estate agency work.

Key elements inc:

-Clarity within the TOE (sole selling or agency rights)
sole or joint agency
-Honesty and accuracy
-Disclosure of conflicts or personal interest - a connected person (section 21)
-agreement on fees and liability
-specify all costs in writing in advance (section 18)
-legal requirement to tell client when offers are received. - Must not misrepresent offers, and must to offer promptly and in writing.
-keep clients money separate

Policed by the National Trading Standards Estate & Letting Agency Team (NTSEAT)

Penalty: Warning, prohibition order or fine.

22
Q

P&S: What other elements of the 1967 Misrepresentation Act?

A

Relates to misrepresentation or a false statement given by a party during pre-contractual enquiries.

-Vendor and agent can be sued for damages
-can be fraudulent, negligent or innocent
-Agent has duty of care to check advice is is reliable

23
Q

P&S Devon: What is included within HOTS?

A

The property
Vendor
purchaser
solicitors details
Sale price
method of sale
tenure
what the sale includes/excludes
subject to contract
conditions
timeline
exclusivity
deposit
costs
Identity checks
Exchange and completion

24
Q

P&S Dorset: What is best bids?

A

Best bids is an informal tender process where on behalf of my client I ask for best and final bids in order to bring the marketing process to a close.

I outlined this within and email which set out the date and mentioned that my client did not have to accept the highest or any offer.

25
Q

P&S Dorset: What were your recommendations to your client?

A

In this instance all the offers were cash and there was a clear and obvious party who’s bid was above the others and over the quoting price.

I recommended my client accept this bid.

26
Q

P&S Dorset: What was the quoting price and why was it a strong area?

A

£500,000

Due to the lack of stock in the area it provided strategic positioning for a potential occupier

8,000 sq ft

27
Q

P&S LV3 Herefordshire: What are the regulations in regards to marketing boards?

A

Planning req for boards over 2sm

must not project more than 1m from the fce of building and not above 4.6m above ground

Planning needed for illuminated signs
-signs on listed buildings

28
Q

P&S Herefordshire LV3: Why did you recommend taking the cash offer?

A

Through understanding my clients requirements I knew that a quick sale was important to them. Therefore I advised that the cash offer was most appropriate in achieving this objective.

Similarly the offer was only slightly less than the STP offer with non of the incumbent risks associated.

29
Q

P&S Herefordshire LV3: What is a subject to planning offer?

A

An offer which is dependant on the approval of amending of a planning permission.

30
Q

P&S Warwickshire LV3: Why were they not marketed as a portfolio to begin with

A

Both properties were placed on the market separately as I was instructed at different times.

They were then not offered as a portfolio as my client wanted to obtain the interest levels on the property on an individual basis.

31
Q

P&S Warwickshire LV3: What are benefits as marketing them as a portfolio? Could your client have achieved a greater total price by selling the lots individually?

A

Would provide a potential purchaser with the opportunity to acquire two assets in Warwickshire which provide trading synergy for an operator.

Also provides economies of scale as a purchaser can spread certain costs across both parks.

Yes - potentially. We still considered offers for the individual properties however due to the downturn in the market the client was more acceptable to potential price cut with selling the lots together as he wished for a quick sale.

32
Q

P&S Herefordshire LV3: What other conditions can be attached to a bid?

A

Subject to valuation if needed for lending to support a purchase.

subject to contract

Subject to due diligence

33
Q

P&S Warwickshire LV3: What are benefits of marketing them openly as opposed to confidentially?

A

There will be a larger buyer pool and I would be able to conduct a wider marketing and PR campaign so potentially more interest would be generated.

34
Q

P&S Warwickshire: What are drawbacks of an open sale?

A

The strength of interest may be poor with a greater amount of timewasters.

Similarly the lack of confidentially will mean the exclusive nature of the site is lost and this therefore may put off some purchasers.

35
Q

What’s the difference between sole selling and sole agency rights?

A

Sole Selling
fee payable if contracts are exchanged in the period in which the rights exist even if purchaser not found by the agent .

Includes purchasers who were introduced by the agent after rights have ended for an agreed period of time. 12 months for Colliers.

Sole Agency
Means fee only if introduced the purchaser. Less advantages for the agent.

36
Q

P&S: please can you talk me through your initial due diligence process?

A

I then liaise with the potential client to obtain the property address, key details and accounting information (if possible). I then undertake a conflict check to ensure I could act for the potential client.

I download the relevant title plans and the planning history to determine lawful use. I also study the site and its location preparing for the initial site visit.

37
Q

P&S: Devon LV2: When you sent a mailout containing details of the property, was there anything in particular you had to consider?

A

I have to ensure that within the mailout includes and opt out option so registered applicants have the option to opt out or contact us to update their requirements.

38
Q

P&S Dorset LV2: If the property had been held on a long-leasehold basis, what effect would this have had on your marketing and prospective sale?

A

That depends on the length of the lease but there usually is a deduction of value and I may need to ask permission of the head landlord to dispose of the leasehold interest.

39
Q

P&S Herefordshire LV3: You mention that you sold a development site in Herefordshire, what was the permitted use of this? Could the site have been used for an alternative use? If so, what would you have recommended to your client that you include within the deal?

A

The use was for 6 holiday lodges for holiday use only within use . Class C in the Town and Country Planning Act 87 and 2021 amendment . No alternative use.

If there where a higher alternative use value I could have advised my client to include an Overage Provision within the deal which would entitle them to a percentage of any uplift in value once they sell.

40
Q

P&S Herefordshire: What would be the risk of proceeding with a financed offer?

A

The risk would be that the potential purchaser does not obtain the appropriate finance in order the proceed with the deal. Similarly this would extend the timescales beyond my clients objective.

41
Q

P&S Herefordshire- What due diligence did you need to carry out after you had accepted the cash bid?

A

I ensured I had acceptable proof of funds from the purchaser and that this covered the amount offered. This was in the form of a bank statement with the vendors name and address on it.

42
Q

P&S: What do the CPR’s and BPR’s prohibit?

A

an agent must not engage in unfair commercial practices by ‘saying, doing or omitting to say or do something which causes, or is likely to cause, the average consumer to take a different transactional decision’ (RICS, 2014). Average consumer is a reasonably well informed person.

Duty of care to potential buyers, viewers/ consumers,

-Giving false/misleading information
-Hiding/failing to provide material information
-Acting aggressively/exerting undue pressure
-treating customers unfairly
-Not acting with sufficient professional skill/care and in good faith

Max penalty an unlimited fine and or prohibition order and up to 2 yrs prison.

Policed by trading standards Office

43
Q

P&S: What are CPSE checks?

A

Commercial Property Standard Enquiries are there to assist the tenant or buyer of a commercial property understand the premises and they therefore are entitled to rely on the information given in the replies; any misleading information you give as the landlord or seller could lead to a misrepresentation claim against you.

44
Q

P&S What is the Caveat ‘Let the buyer beware’?

A

Buyers must satisfy themselves on all matters relating to the property.

45
Q

Explain the VAT position?

A

Specialist advice always recommended.

Paid for the transfer of goods or services.

For a TOGC purchases are not treated as a supply of good and services therefore VAT does not need to be charged.

Is VAT payable on land purchase UK?

VAT does not automatically apply to the purchase of land

46
Q

What are all the details in regards to the industrial sale?

A

Yeovil trade park , 1 acre site

B2 and B8 planning consents

EPC: D

The site comprises two detached warehouses that have
been built around a steel portal frame under a metal sheet
roof with brick and metal clad elevations.

The site has a minimum internal eaves height that ranges
from approximately 2.7m (8ft 8”) to 5m (16ft 4”).

£500,000 qouting price

c. 8,000 sq ft both premises.

APC (22 decks)

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