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Harry Penman APC > Purchase and Sale L1 > Flashcards

Purchase and Sale L1 Flashcards

1
Q

Tell me about the legal processes to complete a purchase/sale.

A
  • Memorandum of sale
  • Solicitors instructed.
  • CPSE replies by Vendor.
  • Vendors solicitor sends contract package.
  • Responds with inquiries.
  • Any additional report obtained (survey, valuation, environmental)
  • Finalize contract & transfer deed.
  • Purchaser solicitor reports with any concerns (Report on Title).
  • Sign contracts & send deposit.
  • Contracts exchanged.
  • Pre-completion searches by purchaser’s solicitor.
  • Completion:
  • Post-completion: SDLT return filed, transfer & charge registered
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2
Q

Tell me about your understanding of legislation relevant to your agency practice.

A

Estate Agents Act 1979
Misrepresentations Act 1967
CPR’s and BPR’s 2008
Bribery Act 2010
Money Laundering and Terrorist Financing and Transfer of Funds Regulations 2017

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3
Q

What 3 things do you need to make a contract?

A

Offer, Acceptance, Consideration also intent to create binding relationship.

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4
Q

Can a verbal contract be legally binding?

A

Yes, but would be harder to prove and more unusual.

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5
Q

What is capacity in relation to contract law?

A

The people signing the contract have to have the capacity to sign, ie sufficient authority or be of sound mind or a child for example.

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6
Q

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

A

Yes. Law of Property (Miscellaneous Provisions) Act 1989

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7
Q

Tell me about key points of the Consumer Protection / Business Protection Regulations.

A

To protect the consumer be they business or public. To protect them from
- Provides consumer protection from unfair or misleading trading
practices, misleading omissions, and aggressive sales tactics.
- Requires estate agents to use care when using general descriptions
relating to location, environment, photographs, measurements,
parking, and pricing.
- Prohibits the use of misleading advertising and regulates
comparative advertising.
- If not in compliance consequences can be civil or criminal, 2 years
prison on unlimited fine.

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8
Q

Tell me about supply and demand in a property market you are familiar with.

A

Broadway - very strong demand, low supply, very low vacancy rates drives yields down to almost residential levels 4.5%

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9
Q

Tell me about government incentives which impact demand in relation to your purchase & sale work.

A

Tax benefits associated with investing in commercial property within a SIPP has strong influence on demand.
Small Business rates relief.

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10
Q

What are current SDLT levels for commercial property?

A

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%

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11
Q

What is SDLT?

A

Stamp duty land duty paid on the transfer of interest in property and land

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12
Q

What are the different types of interest in land?

A

Leasehold, Freehold, Common Hold, licence, restrictive covenant, easement.

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13
Q

What is the difference between freehold and leasehold?

A

One is for a term defined the other is in perpetuity.

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14
Q

What are profits a prendre?

A

A profit a prendre is a right to take something from another person’s land.

This could be part of the land itself, such as peat; something growing on it, such as timber or grass (which can be taken by the grazing of animals); or wildlife killed on it, for example by shooting or fishing.

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15
Q

What are rentcharges

A

Victorian method of developer taking on the land at no cost in favor of burdening all freeholders of the subsequent houses to pay a nominal amount to the rentcharge holder in perpetuity. Typically £10 a year or so. Very tricky to get rid of and can make property unmortgagable.

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16
Q

What legislation relates to rentcharges?

A

1977 Rentcharge Act

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17
Q

What are the implications if a rentcharge is not paid in full?

A

Fall into arrears and cannot be relinquished until arrears are paid and negotiated settlement out of the condition.

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18
Q

What is an example of an equitable interest in land?

A

Equitable interest in land is the money that a legal owner, joint owner, or non-legal owner is entitled to from a sale of the property.

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19
Q

What is an example of a legal interest in land?

A

Easement or restrictive covenant.

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20
Q

Why would you use online marketing for a purchase/sale transaction?

A

To cover as broad a market as posible to those interested in buying that type of property.

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21
Q

Why would you use a marketing board for a purchase/sale transaction?

A

To attract local interest and possibly people that are not necessarily searching for property but would be interested

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22
Q

Tell me about an information pack you have prepared for a purchase/sale transaction.

A

Parklands House. We supported the process of preparing the information pack for the sale.

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23
Q

Tell me about CPSEs and the sale process.

A

Commercial Properties Standard enquiries - a very long list of questions to the owner of the property asking them to disclose the details of their ownership and history at the property including disputes, title, costs insurance etc .

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24
Q

What is a Memorandum of Sale?

A

The headline terms of sale agreed and the details of buyer and seller to be sent to solicitors once negotiations on sale have concluded.

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25
Q

Talk me through the legislative/regulatory requirements relating to auctions.

A

Auctions (Bidding Agreements) Acts 1927 & 1969:
These acts make it illegal for a dealer in an auction to give inducements or rewards to someone to abstain from bidding, and for that person to accept such an offer. This ensures a fair and competitive bidding environment.

26
Q

Talk me through the auction process.

A

Agree terms
Agreed Guide price for auction
Set date for auction
List the property for sale by auction
Prepare contract pack for sale
Distribute pack to all interested parties
Register interested parties and proof of funds and AML
Auction and bidding
Exchange contracts on the night and pay deposit
Complete typically within 28 days

27
Q

When is an auction sale legally binding?

A

Fall of the hammer.

28
Q

What due diligence should be carried out pre-auction?

A

Everything, there is no opportunity to reevaluate following the auction.

29
Q

What are the advantages/disadvantages of buying/selling at auction?

A

Speedy transaction
Competitive bidding drives best possible price
No possibility of renegotiation after auction.
Seen as transparent

Off putting for some people
Pressures the process of sale.

30
Q

What are the RICS Common Auction conditions?

A
  • a glossary of defined terms (compulsory)
  • auction conduct conditions, which cannot be disapplied or changed without the auctioneer’s consent (compulsory)
  • general conditions of sale (compulsory)
  • any ‘extra’ general conditions that the auctioneer requires (optional)
    IP7
    Auctioneers selling real estate (incorporating Common Auction Conditions)
  • special conditions of sale provided by the seller’s conveyancer (recommended)
  • any addendum (usually announced at the auction itself) (optional)
  • a form of sale memorandum (compulsory).
31
Q

What are the RICS Common Auction conditions?

A

The RICS Common Auction Conditions are standardised terms set by RICS for property auctions in the UK, covering contract formation, conduct, payment, title, and dispute resolution to ensure fair and transparent auctions for buyers and sellers

32
Q

What are the key principles?

A

The key principles of the RICS Common Auction Conditions include:

Fairness and Transparency: Ensuring all parties have clear and equal access to information and processes.

Contract Formation: Defining when a contract is formed during the auction.

Conduct of Auction: Outlining how auctions should be run, including bidding procedures and the role of the auctioneer.

Payment and Completion: Specifying timelines and requirements for completing the sale and making payment.

Title and Tenure: Clarifying the seller’s obligations regarding the property’s title and tenure information.

Guide and Reserve Prices: Setting expectations for bidding with guide and reserve prices.

Special Conditions: Allowing for additional terms specific to a property or auction.

Dispute Resolution: Providing methods for handling disputes between buyer and seller.

33
Q

Under these, when is completion set for?

A

28 Days (20 working days)

34
Q

How do you find out about an auction property?

A

Online via the agent or Essential Information Group

35
Q

Under these, when is completion set for?

A

28 days or the time defined by the vendor.

36
Q

Should you view an auction property before buying?

A

Yes, always

37
Q

What is/are an Important Notice to Bidders/Memorandum of Sales/general conditions of sale?

A

Important Notice: anything that crops up during sale that bidders must be aware of.
Memorandum of Sale: A preliminary document outlining the agreed-upon sale details.
General Conditions: The comprehensive set of rules for the entire buying process.

38
Q

What would the legal pack contain?

A

Special Conditions
Land Registry Official Copies (Title Deed)
Land Registry Title Plan
Official Copy Deeds and Documents
Conveyancing Searches
Energy Performance Certificate (EPC)
Replies to Enquiries
Property Information Form
Fixture & Contents Form
CPSE’s
Asbestos Survey
EICR

39
Q

What might be a special condition of sale?

A

Conditions that are specific to the sale of one property rather than the auction generally. This might include things included in the sale fixtures fittings chattels.

40
Q

What is a guide price?
What is a reserve price?

A

The marketing guide price as a steer to purchasers.
The reserve is the amount below which the auctioneer will not sell the property it can be disclosed or undisclosed but must be within 10% of the last published guide price.

41
Q

Which of these are confidential?

A

Reserve unless the vendor chooses to disclose.

42
Q

What is an addendum?

A

A change to the lot after the catalog has been published.

43
Q

What fees are typical for an auctioneer?

A

2%+ +VAT

44
Q

Can you sell a property before or after auction?

A

Yes

45
Q

How does finance work for auctions?

A

Finance must be in place before the sale.

46
Q

What deposit is typically payable and when.

A

Uusally 10% and payable on fall of hammer.

47
Q

How can you bid at auction?

A

In the room
Telephone by prior agreement
Proxy

48
Q

What is a proxy bid?

A

Someone biding on behalf of and with authority of another.

49
Q

When is insurance required for in relation to an auction purchase?

A

We recomend that a building is insured from the following day.

50
Q

Is VAT payable on auction properties?

A

Yes if registered

51
Q

What are the key principles of RICS Professional Standard Auctioneers Selling Real Estate (6th Edition)?

A

????????????

52
Q

What are the EPC requirements at auction?

A

Same

53
Q

Do you have to check anything in relation to an auction venue?

A

Yes, you should check that the venue is fit for purpose. where including the local pub.

54
Q

What does the Sale of Land by Auction Act 1867 say?

A
55
Q

How are arrears dealt with in relation to auction properties?

A

Make sure that the sale proceeds exceed the outstanding debt on the property.

56
Q

What should be included in auction particulars?

A

Also the property can be sold prior to auction

57
Q

What is the power to sell?

A

The Sale of Land by Auction Act 1867 is an Act of the Parliament of the United Kingdom. It outlines certain procedures and requirements that must be followed during the sale of land by auction. The Act contains provisions regarding the following aspects of land sales:

Auction terms: The Act specifies that the particulars and conditions of sale must be made available for inspection before the auction. This allows potential bidders to understand the terms and conditions associated with the sale.

Advertisement: The Act requires that the sale must be properly advertised, including specifying when and where the auction will take place. This ensures that potential bidders have sufficient notice of the auction.

Deposits: It covers the requirements for deposits made by the purchaser at the auction. The Act requires that any such deposit should be treated as part payment for the purchase of the land.
Withdrawal of lots: It addresses the rules for withdrawing lots from sale. If lots are to be withdrawn, the seller must do so in a manner consistent with the law.

Acceptance of bids: The Act specifies that the auctioneer must accept bids from any person who wishes to bid, as long as they comply with the auction’s terms and conditions.

58
Q

Why are POA listings unlawful?

A

The conclusions from NTSELAT said: “Our view is that ‘POA’ or ‘price on application’ in relation to a property listing, whether on a property portal or an agent website or similar is likely to be misleading as it is withholding or in some cases masking the asking price from consumers.

Likely to constitute a misleading omission.

59
Q

What key changes were introduced in respect of this competency by the Charities Act 2022?

A

The Act makes a number of changes to the regime for disposing of charity land, and in particular the requirement to obtain advice in relation to a proposed disposal.

The Act introduces additional flexibility in terms of who can provide advice, what the advice should cover, and the requirement to advertise.

60
Q

Give me an overview of leasehold reform in the uk?

A

G

61
Q

Give me an overview of current leasehold reform proposals in the UK?

A

Harry Penman APC (34 decks)

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