Buying at auction - the legal facts
PUBLISHED: 10:12 12 October 2018 | UPDATED: 10:12 12 October 2018
As everyone will probably know, when the hammer falls at an auction, you have successfully bought what you bid for. It’s yours. If it’s a car or a piece of furniture, you have probably had a good look over it first, noticed any defects and taken these into account before bidding. But what if it’s a property? Ian Taylor, from Spire solicitors, discusses.
The principle is exactly the same - you should be fully aware of all the potential pitfalls and any defects well before attending the auction, even more so since, although not always the case, properties are sometimes in an auction because they are difficult to sell or to value on the open market.
The seller’s “Auction Pack” should include all the paperwork normally involved in buying a house or land, including the title and property information forms. These form part of the binding contract and should be inspected by your solicitor before the auction takes place, any defects identified and advice sought. The pack should include searches and the contract will provide that you reimburse the seller on completion for the cost of those searches.
Once the hammer falls, the contract is complete and you must pay a 10 per cent deposit to the auctioneer and any buyer’s premium or other fees. The purchase must be completed on a fixed date, normally 28 days from the date of the auction. You must therefore ensure that you have all necessary finance available, in addition to the deposit.
After the auction, you have no right to ask the seller for any more information. If you have not had the Auction Pack inspected by your solicitor before the auction, you may find important things are either missing or incomplete, such that you might not have bought the property if you had been aware. At worst, you may not be able to get a mortgage for the purchase if the solicitor cannot give the lender a clear certificate of title. In the same way, you have no comeback on the seller for defects in a building which might have been discovered by a surveyor.
If you cannot complete your purchase, the seller is entitled to give you 14 days’ notice to complete. During that time you must pay the seller interest on the balance of the purchase money until completion takes place. If completion does not take place, you will forfeit the deposit paid at auction and any costs incurred.
Whether it is your first home or you are a seasoned property investor, never buy property at auction without a solicitor’s advice beforehand. If something looks too good to be true, it probably is - buyer beware!
If you would like to discuss any points in this article further, please contact Spire Solicitors LLP on 01603 677077 for all your legal needs.
Spire Solicitors has sponsored this column.
If you value what this story gives you, please consider supporting the Eastern Daily Press. Click the link in the orange box below for details.