Introducing Auctions by Auction Conveyancing

Open Market vs Property Auctions: With a normal open market transaction, neither the buyer nor seller is committed to the sale until written contracts are exchanged. So there is a period following the acceptance of the buyer’s offer when investigations will be made as to the seller’s title and making various searches and enquiries about the property. Only when all this has been done, and the buyers are willing and able (in funds) to purchase, will contracts be exchanged and both parties committed to completing the deal.

With auctions however, the fall of the auctioneer’s hammer signifies the legal acceptance of the offer to purchase the property. If it is you who has made the last bid, this therefore means that you have entered into a legally binding agreement that carries the same legal implications as formal exchange of signed contracts within a normal open market sale and purchase transaction.

You are then legally required to complete the purchase, usually within 20 working days of the date of the auction (although sometimes the completion date differs, and this will be set out in the Special Conditions). If you fail to do so, your deposit is at risk.

Equally, for anyone wishing to sell their house quickly, the speed and legally binding nature of an auction transaction also makes the process appealing. Whereas a standard property sale can often take months, with some deals falling through at the last minute, auctions allow for a swift and decisive transaction. However again it is critical to note that, once the hammer falls, the property is sold for the final bid price, there is no pulling out or opportunity for further negotiation.

Here's a breakdown of the legal process to buy and sell a property at auction - https://www.auctionconveyancing.com/auction-legal-process

 

What is in an Auction Legal Pack?

A Legal Pack for property auctions is the documentation that provides potential buyers with information on the legal standing of the asset and Special Conditions of the transaction. It is usually prepared by the seller’s lawyers or solicitors but is occasionally by the seller themselves.

An auction Legal Pack normally includes:

• Official Copy of Register of Title (Office Copy Entry) - in a nutshell, who has owned it and now owns it. Sometimes including the existence of a compulsory purchase order.
• Land Registry and Local Searches - Any outstanding statutory notices, planning decisions, breaches of planning or building regulations and highways, proposals for new road rail schemes.
• Special Conditions of Sale – Legal information outside the Standard Auction Terms and Conditions pertaining to that particular Lot (very important, please see below).
• Property Information Form – Important information provided by the sellers to the buyers, including boundaries, planning and works to the property, guarantees and neighbour disputes.
• Fixtures and Fittings Form – what is going to be left behind when the seller vacates makes it completely clear on what is and isn't included in the sale. Or indeed what the buyer may have to pay extra for.
• There may also be other documentation pertaining to the asset, e.g. Lease Agreement, Tenancy Agreement, Planning Permission Documentation & Management Information Pack.

The Packs are available to download and a hard copy will usually be available in the auction room too. Prior to the auction, it is also worth checking if there has been an Addendum, which is information that may have changed to the Lot/Pack since the time of original distribution.

Find out what to look out for in an Auction Legal Pack - https://www.auctionconveyancing.com/auction-legal-packs-and-special-conditions

 

What to look out for in the Auction Special Conditions of Sale

The auction Special Conditions of Sale detail those conditions that are supplementary to the standard auction Terms and Conditions for that particular Lot. These include the decisive Completion schedule or date, specific clauses or costs you may incur upon Completion, e.g. vendor’s legal costs, or during the course of your ownership, e.g. overage rights.

Two key considerations for potential auction buyers when reviewing the Special Conditions of Sale should be:

1. When is the Completion date?
   1. Can I meet the schedule?
   2. Can my solicitor/lawyer work to the schedule?
   3. Will my finance be in place in time?
   4. Does it work to work to my advantage or disadvantage?
2. Are there any extra costs or charges?
   1. Now and in the future?
   2. Are these included in my overall calculations?
   3. Will it impact on future value or saleability?

Auction Special Conditions used to be somewhat dressed up with unnecessary complex ‘legal terminology’ but these days most Special Conditions are drawn up clearly to help potential buyers understand what they are buying. That said, if you’re struggling with any terms have a look at auctionconveyancing.com/auction-terminology or let us know.

Need to know more, try https://www.auctionconveyancing.com/auction-faqs or if you have any questions, just ask - https://www.auctionconveyancing.com/contact

 

Blog Disclaimer: UK Auction List is not responsible or liable for anything shared on our site by third parties, or anything, including the accuracy of the information, on sites that we link to - in this instance Auction Conveyancing at Taylor Rose MW Ltd. We advise to always undertake your own due diligence.