Buying property at auction
Buying property at auction

The following Property practice note provides comprehensive and up to date legal information covering:

  • Buying property at auction
  • Buying at auction
  • Legal pack
  • Sale contract
  • General and extra conditions of sale
  • Special conditions
  • Addendum
  • Price
  • Buying property as a going concern
  • Completion

Buying at auction

Buying a property through auction has its benefits compared to buying on the open market:

  1. the property may be purchased at a good price

  2. the auction process is quick

  3. the properties available at auction may offer opportunities for improvement and to increase value

  4. 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.

Legal pack

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:

  1. the Common Auction Conditions, 4th edition

  2. any special conditions

  3. official entries for the title and copy documents referred to in the registers

  4. searches

  5. 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

  6. draft deed of covenant

  7. draft transfer

  8. if being sold by fixed charge receivers, letters of appointment—see checklist: Leasing or buying from an LPA or fixed charge receiver—checklist

  9. copies of any leases, te

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