We would advise any one purchasing a property at auction to be very cautious.
We are aware of several circumstances where people have successfully bid for a property at auction and the auction gravel have been knocked down to them. We would like to highlight the following risks when buying a property at auction:
1. When the gravel is knocked down to a successful purchaser it is a binding exchange of contacts. Your solicitor cannot make any enquiries as to the property once you have exchanged.
2. You will not have chance to get the property surveyed in most circumstances and we would always advise a full structural survey.
3. In auction contracts there are usually provisions in the contracts to catch the un-wary such as clauses obliging you to pay the sellers legal costs, to redeem outstanding arrears of service charges and to pay the seller an uplift in the purchase price in years to come in the event successful planning is granted, this is sometimes called a planning clawback clause.
4. Normally you only have 28 days and sometimes less to complete from the day of the auction.
How can you avoid pitfalls when purchasing a property by auction:
1. If you are going to make a bid, make sure you have spoke to your accountant to find out in which vehicle you should purchase the property, i.e. either an individual name or company name.
2. You should speak to your bank to ensure that you have an offer in principle from them should you be successful at the auction and that they have confirmed to you that they can hit the completion deadline.
3. You should contact us prior to going to the auction and ask us to prepare a pre-auction report on title for you. This will tell you if the property is good and marketable and we will also cover off any issues such as uncommon conditions in the contract for sale. We can also raise enquiries with the vendors solicitors prior to the auction.
4. We would advise you to speak to the auctioneer to see if you can arrange for a surveyor to attend the property to give you a full structural survey prior to the auction.
5. Auction packs normally only contain a local search so you should instruct us to carry out further searches prior to the auction date.
PLS Solicitors specialise in advising on the complex area of commercial property, especially Commercial Conveyancing. We offer a friendly, efficient and effective legal advice on any area of commercial property.
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