Buying property at auction can be perilous – instructing a solicitor is a sensible first step
Property buyers looking for a bargain can find themselves drawn to auctions in search of discounts against market value of 20 per cent – after all, who does not like to feel they are getting a bargain? But unfortunately, in many cases, it turns out that there are plenty of things not to like and the old cliché that speaks to getting what you pay for can hold true when purchasing a dwelling at auction. In short, if a property appears to be on sale at a knock-down bargain price, there is probably an underlying reason.
Under UK law a purchaser at auction is contractually bound to pay 10 per cent of the bid price immediately their bid is successful; the balance is due for payment within 28 days. Furthermore, as soon as the auctioneer’s hammer falls the buyer is liable for all damage to the building they have just bought.
So what actions should you take if you are keen to purchase a property at auction? Your first move should be to instruct a solicitor to consider the property’s auction pack on your behalf. The property might suffer from lack of basic rights, or from onerous or unusual covenants that could prevent the purchaser from undertaking alterations or making specific use of the property. The auction pack should also include the results of a local search highlighting any previous alterations or extensions to the property and showing whether all the requisite local authority consents were in place. If the property you are considering is less than ten years old, your solicitor should also check whether it benefits from a structural warranty to meet your mortgage lender’s requirements.
However, many auction packs do not include a property survey and, although you may be tempted to avoid as many additional costs as possible, a survey is essential to ascertain the structural condition or development potential of a dwelling before you buy.
There are other points to consider, too. For example, if you are relying on a mortgage to help fund your auction purchase, you would be wise to make sure your mortgage application can be processed in time to meet the 28-day purchase completion deadline.
For more information on property law and buying at auction, or for advice and support from our specialist residential conveyancing team, contact us on 01243 786668 or email us at firstname.lastname@example.org.
General, George Ide, News, Residential Property Conveyancing