Purchase and Sale

What is the ultimate goal of purchase and sale?

Securing the highest price for sale

What must terms of engagement cover?

• Basis of agency instruction (sole or joint)

• Rights of the agency (sole selling rights or ready-willing-and-able purchaser)

• Proposed fee

• Marketing expenses and disbursements

• Confirmation of no conflicts of interest

• Money laundering checks (Money Laundering Regulations 2017)

• Timetable for payment of fees and disbursements

• Details of the firm's complaints handling procedure

Which act governs estate agency?

The Estate Agents Act 1979

Applies to all interests in freehold or leasehold property - sale or lease, land or property, including auction - with a combination of criminal and civil penalties

• Section 18 is pre-contract information

  • In writing, before entering an agency contract:

    • When the client becomes liable to pay remuneration

    • The amount of that remuneration

    • What does not form part of it (e.g. marketing expenses)

    • Nature of instruction (sole vs joint agency)

• Section 21 is personal interests

  • Requires declaration in writing of any personal interest or connected party - reaching as far as current or former partner, relative or employee

  • Must be stated on the sales particulars and in HOTs

What is misrepresentation and which act governs it?

The Misrepresentation Act 1967

Misrepresentation is defined as a false statement of fact made during pre-contractual negotiations that has the effect of inducing the other party to purchase. The agent can be sued for damages and/or the contract rescinded.

Which act governs unfair commercial practice and what are the two categories?

CMA207 under the Digital Markets, Competition and Consumers Act 2024 (DMCC Act 2024)

• Category A - always unfair (Per Se Forbidden) - prohibited outright

  • One of the 32 banned commercial practices listed in Schedule 20 (e.g. fake reviews, selling illegal goods)

  • Omitting material information in an invitation to purchase (e.g. failing to disclose mandatory fees - drip pricing)

  • Promoting unfair practices within code of conduct

• Category B - potentially unfair (by likely effect) - if likely to cause the average consumer to make a different transactional decision

  • Misleading actions - providing false or deceptive information

  • Misleading omissions - omitting legally required or material information

  • Aggressive practices - harassment, coercion or undue influence

  • Breach of professional diligence - a lack of honest, transparent handling or care

What are the enforcement powers under the DMCC Act 2024?

Higher of 10% of global turnover or £300,000 - whichever is higher

Fines may be reduced for mitigation or early resolution

What are the four bases of agency instruction?

• Sole agency:

  • Remuneration payable if unconditional contracts exchange during sole agency period

  • Purchaser must have been introduced by agent or negotiated with agent during that period

  • No fee if vendor sells property themselves

  • Agent can still be paid if party introduced during period exchanges after the period expires

• Sole selling right:

  • Remuneration payable if unconditional contracts exchange during period agent holds sole selling rights

  • Applies even if purchaser was not found by agent

  • Doesn't matter who introduces buyer

• Ready, willing and able

  • Applies if the client withdraws at point of exchange

  • If purchaser was ready, willing and able, agent should still receive fee

  • Can also include abortive fees where client pulls out

• Multiple agency

  • A number of agents are instructed to sell same property

  • Only agency that introduces purchaser who proceeds to exchange may submit a fee account

What is an EPC and when is it required?

An EPC contains information about a property's energy use and typical costs plus recommendations to reduce both, giving a rating from A-G valid for 10 years

EPC required whenever a property is built, sold or rented and must be obtained before marketing commences

What are the four methods of sale?

• Private treaty

• Informal tender

• Formal tender

• Auction

Which regulations govern board display?

Town and Country Planning (control of Advertisements) Regulations 2007 in England (the 1992 regulations, as amended in 2017, continue to apply in Wales)