Similar to other auctions, property auctions allow buyers to pursue and bid on properties. Despite this, there is much to think about amongst all the excitement of your potential purchase.
We can help with the complicated legal steps involved in such a purchase.
What is the role of an auction solicitor when buying at auction?
An auction solicitor’s role when buying at auctions is to not only assist with completing the transaction, but their key role is to review the property’s legal auction pack. The legal pack contains various important documents for the property such as evidence that the seller owns the property, specific conditions affecting the sale and searches.
Auction solicitors should identify any title defects (which are issues that may affect the value of the property and prevent it from potentially being sold onwards) from the documents n the pack but also more importantly identify what documents are missing from the pack.
Do you need a solicitor when buying at auction?
Yes, it is incredibly important that you have a solicitor when buying a property at auction. Although many buyers read the auction pack and understand it, even the most experienced of property investors won’t know exactly what to look for in an auction pack if they do not have legal training.
Properties are invariably put into auction because they have a problem which prevents them being sold on the open market. A solicitor acting for the buyer needs to identify what that problem is, whether or not it can be fixed and at what cost.
Some buyers go to auction with the intention of getting a mortgage on completion. However, in these circumstances, buyers need to make sure that there is nothing affecting the property which would prevent a lender from lending money on the property. This is when you would need the expert advice of a solicitor.
When you make a winning bid at auction, on the fall of the auction hammer, you exchange contracts to buy the property. This is a legally binding contract in which you are committed to buy the property.
If you later decide not to buy the property, and fail to complete the transaction, you will:
Lose the deposit that you have paid to the auctioneers; and
Potentially face a claim from the sellers for breach of contract
What is the auction conveyancing process?
Buying a property at an auction is a very different experience to buying a property on the open market. It can be daunting; however, once you’ve done your research and have the assistance of an auction solicitor, it can be rewarding and profitable experience.
Ideally, if everything is done correctly, the process can be as simple as:
You, the buyer, identifying a property in the auction catalogue
Ensuring your finances for the purchases are in order, whether it’s for an agreed mortgage or cash purchase
Your auction solicitor reviewing legal pack to identify any issues with the property.
The auction report being prepared by your solicitor, which will set issues identified in the pack and also what documents are missing. If the seller’s solicitor knows the document will contain an issue, they will usually omit it from the auction pack.
You, as the buyer, reviewing the auction report and from there you can:
Withdraw from the transaction if it’s too risky
Instruct your solicitor to try and rectify title defects, e.g. obtain copies of missing docs or apply for missing consents
Resolve to bid at auction
If you choose to bid at auction, you will either lose out or make the winning bid and proceed to exchange contracts.
If you make a winning bid, you will have a limited amount of time to complete the purchase. The most common period of time is 20 working days, but this can be reduced by the Seller. .
You would then provide funds to your solicitors and completion of the purchase would take place.
What is included in an auction legal pack?
Although the contents of an auction legal pack can vary from auction to auction, there are a few general pieces of documentation that would be included, such as:
Registers and title plans, this should be evidence the seller owns the property
Documents referred to on the title registers
Coal mining report
Water and drainage search
Occupational leases (if any)
Replies to standard enquiries such as Replies to CPSE.1 or a Sellers Property Information Form
Property auction rules and regulations
In an open market property transaction, properties are sold using the Standard Conditions of Sale. Properties in auction however, are generally sold using the Common Auction Conditions. These are conditions specifically designed for auctions.
What to consider when buying property at auction
When you are deciding whether or not to buy a property at an auction, there are a few things you should consider beforehand:
The auction pack
Type of property
Why the property placed auction (rather than sold on the open market)
How long has the property been for sale
How quickly you will need to complete purchase
Will you have funds readily available
Will any additional documents be required (such a third party consents)
What you will be using the property for
What are the risks of buying at auction without a solicitor?
Although there are some pros to buying a property at auction, there are also some risks that you should be aware of before you jump in:
You may lose the deposit you paid if you withdraw from the purchase before completion
You may lose money in a breach of contract claim
You may not get what you were expecting
You might not be able to use the property for the purpose you are intending
The property may be worth less than you thought
You might not be able to get a mortgage on the property
You might not be able to sell the property on
Auction Property Solicitors in Bolton and Bury
At AFG Law, we have a team of highly experienced solicitors who have years of experience dealing with property auctions. We know, as a buyer, you will be looking for a quick turnaround, which is why our knowledgeable and expert solicitors are the perfect choice.
With reasonable and budget friendly tailored fees, we will help you to purchase your dream property without the strain of expensive solicitor fees.
If you are looking to purchase a property at auction, contact us today to see how we can help you.
AFG were recommended to me by the agents selling my property, in the main I dealt with Elizabeth who was ever the professional, dealt with all matters quickly and answered any questions I had promptly. Elizabeth also kept me updated throughout the process for which I was extremely grateful. Thanks also to Dominique for dealing with the conveyancing so quickly , much appreciated. Wouldn’t hesitate to recommend AFG.
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