“I’ve bought this property at an auction; would you just have a look at the pack?” – words that make a property lawyer’s heart sink. Why? Because once your client has bought the property at auction, it’s too late to deal with most of the issues that might arise. The auctioneer’s hammer going down is the point at which a contract to buy the property is concluded.
We have had many situations where clients have bought property at auction and discovered problems after the event that would have been picked up earlier if they had asked us to review the auction pack first. Examples include:
- The client who bought a development site, only to discover it didn’t have rights over the apparent access;
- The client who discovered that his bank wouldn’t fund the price he had agreed to pay, putting the £50,000 deposit he had paid at risk;
- The client who bought a leasehold property only to discover that the lease prevented him from using it for the purpose he had bought it for; and
- The client who bought a leasehold property and found there was an undisclosed rent review outstanding, leaving him having to pick up ten years’ worth of rent increase!
Auctions are an increasingly popular way of buying and selling a property. Buying a property (whether commercial or residential) at auction often involves making the purchase at speed and specialist advice should be sought to help you decide whether or not you should bid for it. The legal pack produced by the auctioneers will contain the information your solicitor will need to review, and you should always remember that many properties are put into auctions because they won’t sell any other way or because the seller is hoping that buyers won’t look too closely at them.
Properties that are often sold at auction sales include:
- Unusual properties that are difficult to value;
- Properties requiring renovation work;
- Properties being sold by a mortgagee following repossession;
- Tenanted properties;
- Properties requiring planning consent for their use;
- Properties with hidden problems;
- Properties of low or mixed quality.
Your solicitor will review these documents to uncover any points of concern that may influence your decision to bid for the property at auction or the amount you are prepared to pay for it.