Auctions are an increasingly popular way of buying and selling property. While there are many advantages, it is not wholly without risk. The unwary can fall foul of legal and financial traps which reduce the return on their investment. Worse case – the buyer is left with land or a property which they are unable to sell or raise finance on.
Viewing the property
You should always try to inspect the property (or land) before the auction, keeping a watchful eye out for:
- occupiers of a property which is marketed as vacant
- additional land used ancillary to the property but not on the title plan e.g. garages or parking spaces
- ability to access property from roads and footpaths.
The Auction Pack
The auction is conducted in accordance with the Common Auction Conditions and Special Conditions of Sale. The auction pack may contain special conditions which vary the common conditions but will always include evidence of the seller’s legal title. You should instruct a solicitor to review the auction pack and alert you to any title deficiencies which could affect the resale of and ability to raise finance on the property in the future.
Legal advice should always be sought before committing to a sale or purchase at auction.
Searches
You should instruct a solicitor to undertake a local authority, drainage, environmental and chancel repair search. All enquiries and investigations should be made before you bid as the contract is binding once the hammer falls.
Insurance
Assuming your bid is successful, you should be prepared to insure the property from the date of the auction.
Exchange of Contracts
Once the hammer falls, you have effectively exchange contracts and you will be required to pay a 10% deposit there and then. You will normally be required to complete the purchase within 28 days of the auction.
