Friday, August 1st, 2008
Estate agents must do more for their money than simply show a potential purchaser around a property, following a recent decision of the Court of Appeal.
When a Mrs Bicknell signed a standard sole-agency agreement with Foxtons Ltd. to sell her £1.4 million home, she agreed, among other things, to pay the agency 2.5 per cent of the sale price if contracts were exchanged ‘with a purchaser introduced by us Foxtons’.
In June 2005, Foxtons showed a Mr and Mrs Low around the house three times but, after initially showing interest in the property, the couple took no further action. In July, Mrs Bicknell ended the sole agency arrangement and agreed a multiple agency deal with Foxtons at 3 per cent commission.
She then appointed a second firm, Hamptons International, at a 2.25 per cent commission rate. In October, Hamptons spoke to the Lows and persuaded them to view the house again, eventually securing an offer of £1.15 million for the property. The offer was accepted and the purchase was completed in January 2006.
Hamptons duly submitted an invoice for their commission and received payment. When Foxtons learned of the sale, however, they also sought to be paid a commission. When payment was refused, they commenced court proceedings. The lower court decided in favour of Foxtons on the basis that the Lows were a purchaser introduced by Foxtons and this alone was sufficient to secure their right to a commission.
On appeal, the question of the meaning of ‘a purchaser introduced by us’ was again raised. The Court of Appeal held that in order to charge commission, an agent must be the effective cause of the sale. Simply introducing a property to a person who eventually becomes the purchaser is not sufficient.
Had the reverse been true, Mrs Bicknell would have been in the unusual position of having to pay two agencies a commission for the same sale. Mrs Bicknell was not required to pay Foxtons for their initial, unsuccessful, introduction.
Wednesday, July 16th, 2008
Easements and Covenants – Changes to the Law Proposed
The law relating to covenants, easements and ‘profits à prendre’ over land is a relatively complex area given that such rights are common – the Land Registry has suggested that nearly two thirds of properties have some sort of easement over them and nearly 80 per cent have a covenant of some sort.
An easement is a right enjoyed by one landowner over the land of another. A positive easement (such as a right of way) is a right to go onto or make use of something in or on a neighbour’s land. A negative easement is essentially a right to receive something (such as light or support) from the land of another without obstruction or interference.
Covenants are promises made with regard to land (i.e. not to allow it to be used for stated purposes).
Profits à prendre allow the holder the right to remove products of natural growth from another’s land. Shooting and fishing rights come under this category.
The Law Commission has stepped in to reform the current system by proposing a simpler system for dealing with covenants and easements. It has issued a consultation paper which aims to remove anomalies and complications in the law. However, the proposed changes are limited to private law rights and will not deal with rights available to the public at large, such as rights of way, or with covenants between landlords and their tenants.
For more information and advice and guidance on all propertry matters contact a member of our property team
Wednesday, July 9th, 2008
With the advent of Home Information Packs (HIPs), the appointment of an Ombudsman for Estate Agents (OEA), the laying down in statute of the duties of estate agents and the recent passing of the Consumers, Estate Agents and Redress Act 2007 (CEARA), a property purchaser might reasonably conclude that their interests are strongly protected under the law. This view is likely to be bolstered by an awareness of the existence of the National Association of Estate Agents’ (NAEA) own disciplinary and redress scheme. However, the assumption that a buyer’s interests are well protected is not as well founded as you might think.
The main function of the HIP is to collect information (searches, title details and so on) about the property and its energy efficiency. It is supplied by a provider independent of the owner of the property. The rights of the property purchaser are primarily protected by making the HIP provider carry insurance to meet claims for losses suffered by buyers as a result of incorrect HIP content.
The estate agent’s main duty is to the vendor of the property, so the regulations under which they operate relate mainly to their relationship with the vendor. They are bound not to discriminate against purchasers who do not wish to buy other services they offer and to declare a personal interest to any buyer. It is important to note that even when the sales particulars of a property are inaccurate, the right of redress may be limited. Recently, the court ruled that an agent was not liable for providing false information to the effect that a property included a substantial area of land which was not in fact registered in the vendor’s name. The estate agent had simply accepted without enquiry that the area of land was part of the property and included it in the sale particulars. The court considered that any purchaser would have made sure that a proper search of the title was done and in any event the offer for sale was ‘subject to contract’ – placing the onus on the purchaser to make sure their enquiries were carried out carefully!
The Ombudsman service deals with claims against estate agents, but its powers are limited and the maximum award that can be made is £25,000. In practice, most awards are a small fraction of that amount. Members of the NAEA must belong to the OEA redress scheme.
Whilst the CEARA requires estate agents to belong to an approved redress scheme, the tendering process for operation of the scheme has not yet been completed and it is not expected to be fully implemented until October 2008. The relevant section of the Act itself mainly relates to record keeping and inspection of records issues and the grounds under which estate agents can be warned or banned. There is no specific mechanism for compensating consumers.
We can assist in all property matters and disputes arising from property and other transactions.
Contact a member of our property team for more advice and guidance.
Tuesday, November 27th, 2007
WHAT IS AN LPA?
An LPA is a legal form which allows a person (donor) to choose someone else to manage their affairs for them. The person chosen is known as an attorney. They have replaced enduring powers of attorney or EPAs.
Under an LPA the person who is chosen to be an attorney can be a friend, relative or a professional person. The donor will decide who that person will be, and exactly how much power the attorney should have over his or her affairs. More than one person can be chosen to act as an attorney on the donor’s behalf.
The donor must have capacity to execute the LPA at the time it was created. This means they must be able to understand what it is that they are signing, and what it means. An LPA can only be used once it has been registered with the Office of the Public Guardian.
There are two types of LPA:
1 An LPA that grants authority in relation to a person’s property and affairs.
This type of LPA may, for example, allow a donor to choose someone they trust to make decisions about how their money is spent and the way their property and affairs are managed. The attorney could be able to pay the donor’s bills, sell their property or investments and make limited gifts on the donor’s behalf.
With this type of LPA, the donor can specify that the attorney should only start managing their financial affairs after the donor lacks capacity, sometime in the future. If they do not specify this, the attorney can start using the LPA after it is registered, but while the donor still has capacity. All attorneys are under a duty to act in the donor’s best interests.
2 An LPA that grants authority in relation to the donor’s personal welfare.
This type of LPA allows the donor to choose a person to make decisions about the donor’s personal healthcare and welfare and medical treatment, when they are unable to do so themselves. The donor can even choose to give the attorney the power to give or refuse consent to treatment on the donor’s behalf, but the attorney cannot make decisions about life-sustaining treatment unless the donor specifically permits this in the LPA.
The attorney may also be given the power to make decisions as to the donor’s diet, where they live and how they spend their time. These decisions can only be taken on behalf of the donor when he or she loses capacity, or the attorney reasonably believes that the donor has lost capacity, and after the LPA has been registered.
Whenever an attorney makes a decision under any of the two types of LPA, by law they must act in the best interests of the donor who has given them the power. Under the Personal Welfare type of LPA, the attorney must consider whether the donor has capacity to make the decision themselves. Only after having considered this, can the attorney make a decision on behalf of the donor.
The donor may appoint the same attorneys under both types of LPA, or different attorneys under each type of LPA. If different attorneys are appointed under each type of LPA, they may need to act together on some decisions. For example, the decision about where the donor lives should be taken by the attorneys under the personal welfare LPA. This may involve selling the donor’s property, which is a decision for the attorneys under the property and affairs LPA.
It is the decision of the donor how much power is given to the attorney. They might decide that they want an attorney to make welfare decisions about their care but not make medical decisions on their behalf.
HOW CAN I MAKE AN LPA?
If you are the sort of person who is confident about undertaking legal matters yourself then you can complete the process. You will need to complete an application form. There are two types of form, one for each type of LPA. If you want to create two LPAs, one for your property and affairs and another for your personal welfare, then you will need to complete two separate forms. The forms are quite lengthy.
To complete an LPA you must be able to understand what it means and seeks to do for you. To check this and to prevent fraud, you will need to provide a certificate, which is part of the LPA form. The certificate must be signed by an independent person stating that you fully understand what is involved in making the LPA, what it will mean to have one in place and that no fraud or undue pressure is being used by somebody to make you create the LPA. We can arrange for this certification process to be completed for you.
After you have completed your part of the application form, and the certificate provider has signed their part, then your attorney(s) and any replacement attorneys must also complete a statement. The duties being imposed on them must be explained to them, and they will then sign to confirm that they understand and accept them.
After we have completed the form and the certificate, the LPA must be registered with the Office of the Public Guardian before it can be used. There will be a fee for registration to the Office of the Public Guardian and a fee to whoever deals with the registration. We are able to deal with the registration formalities for you.
Once registered, a property and affairs LPA can be used straightaway, while the donor is still able to manage their own affairs, if that is required. However, a personal welfare LPA cannot be used until the donor has lost capacity. As the registration process will take between 5 and 6 weeks, and an attorney would not be able to act until after registration, clearly it is important for this type of LPA to be registered straight away.
On the application form you will be able to choose up to 5 people who you would like to be notified when an application to register the LPA is made. These will be people, other than the attorney, that you trust and know well, and who will be interested in your well-being. You do not have to choose members of your family, it is up to you.
You do not have to choose 5 people, or even any people at all, if you do not wish anyone to be notified when an application to register the LPA is made. However, if you do nominate some people who you would like to be notified, you should make these people aware that they have been nominated, as they act as an important safeguard. You will rely on those people to act and raise any concerns they may have, when they are notified that an application to the register has taken place.
How can we help?
If you would rather have someone guide you through the process then contact us. We specialise in deal with the legal affiars of families and especially looking after elderly or vulnerable clients and planning for that eventuality.
If you have completed the forms and need the certification process dealt with or registration then we can help.
Contact Sue Bedwell who specialises in care for the elderly or Maria Turner who specialises in Wills and Probate and let them help you - from guidance on the forms through to a complete home visiting service.
Tuesday, November 27th, 2007
Chancellor Darling’s pre-budget statement on inheritance tax may have spelled the end of the nil rate band discretionary trusts in wills but did it spell the end of all inheritance tax planning? Inevitably not.
Families whose total asets are less than or around the £600,000 mark can now concentrate of getting their Wills right from a family perpective, without focusing on inheritance tax - and unless you are single and penniless you need a Will. Couples with young children, co-habiting couples, individuals with families or friends with special needs, owners of property abroad need Wills as indeed does anyone who has some assets and is unhappy about leaving it the the 1925 Administration of Estates Act to decide who gets what. Under those rules if you die without a will leaving a spouse or civil partner and children then the surviving spouse or civil partner will only receive £125,000 outright.
For those whose total family assets exceed £1million, and with local property values, pension and death in service benefits a surprising number of people are included then you need a Will and you need to look at inheritance tax. An estate of £1.25 million even after 2 tax free allowances will still pay £300,000 of tax to the Revenue. If you are comfortable with that then fine. If not you need to talk to Ed Walter to see what can be done. Between now and Christmas he will provide you with a free diagnostic interview of up to 30 mins without obligation.
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