Paul Fursman
Legal
Four things to be aware of before buying a property at auction
It’s important that you look at the property and the area it is located in before making a bid at auction.
Research and investigate the property
We would advise you to arrange a viewing of the property first with the auction agent before making a bid on the property. Be sure to ask questions and check its condition as this will help you find any possible risks or factors which you may want to consider before deciding whether to proceed with your bid.
Read through the auction pack
The particulars will outline all key information you need to be aware of in relation to the property. The special conditions may include conditions which add more fees to be paid to the seller, their solicitor, or the auction agents. These fees can come as a shock to many once they have been successful with an auction bid.
A legal pack will also usually be provided which will outline and provide further information on the property. Each legal pack can vary, but they usually include searches, title deeds and other legal documents which will provide further information on the property and its condition.
Winning the bid
Should you be successful in winning your bid at auction, you will be required to sign the contract and pay a deposit straight away. Auction agents may also be authorised to sign the contract on your behalf should your bid be successful. Once this is done, you have legally exchanged on the contract and will be bound by the terms and conditions attached with the contract. You should also take out buildings insurance on the property from this date. Should you pull out of the purchase after this moment, you could be subject to costs and even lose your deposit.
Using a Solicitor
We recommend you instruct a solicitor to assist you in going through the legal pack as they will be able to inform you of any hidden covenants or loopholes which you will need to be aware of, as they could end up costing you more than you initially thought. Your solicitor will also assist you in the process from winning the bid to completion and ensure the property is registered in your name at the Land Registry.
Shah Al Hoque, Paralegal in our Residential Property team, said:
“Buying a property at auction can allow you to secure a property at a bargain in a timely manner. However it is important to be aware that there are also various possible risks. The property may have a hidden defect or be subject to certain covenants which could affect the property value or how it is used.
The Residential Team at Mullis and Peake LLP have extensive experience with auction properties and can assist you in approaching your auction purchase in a stress-free manner. The team will work to ensure you obtain a better understanding of the purchase of the property, and you are made aware of the legal implications and any risks involved.”