What are the key legal considerations when buying a property at auction?
Many auction properties sell for a much lower amount than they might normally expect to achieve on the open market. Whilst this means that buying at auction can lead to getting a good deal on a property, there is a risk as there will be reasons behind a seller choosing to sell in this way.
There are many legitimate reasons that a seller would want to sell at auction – they may be in financial circumstances that mean that they need the money more quickly.
However, it is equally possible that the seller has already tried to sell the property on the open market and been unable to do so. This could be because the property carries a lesser grade of title at Land Registry – it may only be registered with possessory rather than absolute title. With flats, they could be difficult to sell if they are freehold flats or have a very short lease.
Whichever method the auction proceeds on, there is an element of commitment from the buyer from the moment that their bid is accepted. In the traditional method of auction, contracts are deemed to have been exchanged at the point that the hammer falls and the buyer is obliged to pay a 10% deposit at that time and to complete, normally, within 28 days. The modern auction method is different in that a lower deposit is paid and exchange does not take place at the time of the auction. However, there is still an obligation to exchange within 28 days of that. As such, buyers frequently do not have time to fully check the Property by the time their bid is accepted.
For this reason, I would always strongly recommend to anyone looking to buy at auction that they arrange for a Solicitor to check the Auction Pack in advance. Although this might incur a fee to the buyer, it might also give them the chance to save money in the long run by making sure that if they do offer on a property that they do so having the full facts in advance.
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