Jake looks at some of the legal aspects you should consider when buying an auction property.
Property auctions can be an easy way for a seller to sell a property and for potential buyers to get a bargain. But auction purchases can cause very real and costly problems. There is always a risk there’s something hidden in the legal pack that could cost a lot of money to set right. There are several ways in which problems can arise, therefore it is vital to seek legal advice well in advance of an auction purchase.
Potential examples of property auction problems
Auction properties may be misrepresented. We recently saw a situation where the seller presented himself as the owner, when in fact he had not yet acquired title to the property he was seeking to sell. It is very possible a buyer may successfully bid, pay a deposit and later discover a defect in the title – such as this situation. Also, there is no legal duty on the seller to disclose any title defects or make any more than bland comments in the auction pack. The buyer is deemed to have knowledge of the property, including any knowledge of problems.
The contractual terms have not been negotiated. It may be common for the property to be auctioned on a ‘take it or leave it’ basis. This may expose the buyer to a one-sided purchase where they bear all risk, and the costs, from the seller. This is very important if the seller attempts to exclude or limit liability for property problems.
There may be the inclusion of out-of-date searches in the auction pack, which do not reflect the true position of the property at the date of the auction and require an up to date search – incurring more costs on the buyer.
Even when it seems there is an agreement, risks may also arise after the contract is exchanged. There is no obligation on a seller of an auction property to volunteer further information to a buyer, or to assist the buyer once the contract is exchanged. It is expected that the buyer takes the necessary steps to check the suitability of what they are purchasing – but this is even more crucial in an auction purchase.
Importance of taking legal advice when buying a property
Often purchasers may not take legal advice on the auction purchase – it is crucial to get legal advice as this can reduce the risk of costly errors. Given enough time to do so, solicitors can review the auction pack information and point out any potential title defects. Moreover, any searches on the property should be checked carefully by a solicitor.
As well as the auction pack, solicitors can check the contractual terms which may give rise to issues if the property is purchased. This also allows any missing information to be pointed out and any potential problems revealed at the outset.
Don’t go into auction without being aware of the possible risks. We are ready to provide advice to ensure you are ready on auction day and don’t make a purchase you regret. Please give Bell & Buxton a call to discuss on 0114 249 5969.
