The following Property practice note provides comprehensive and up to date legal information covering:
Buying a property through auction has its benefits compared to buying on the open market:
the property may be purchased at a good price
the auction process is quick
the properties available at auction may offer opportunities for improvement and to increase value
if the property is tenanted, income can be received from completion
A buyer will be exposed to funding risk if it wishes to obtain a mortgage for the completion funds. The contract is binding as soon as the hammer falls and therefore, if an unconditional mortgage offer for the purchase of the property is not in place prior to the auction, the buyer is at risk.
The seller’s legal advisors prepare a legal pack for the lot. This is prepared prior to the auction and will contain some if not all of the following:
the Common Auction Conditions, 4th edition
any special conditions
official entries for the title and copy documents referred to in the registers
replies to enquiries—a buyer should check the basis upon which replies to enquiries have been given, as often it is on a non- (or limited) reliance basis
draft deed of covenant
if being sold by fixed charge receivers, letters of appointment—see checklist: Leasing or buying from an LPA or fixed charge receiver—checklist
copies of any leases, te
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