Property auctions are an increasingly popular way for property owners to sell their properties and for potential buyers to snap up a bargain

However, what at first sight appears to be a bargain can turn out to be an extremely costly mistake.

Property auction issues

We have acted on several cases for purchasers who have successfully bid on a property only to discover some significant problem with it.

Examples of situations where buyers have encountered difficulties could include:

  • The purchaser of a long residential lease which was already subject to forfeiture proceedings by the landlord due to significant breaches of the terms of the lease. The new owner would inherit a considerable financial liability to the freehold landlord or faced the forfeiture of the lease.
  • The property being described in a certain way or to include certain things, such as a larger piece of land or parking space, when this is not the case.
  • The purchaser of a freehold of a commercial property discovering that the seller had reached an informal agreement with the existing tenant regarding the rent payable, which did not reflect the terms of the lease provided in the auction pack.
  • A seller of a flat suggesting that it was able to extend the term of the lease and assign the benefit of this to the buyer when in fact legally, this was not possible.
  • Including out-of-date searches in the auction pack, which did not reflect the true position.

The importance of taking legal advice on buying property at auction

One thing that many of the examples above have in common is that the buyer did not take any legal advice on the contents of the auction pack before bidding on the property. Whilst taking legal advice may not seem like a necessary expense before the auction, it can reduce the risk of costly mistakes.

Whilst such advice cannot remove the inherent risk of purchasing a property at auction completely, asking a solicitor to check through the auction pack, identify potential issues and discuss the contractual terms will provide a bidder with a more informed idea of the risk that they are prepared to take and the amount they consider reasonable to bid.

Pre-auction enquiries can be raised with the seller or agent and whilst there would be no obligation on them to respond, if they want to maximise the bids they receive, it might be in their interests to do so.

If you are considering purchasing a property at auction and would like to instruct Cunningtons to assist in considering the auction pack, please do get in touch.

Misrepresentation at property auctions

We have previously written about misrepresentation in a residential property context (read My Seller Lied To Me here). This article focusses on property misrepresentation in the context of auctions.

The first thing that needs to be said about auctions is that generally, the applicable contractual terms have not been negotiated between the parties. They are generally presented in the auction pack on a “take it or leave it” basis. It is not uncommon for contractual terms to be heavily one-sided and to pass all the risk (and normally the cost) on to the successful bidder.

The contractual terms will invariably contain what are known as limitation or exclusion of liability clauses, which seek to limit or exclude liability for things said about the property which might not be factually accurate. Sometimes what are called “whole agreement” clauses are included, and these seek to specifically exclude anything said about the property which might otherwise have become a contractual term. Effectively, these clauses seek to protect the seller by saying that anything said about the property which is not included in the contract cannot be relied on if they turn out to be inaccurate.

Whilst “buyer beware” or “caveat emptor” is a principle of law, meaning that buyers should undertake the necessary steps they want to check the suitability of what they are going to purchase, the law does seek to balance the requirement for buyers to do this against the broad requirement for sellers to at least try to be accurate in the information that they provide. Certainly in cases of fraudulent or reckless misrepresentation there is some scope to challenge clauses which seek to limit or exclude liability.

Section 3 of the Misrepresentation Act 1967 provides that any terms within a contract which would exclude or restrict a seller’s liability for misrepresentation, or limit the remedy available to a buyer for this, are of no effect unless they are “reasonable”. If such terms are unreasonable and of no effect, then the misrepresentation is actionable and a claim can be pursued.

Test of Reasonableness

The test of reasonableness is contained in Section 11 and Schedule 2 of the Unfair Contract Terms Act 1977 (UCTA).

Sadly for buyers, there is not a black-or-white, yes-or-no test or criteria to determine whether or not such clauses are reasonable or not; merely examples of what may or may not be reasonable in the circumstances. The test is to a large degree subjective and this means that the Court has the ability to consider what the parties knew, or ought reasonably to have known, about the situation at the time. Each of these cases is therefore very fact-specific and a careful consideration of all of the facts is necessary.

Broadly, the guidelines set out in UCTA which the Court will consider are:

  • the bargaining positions of the parties, taking account of alternatives that the buyer might have, such as alternative property;
  • whether there has been an inducement to agree to the term or had an opportunity to enter into a similar contract with someone else without such a term;
  • whether the buyer knew or ought reasonably to have known of the existence and the extent of the term;
  • where the term excludes or restricts liability if some condition was not complied with, whether it was reasonable at the time the contract was entered into to expect that this condition would be met.

Case law on exclusion and limitation of liability clauses is extensive. This is understandable to the extent that the law exists to balance the interests of a seller to sell a property without fear of a future claim and the right of a buyer not to be misled, certainly not deliberately. Whilst cases can provide helpful guidance and may be relevant to your particular circumstances, they are rarely conclusive of the matter, as when situations like this arise, there are always factual differences.

Further advice for auction buyers

Check carefully what the terms say about the fees. Often there will be a contractual clause obliging the successful bidder to pay the seller’s legal costs. These can sometimes be quite high and an unexpected expense which should otherwise have been factored into your decision in respect of the maximum bid you are prepared to make.

Often, searches are included in auction packs, as it would be a rare circumstance when a buyer would have time to undertake their own searches. Normally the cost of these searches will be passed on to the successful bidder as well. Any searches should be checked carefully for what they reveal. They should be checked to make sure they are up-to-date. If there is missing information or queries which come out of the searches, the risk of this should be considered when bidding for a property. If searches are inadequate, then checking the auction terms to see whether the buyer can rescind the contract in the event of discovering something untoward later is worthwhile doing.

If you require finance or a mortgage to purchase the property, make sure that your lender is on board and satisfied that the property is going to provide good security.

We have acted for clients who have successfully bid on a property, paid a sizeable deposit and then discovered a defect in the title to the property, or something else which makes the property unsuitable security for a mortgage. The lender then withdraws the mortgage offer, leaving the client in a position of being unable to complete, and therefore liable to lose their deposit, or have to seek a bridging loan or some other finance at considerably worse rates.

Can Cunningtons help?

We would be interested to know about your experiences of purchasing property at auction.

If you feel that you have purchased a property pursuant to a misrepresentation, then we may be able to assist you, let us know your experiences in the comments section.

 

34 thoughts on “Dealing with property auction issues”

  1. Hello There
    I am hoping you can help. I have purchased a property via auction I was provided with the legal pack 3 days before the auction, despite enquiring about the property 3 weeks previously. The property was advertised as Free Hold, we inspected the property and were aware that part of the upper floor was over a shop next door, however all documentation and legal pack special condition didn’t identify any problems. We have since won the property, paid £9025 in auctions fees and 5% deposit. we cannot secure a mortgage as the property has a 32% flying freehold which renders it un mortgageable. I have gone down every avenue to try and secure funding. We believe that such a large Flying Free Hold should have been in the special condition we had conversations with the auction house prior to auction and they were fully aware we needed a mortgage to complete the sale and at no point was there any indication from the estate agent showing us the property or the auction house discussing it. Where do we stand as the auction house are standing by the fact that the title plan shows a flying free hold albeit not highlighting the size and implications this can have on being able to mortgage the property.??

    1. Thank you for your comment.

      From what you have written, we are afraid that it is unlikely that you have any recourse against the seller or auction house.

      Sometimes it is possible to say that an auction pack was misleading so as to give rise to a claim for misrepresentation. A good example of this is the case of Atlantic Estates v Ezekiel [1991] which we refer to in our blog “Property Misrepresentation Claims in Practice”, which can be found here. In that case, a photograph of the wine bar being auctioned showed it being used as such. In fact the wine bar was unlicensed and the Court of Appeal held that this amounted to a misrepresentation as it could not be used as a wine bar without the licence.

      Silence in itself, without some form of incorrect statement about the property, would not give rise to a claim. It is up to the buyer to decide whether or not, based on the information that they have, to take any risk on bidding for a property. There would therefore have to be something expressly stated to suggest that the property would amount to good security for a lender.

      Whilst you may have made your intentions known, namely that you were purchasing with the assistance of a mortgage, it is likely that even if you were expressly told that the property would be fine to purchase and was good security for a mortgage, or was even mortgaged at the time, this is still unlikely to amount to a misrepresentation.

      One reason for this is that it is more than likely that the contract of sale excluded oral representations. Another reason for this is that there must be a false statement of fact to give rise to a misrepresentation. A statement of opinion (i.e. that someone thinks that the property amounts to good security for a lender) does not amount to a representation. What is said or conveyed to the buyer must be a statement of fact, which is inaccurate.

      Sometimes a mistaken statement about the legal position of a matter can amount to a statement of fact, but we are hesitant to suggest that someone’s opinion of the property representing good security for a lender would be anything but opinion, particularly on the basis that lenders consider a range of things, including the borrower’s financial circumstances, before agreeing to offer a mortgage.

      If you are interested in reading about the distinction between a false statement of fact, law and opinion, Pankhania v LB Hackeny [2002], which we also refer to here, sets the legal principles out well.

      We have to qualify the information that we set out here. We do not know the full facts of the matter what we post on our website is guidance only and sets out only broad principles. It should not be relied upon as a substitute for bespoke and properly considered legal advice. If you would like us to consider the matter in more detail, please do feel free to get in touch.

  2. Hello, we are in the process of purchasing a property from auction. We were given a 56 day completion deadline which we stuck to and it looked like we were going to complete early but just as the deadline was approaching we were told that the sellers couldn’t complete yet. No mention of why was given until we pressed the matter and it turns out the sellers didn’t have the lasting power of attorney in place to be able to sell the property. Their story is they had tried to get it and thought they had but there was some sort of admin error which they weren’t aware of until close to completion. We paid £17k in auction fees and were counting on the quick turnaround for various reasons. We were even pressured into getting buildings insurance for the new property and to pay as quickly as possible which we did and only after this did we hear anything from the sellers side about not being able to complete. We haven’t been informed in writing about their need to extend the 56 days and in our opinion the matter has been handled very poorly. We are still waiting and wondering about our rights here and what steps can / should be taken. Do we have a misrepresentation case? Can we get out £17k back? Can we renegotiate the price of the house should they be able to sell in the coming weeks? Is it legal for them to try and sell the house without having any formal rights over it and on top of that taking a reservation fee from us, being shady about why there’s a delay and causing us extra expenses.
    Thanks in advance.

    1. If a party to the contract of sale is unable to complete and the other is, it would probably be worthwhile considering serving a notice to complete, subject to the terms and conditions attached to the sale. This is something you should discuss with your conveyancing solicitor. This is the starting point for rescinding, or “cancelling” the contract and recovering the deposit paid.

      This does not sound like a property misrepresentation matter per se, but you are correct to identify that without the appropriate authority for someone to sell a property that does not belong to them (i.e. the power of attorney) if would not be appropriate to complete.

      If you would like us to look into the matter for you, please feel free to get in touch.

  3. I bought an auction property with tenant in situ expecting to use a mortgage for the purchase. Unfortunately i wasn’t made aware that the tenants are problematic and there was ongoing dispute with the seller. Prior to bidding on the property i did make enquiries from the lettings agent and was told that the tenants were responsive , pay their rent on time and was given evidence of statement of rent.
    Now my mortgage lender has been unable to gain access to perform a valuation as the tenant is preventing access and will not respond to calls. This has been going on for weeks and i now have 3 days to complete. The seller has been unwilling to offer any help in facilitating access. I have no other source of funds so it looks like i may lose my deposit due to failure to complete. Can i claim back my deposit dure to misrepresentation as the seller failed to disclose issue with the tenant?

    1. Thank you for your comment.

      We are hesitant to suggest that this is a case where there has been a misrepresentation but it is possible, depending exactly what you asked and were told. The auction terms and conditions would also be very important to consider, as is the auction pack contents.

      This is not a situation we have specifically come across before. The seller is still the landlord. Whilst you have exchanged contracts, you are not yet the legal owner and cannot force the tenant to comply with the terms of the tenancy agreement, which no doubt would contain provisions to allow the landlord or the landlord’s agents to attend the property on reasonable notice.

      There may be some scope to suggest that the inability to access the property as a result of the seller’s tenant amounts to a frustration of contract (i.e. it cannot now be performed as a result of circumstances outside of the control of the parties) but we would need to consider this with you in more detail. This may entitle you to claim back the deposit. However, we suspect that much would turn on the contractual position. Ideally, a contractual clause allowing you access to the property for the purposes of carrying out a necessary valuation would be helpful, but we suspect that there is no such clause. We also suspect that the argument that the seller will adopt is that it was for the buyer to ensure that they had the finance in place before bidding and to enable them to complete. We would be interested to know whether or not there were any discussions regarding access for the purposes of obtaining a valuation prior to the auction itself.

      We would be happy to consider the position with you in more detail if you would like to get in touch.

  4. I have bought a property from an auction only to discover additional fees for ‘legal, admin and disbursement’ totally £13,000 on top of the usual auction fees and legal costs. Furthermore there is a second clause attached that states no disclosure will be made to how these fees a broken down. Whilst I accept this is a contractual obligation now having exchanged the fact that it is a commercial solicitor that is demanding this sum for unexplainable extortionate sum. As I am a consumer do to the implied terms of this contract surely the ‘Rights of Fair Trading/Terms’ apply. It is surely a misrepresentation to label it as ‘admin and legal costs’ if I am paying £13,000 for a service due to the explicit terms of this contract I have a legal right to be advised what they are for. I believe that I can argue that this is a ‘sham contract’ and that all the consumer regulations including misleading advertisement and misrepresentation rules apply. I am currently seeking expert advise on this as just because it has never been challenged and is practiced it does not make it right . Look at the PPI case? I think £13,000 is excess for conveyancing for a property at a guide price of £50,000! then to place these contractual clause by a commercial firm makes this a ‘sham contract’

    1. Much will depend on the terms and conditions that the transaction was subject to. The basic position is that if someone has contractually agreed to be liable for a cost, whether or not that cost is currently known, this is still potentially enforceable contractual term. From what you have written, it appears that you have contractually agreed to pay the seller’s legal and other costs associated with the transaction.

      We are not aware of the specific legislation that you refer to and we are not aware of any legislation which specifically states that a seller/auctioneer must set out what the charges will be in advance. It would generally be for a buyer to make their own enquiries until they are satisfied that they are prepared to bid for the property in question, including the position with respect to any contractually agreed charges. If those queries are unanswered, then the risk would lie with the buyer.

      In theory, there could be a consumer/trader relationship and some scope to challenge the charges on the basis of the contract term being unfair. However, we are unaware of any specific case law on this point, so cannot point to a historical case which might lend itself to suggesting that such a claim would be successful.

  5. Hi.
    I’m in process of trying to get back my auction reservation fee.
    I was told before viewing the property that the only yearly charges are £64pm maintenance fee which money wise was perfect.
    So I bidded.
    I won the auction bid.
    First I was mislead by being told I have to pay 4.2% of the property price by estate agent Aprox £4.3k which i was then told it’s £6k minimum which I just let slip as no one replied back to me regarding it. (I have email proof of this)

    In the auction pack it stated £64pm maintenance charge no other charges mentioned which I was told by the estate agent also…
    I received the management pack after waiting 2 months for it (2 weeks before completion) to find that the maintenance charge is in fact £107pm, £10 ground rent and £1.5k reservation fund..

    It has now affected my mortgage offer meaning I can only borrow £10k less that I was originally agreed to because of the of the maintenance charges were incorrect .
    I have 3 documents of proof that I was told it was £64pm ( including the auction pack). Apparently it’s not enough proof…
    The auction company have said it was the amount the seller was paying when filling out the form which again isn’t true because it was £98pcm back in 2018-2019 ( management pack proves this)

    Where do I stand with getting my deposit back?
    A caveat is in place but apparently it doesn’t cover this.
    I’ve been mislead and lied to by both estate agent, seller and the auction pack.

    1. Thank you for your comment.

      We are unclear whether or not the transaction proceeded to completion or not. This would likely be relevant to the position as if the issue was brought to your attention before completion and you proceeded, there is a possibility that this may have the effect of affirming the contract or waiving any claims in relation to the matter.

      On the assumption that completion did not take place for this reason, much will depend on the auction terms and conditions. A reservation fee is normally stated to be non-refundable, whether or not the matter proceeds to completion. Maintenance and other charges can sometimes vary, so it would be necessary to also consider whether what was stated in the auction pack took account of this. It does appear from what you have written that there may have been a mistake, if the seller had paid larged historical charges than those stated. This might give rise to a claim for misrepresentation.

      It would be necessary to consider the matter in more detail before we could provide any conclusive advice. If you would like to get in touch to discuss further, please feel free.

  6. I recently bid on a property a few days before the auction and it was rejected. The auctioneer agent contacted me via phone and said that the sellers could agree if increased the figure, which I did and bid was agreed. However, at this point I told the auction that the bid would be under the name of a different family member. I paid the auction fees and the 10% deposit over the phone via the other family members debit card. The auctioneer agent sent an email attaching forms to sign and return by the bidder. In addition, I was asked to send my ID with the bidders via email and return the signed bidder form.
    Please note that at this point no legal pack was available to me or none was present on the website of the auction. The auctioneer agent said that no legal pack was available and there was no access to the site as they didn’t have keys and neither did the owners.
    Thereafter, a week went by, two weeks went by, our solicitor had not been contacted by anyone. I further contacted the auction and after a few phone calls and emails eventually got a response stating that the sellers had not appointed a solicitor yet. 4 weeks passed. Eventually my solicitor contacted the auction house and was passed over details of the sellers now appointed solicitors. My solicitor contacted the sellers solicitors and communication began.
    It became known to us at this point that the sellers had just completed their purchase of the property via another auction and at the point of sale where I bid for the property at the auction house the sellers technically never owned the property and therefore it should not have been marketed or on auction. The Seller has bought from a limited company which had floating charges against it.
    Articles of Roup had been drafted up and provided to my solicitor 5 weeks after the bid, in which it states that the bidder would have to pay legal costs of the seller for £1000. My solicitor rejected the articles of roup and sent standard missives instead.
    My solicitor wrote the sellers solicitor asking for a clean title to the property and entered into missives with the sellers. However, the sellers solicitors failed to communicate with my solicitor and more time passed. In the interim, my solicitor had carried out searches against the initial company that sold the property at auction to the current sellers, which showed charges against it. Therefore, asking the sellers side to provide us with proof that no charge was against the said property and that the title would be clean. Still no response.
    The sellers solicitors have now come back saying that we are in breach of the auctions contract and therefore in forfeit of the deposit, losing £12000.
    I was informed that the sellers have now put the property on the market and selling to someone else.

    Therefore the auction house should not have put the property in the auction, as the seller hadn’t completed missives and the title wasn’t in their name at the point I agreed the bid. There was no legal pack or any documents relating to the property available at the point of bidding. The reason there was a delay of 4 weeks after the bid in my opinion was that the sale wasn’t completed and therefore couldn’t appoint a solicitor and hence why articles of roup were drafted up later.
    In addition to the above the auction house are stating that I am the buyer and not my family member; although the completed form is completed and signed by them and has their name on it; and payment was made via their debit card.
    In my opinion there is been misrepresentation by the auction house and the delay in responses by th auction house and the sellers solicitors is because the property wasn’t owned by the sellers at the point I placed my bid, and hence; after 4 weeks their solicitors details were provided after concluding missives.

    I need your advice and it would greatly be appreciated.

    Is this the fault of the auction house ? Should an action be raised against the auction house or the solicitors acting for the seller ?
    What would the best way be to recover my deposit and legal expenses incurred so far ?

    1. Thank you for your comment Raymond.

      You mention “articles of roup”. We understand that this is something used in auctions in Scotland. Unfortunately we are unable to advise on Scottish Law. Unfortunately we are only able to provide advance, guidance and comment on the law in England and Wales.

  7. Great article thanks. We bought a property at auction. Read the legal pack viewed the property. And thought everything was great put an offer and then we’re failed mortgage due to the non standard construction of the property. We were unable to mortgage the property causing rescindment of contract and charge of fees to the value of 20k. I know it is mentioned above that the duty of care does not lie with the seller in this respect but with me to undertake surveys. But I am surprised that nothing is mentioned at all or even the property is not advertised as a cash purchase due to this. The scheme of repairs for the property is 47k property value is 71k! And nothing was mentioned. What would u say is their any possibility of actionable misrepresentation or shall I just swallow this horrendous bitter pill and stay away from auctions forever

    1. The issue that stands out here is that this sale did not complete.

      While we cannot advise on individual issues over the web it would depend on whether a Notice to Complete was served and also what state the property was said to be in according to the auction pack. There are certain circumstances in which the deposit can be ordered to be returned by a Court but without having seen the exact correspondence and chronology between the parties it will be difficult to determine.

      However you can of course contact us for a confidential discussion should you wish to explore this.

      1. We have been served a notice and this has been extended till 8th December.
        Thanks for your response and it will be good to explore options now before it is too late.

  8. Hi

    I have recently bought a suite that I had not been out to view. I have paid £13,000 for a bedroom with en-suite in penthouse that has 4 suites as was advertised. I have found out that the suite I have bought does not come with an en-suite (the other suites have them). By the looks of things the suite I have purchased comes with access to the shared bathroom.

    What are my rights to break the contract for mis representation?

    1. Thank you for your comment and I am sorry to hear that you are having this issue. Purchasing a property at auction is a high risk activity and whether there is a claim for misrepresentation will depend on what was actually in the auction pack or other paperwork supplied to you and other bidders, as you would have to be able to point to a specific statement by the seller that was false and that you relied upon. It also will depend on the content of the contract, as there may be an entire agreement or non-reliance clause in it or the auction’s conditions.

      We are afraid, however, that we cannot give anything other than general guidance on our website, primarily for the fact that without considering the position in detail with our clients, we cannot give accurate advice.

      If you wish to go through this with us further, please feel free to contact us for a confidential discussion.

  9. I brought a property at an auction, and after renovating the property we tried to sell and found we had red ash in the floors. We got the usual report completed and to our surprise the company we contacted, knew all about the property as the previous owner who had sold it at auction, got this same company to carryout the testing and to verify there was red ash. He obviously choose not to let the auction house know there was red ash, even though you asked when putting a property up for auction if you have any reports pertaining to the property being sold.
    Generally when buying from this particular auction house, they would tell me if the property potentially had red or black ask. To what degree is this classed as misrepresentation by the seller. To remove the red ash cost £10,000 and the removal and replacement of all fittings. And added an extra 6 weeks to before we could sell again.

    1. Thank you for your comment.

      We are sorry to say that it is quite unlikely that there is any sort of claim here. Unless something specific was said about the position, as a minimum that the property was structurally sound and free from defects, then there can be no false statement that has been relied on when entering into the contract (i.e. making the successful bid).

      A seller, at auction or otherwise, has no obligation to volunteer information about the property, including materials used in construction. This is normally the remit of the buyer’s surveyor. It is also highly unlikely that there was any duty of care on the auctioneer to identify the problem. It is a matter of “caveat emptor” or “buyer beware” insofar as it is down to the buyer to decide whether or not they wish to make any bids based on the information that they have.

  10. I bought a land in an auction for £3000 only to discover in the legal pack that i need to pay extra £3000 for the seller legal fees and extra £650 for searches . All these are in addition to the auctioner fee of £1000. This is rediculous. i have already pay £4000(3000+1000) and i am wanting advice how i can get a refund as i cannot complete the purchase due to the 3k legal fees

    1. Thank you for your comment. Unfortunately it does not sound as though you have any option but to complete the sale.

      Whilst we can only provide general guidance and pointers, and would need to consider the documentation and circumstances in more detail, if the terms of the contract were set out in the auction pack (as they normally would be) and these contained obligations to pay certain sums, then you will likely be bound by these.

      1. Thanks for your reply. It is clear cannot complete the purchase because it does make any sense to pay over £5300 to buy a land worth only £3000 which means i will forfiet my money. There is a suggestion online that i might be able hold ground under “unfair contract terms” . Nonetheless i will also complain to my card issuer. Lesson learnt, stay away from property auction Never never again.

      2. Hello Mark,

        What would happen if purchase not completed? The 10`% deposit or £3000 requested happens to be the wining bid and that has been paid. And also what are my chances of deposit refund from Section 49(2) of the Law of Property Act 1925

        1. Thank you for your further comments.

          We are unable to give specific legal advice on our website. We are only able to provide general guidance which should not be considered a substitute for bespoke legal advice. This is primarily because without considering the circumstances as a whole, including the exact terms of any auction conditions, we cannot give accurate advice.

          Section 49(2) of the Law of Property Act 1925 gives the Court a mechanism and legal discretion to refund a deposit. The Court will always apply the overriding principle that the deposit exists to ensure performance of the contract i.e. completion. The Court also recognises that there must be certainty with respect to the purpose of and intention behind paying a deposit. The Court does not exercise such discretion other than in exceptional circumstances. As mentioned, we cannot give specific advice but we would consider it unlikely that an unwillingness of a seller to complete on a purchase for no other reason than the contractual terms identified before the contract was entered into are no longer acceptable to the buyer.

          1. Thanks you very much. One more question pls. The searches for the land was dated 24/02/2020 is that still valid for 11/11/2020. The seller solicitor searches were done in march

          2. We are afraid we cannot say without considering the title documentation in detail but the basic position is that the buyer would need to be satisfied with the information that they had been provided with and if not, undertake their own enquiries and searches.

  11. I bought a property at auction that had a lapsed planning consent to build an additional property in the garden of the existing house. The price was much more than a single property in that area would cost and the planning application number was on the auction for you to view the plans, in my view alluding to it being an investment.
    Even though the planning had lapsed by 18 months I did not think that there would be a problem re-submitting the plans.
    I paid my 10% deposit at the auction and them contacted the architect who submitted the original plans to act on my behalf to gain planning again. He informed me that the property could not be built as a local farmer owned the road that the new property would be accessed from and he was demanding £50,000 to give access.
    The seller new this and a previous sale not at auction had fallen through due to this problem.
    I have informed my solicitor that I do not wish to proceed with the purchase and I want my deposit of £40,000 back due to misrepresentation.
    The sellers solicitor replied that he expected the purchase to be completed and if not we would be sued for any losses the seller would incur.
    Please can you advise me on my options.

    Thanks

    1. We are unable to provide specific advice on our website. We do not have all of the necessary information and documentation to do this. We can, however, offer some general guidance.

      It seems that you did not rely on any sort of representation by the seller that the planning permission was extant, that it would be easy to re-submit plans or that the plan you had in mind for the land would be achievable. It appears that you noted that the planning had lapsed before entering into the contract (by making a successful bid) and assumed that there would be no issues in proceeding in the way that you thought. Therefore even if the seller had actively stated that planning would be granted, you would not have relied on this statement as you undertook your own enquiries to satisfy yourself. It appears that they provided the details of the planning application and will no doubt argue that it was then down to you to check the position. We are afraid that this is the case, as the principle of “buyer beware” applies equally to auctions as it does any other property transaction.

      Further, planning applications relate to a local authority’s function of ensuring compliance with planning policy. It is not generally relevant to the legal rights that anyone may have in relation to the property or land, in this instance, whether or not a third party may seek to exercise their rights to prevent the land being used in a particular way.

      The seller was not obliged to disclose the reasons why the previous sale or sales fell through. Many properties are auctioned because there are some issues with selling the property in the “traditional” way. Many bidders at auction do not instruct a solicitor or surveyor to investigate the property before bidding, which is in contrast to a situation where a buyer makes an offer and the solicitor and surveyor investigate before contracts are exchanged. Purchasing a property at auction is always a risk. That risk can be mitigated by instructing a solicitor and surveyor to look at the auction pack and property before placing any bids.

      As mentioned, we are unable to provide specific advice and you should ask your current solicitor about your options. However, it seems to us that your options may be limited to either forfeiting the deposit or completing the purchase, adapting your plans accordingly.

      1. The purchase was agreed after the auction finished, it never met its reserve so the deal was finalised by phone. Does this still fall under an auction contract as the gavel never fell?

        Thanks

        1. Thank you for your comment.

          At an auction, a contract is formed when the hammer falls. However, whether or not the auction terms and conditions will still apply to the transaction will ultimately depend on what the contractual documentation says. If the auction documentation was used, instead of new contract being drawn up, it may be that these terms and conditions still apply.

          You mention that the deal was finalised by telephone. Unless a contract in writing was entered into, this would not comply with Section 2 of the Law of Property (Miscellaneous Provisions) At 1989. Save for a few exceptions, auctions being one of them, all contracts for the sale of land must be in writing. We suspect you mean that you agreed the terms of the purchase, which were then committed to writing.

  12. I have purchased a property at auction recently to learn that it has knotweed which was not mentioned in the particulars.

    I went to view the property on 2 occasions prior to the auction and Knot weed was cut to surface level and was not present.

    I’ve owned the property 2 weeks and it’s growing and is causing all sorts of concerns and I have been told I have rights in issuing a claim,

    1. Thank you for your comment Sandeep.

      This is a tricky one. On the one hand, auction terms and conditions are normally drafted in such a way to attempt to exclude any possibility for a misrepresentation claim unless based on the contents of the auction pack, which are normally very limited in terms of information anyway. They attempt to place the entire risk of the transaction on the bidder. Further, it is not clear from what you have written whether or not an actual representation was made in the auction pack. There is a difference between staying silent on a particular point or actively misleading a bidder by suggesting that the property did not suffer from a knotweed problem when it did. If the point was not mentioned, then there can be no misrepresentation, as there was no statement to rely on when entering into the contract.

      Having said this, a deliberate concealment of the issue could amount to a fraud and the basic position is that liability for fraud cannot be excluded from contracts. The burden of proof (what any claimant has to prove to win their claim) is set very high in cases of fraud. Normally there has to be shown an active intention to mislead the other party. This state of mind element can be very difficult to prove. Put into context, there may very well be a difference between someone mowing their lawn which contains knotweed plants but not realising what these plant are or the implications of this, and someone taking deliberate steps to cut back or remove the knotweed themselves knowing that specialist treatment is required by licensed companies and the cost associated with this. As a claimant is required to prove their case, it would be down to you to prove such dishonest intention.

      Whilst you viewed the property, and it is fair to say that the issue may have been identified by you from an inspection had the cutting back not taken place, did you also appoint a surveyor? Normally this would be something a surveyor would check for. If so, there may be a potential professional negligence claim against your surveyor.

      We would be happy to look into the position in more detail for you, so do feel free to contact us. However, perhaps you would like to make enquiries into the cost of removal first. This might put into context the potential cost to you so you can decide whether or not it would be cost effective to embark on a litigious process.

  13. I bought a property at Auction in November 2019, it is bedroomed town house in Derbyshire. I had initially been registered to bid on another property but did not secure the property of preference. I registered for the Derbyshire property as i thought it might be a good deal too if the first fell through. I had the legal pack reviewed but did not go to see the property. I was not going to bid on the property but a sales agent from the auction house called me about an hour before the end of the online auction and encouraged me to bid on it saying it was a lovely property in good condition and that it may be a good investment.

    I went ahead and bid and all was fine, I was paying cash so no problem with the sale going through. I secured a tenant for the property using the property description.

    It was not until I got the keys that I discovered that the property, although a 3 bedroomed town house had been mis described. The description had said it was lounge and kitchen to the ground floor and then 2 bedrooms and family bathroom on the middle floor and a master bedroom and en suite to the 2nd floor.

    The property actually has a garage and one bedroom on the ground floor, a lounge and kitchen to the first floor and 2 bedrooms an en suite and a family bathroom to the 2nd floor.

    The layout of the property therefore had limited suitability for a family as no one would want a child to be on the ground floor when they were sleeping on the 2nd floor. I had to completely rethink the layout and create a smaller lounge and a small bedroom to the middle floor.

    What I discovered is that the auctioneer used the description of another house type in the street which has the described layout.

    I did review the photographs but as it did not say which room was which and had no floor plan I could only go on what was described.

    I contacted the auctioneer who said that they were not liable as they say in the terms and conditions that they expect the buyer to be prudent and to have seen the property but then that does beg the question that as they register who has seen the property then why did they phone me and encourage me to bid and surely the fact that they used a description of another house in the street which was inaccurate for this property still means that they were negligent in describing the property.

    It cost me £4500 to change the property which is still not totally satisfactory. I did not mind that it needed some work but don’t think I would have bid on it if had it been accurately described. Do you think I would have grounds to make a claim against them?

    1. Thank you for your comment, Charleen.

      Buying property at auction can be risky. The terms and conditions are the first thing which would need to be considered and without doing this, it would not really be possible to say what the contractual position is.

      In some cases, the law of mistake might be relevant. There may be the potential for a claim here, however, this would depend a great deal on whether or not you were actively mislead or made reasonable assumptions about what you were buying. Also, it would be necessary to work out whether or not, as a result of any misleading information or mistakes, you altered the property to the description, in which case it could be said that your loss is all attributable to this. If alternations were made which do not reflect the description of the property as given, then there could be an argument to suggest that the cost of doing this work cannot be considered a loss caused by the erroneous description.

      If your total loss was £4,500, then some caution should be exercised. Claims below £10,000 would generally be dealt with in the Small Claims Case Management Track (colloquially referred to as the “Small Claims Court”). The basic rule here is that the parties will not be awarded their legal costs. Whilst we do regularly act for clients with small claims, it is on the understanding that they will be unable to recover their legal costs. If not all of the £4,500 loss to you is attributable to the inaccurate description, then it would be important to keep an eye on the cost/benefit ratio.

      Whilst we are only able to provide general guidance and pointers here, and not legal advice, we hope this is of some assistance.

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