Purchasing an auction property requires a different legal process than when you buy a property through normal channels. In this article we take a look at the differences and the terminology.
Going, Going, Gone
Once the hammer goes down on an auctioned property, the contract is considered binding. This is completely different to a normal purchase when the contract is only watertight once contracts are signed, leaving weeks when the conveyancer is doing his or her job, always with the possibility that it may fall through as nothing is legally binding.
Do Your Homework
It is a myth that auction properties go for a snip: often they end up at auction as they are rundown or their legal titles are dubious, to say the least. Our advice is never to go in blind; instead get a pre-auction title report as well as a building survey before you enter the auction room. You will also want to consider how much it will cost to get the home up to living standards and what professionals such as electricians, plumbers and Plasterers Gloucester way such as http://pureplasterers.co.uk/ that you may want to employ the services of. Other myths can be explored here: https://www.allsop.co.uk/media/dispelling-auction-myths-advantages-disadvantages-buying-auction/.
The Pre-Auction Legal Report
Auction sales are governed by conditions of sale which form part of the sale contract. It is therefore vital to choose a reputable conveyancer, to go through these with a fine toothcomb and alert you to anything that is significant. The cost of such a report is much less than for the entire purchase and will be deducted from the final costs.
The Search Is On
Buyers don’t often want the expense of undertaking searches before they are the legal owner; we recommend asking the advice of an expert conveyancer, who may, for example, suggest paying for search indemnity insurance instead.
The All-Important Deposit
The deposit will need to be paid to the auctioneer on the day; buyers also sign a copy of the auction catalogue which includes a memorandum of the price. The conditions of sale give a final purchase date – usually around the four-week mark – when the rest of the money will need to be paid. It is therefore crucial that the funds are in place almost from the outset.
And remember, if you fail to complete, then you will lose your deposit; the seller has the right to sue for losses incurred.