290 thoughts on “Dealing with property auction issues”
Hi there,
I purchased a hall via auction March 2022. However, having spoken with the Cllr of the area who shut the hall back in 2019 as it was not safe to use (there is concerns about the floor). This was not been documented or mentioned. I raised my concerns with my solicitor who has said “I can raise your concerns and raise enquiries regarding the contract pack that has been provided however the legal team acting for the seller are not obliged to answer any of the enquiries should they choose not too as contracts have already been exchanged.” This makes me unsure why they would not want to answer simple queries?
Now I would like to withdraw from the sale of a purchase due to concerns – the seller is saying they will not only keep the deposit (Which is fine and I have agreed too) but “could request you pay for them to resell the property and if it is sold for a reduced price you may be required to pay on top of that amount to meet the price you were to pay for it.”
I am not willing to lose anymore money – can they really push for this as an option?
Thank you for your comment. While we are unable to advise fully without having seen all the documentation, the answer to this will usually depend on the terms of the contract.
Firstly, there is no obligation upon the seller to volunteer information even when asked. In addition, it is usually a term of auction property sale contracts that the Buyer is agreeing to purchase the property on the proviso that they have satisfied themselves with the condition of the property and that they have had reasonable opportunity to inspect it and satisfy themselves that it is acceptable to them. Moreover, once you bid on an auction, and are the highest bidder, you are contractually bound by all the terms of the contract and also by the auctioneer’s terms and conditions. In those circumstances, it is usually entirely correct that the seller can refuse to answer further enquiries and it is often a term of the contract that they can. However this will depend on the precise wording of your contract.
Regarding pulling out of the sale. You are correct that usually this will mean loss of your deposit. However you may also be liable for further losses as threatened by the seller. Depending on the terms of your contract you could be liable for any losses of and occasioned by your failure to complete the sale and these could be significant. What these losses may be is once again governed by the terms of your contract though in principle they can only recover those losses that are reasonably foreseeable.
If you do want to try to rescind the contract via misrepresentation this is in theory possible but it is difficult and you would have to point to a knowingly false statement made by the seller that you relied upon and that you were entitled to rely upon. However auction property sale contracts are often filled with exclusion clauses such that only a fraudulent misrepresentation will be enough. That they did not volunteer information is not a misrepresentation. They must only ensure that any information they do give is correct. Once again, without having seen the terms of the contract this is not something we can definitively advise upon.
Hello, I’ve just recently agreed on a auction purchase and have paid the 10% [50k] deposit.
It has now come to my attention that the structure of the house is made of concrete which was not declared in the legal pack-and also there was no mention of a council enforcement regarding a side extension. To my knowledge the council had told the occupants to demolish the extension and thereafter a new one was rebuilt and approved. My concern at this moment is that the bank has refused my mortgage application due to the concrete structure and I am now waiting on another bank to review my application. With this being the case and I’ am unable to obtain a mortgage what would be the financial consequences? Or would I be in a position to get my deposit back as the auction house has failed to disclose vital information regarding the property.
Thank you for your comment. While we are unable to give specific advice on this platform, it should be noted that there is no specific obligation on the seller – or the auctioneer – to volunteer information regarding the property. They only have to ensure that where they do volunteer information, that it is correct. Therefore, unless they were specifically asked, and responded, falsely, that there were no planning enforcement issues or that they answered incorrectly regarding what the structure of the property was if so asked, that they did not disclose this is not in and of itself a misrepresentation.
Therefore unless you can point to a false statement in the auction pack or other documents that you could have had sight of at the time you inserted the bid, it is unlikely that there would be a case here. At an auction of property your being the highest bidder at the point the hammer falls is a legally binding contract to purchase the property and the terms of that contract are in the form of the draft contract that usually forms part of the auction terms or the information about the property. Although we would need to have sight of the auction terms and the exact terms of the contract of sale, usually terms of auction contracts are also very restrictive in terms of when a buyer can claim for misrepresentation.
If you are unable to gain funding to complete on the sale, then the usual redress that the buyer has (though this is once again subject to the terms of the contract of sale) is to retain the deposit and to claim from you for all losses of and occasioned by the failed completion. There may also be contractual late fees that you have agreed to.
You should not bid on a property unless you are 100% sure that you will be able to complete, or unless you are unconcerned about losing your deposit.
If you are seeking any further advice on this then please feel free to contact our Litigation team at the Braintree office.
I purchased a property after an Auction which i was not able to attend.. The account representative was contacted on 3 properties but insisted on this particular property. I asked home several questions about the specials conditions of sale – such as visiting the property, which he replied was not possible because it was tenanted. I further enquired about the conditions and size of the apartment and he told me he cannot give me the size because they have not visited the property, but confirmed that a tenant moved into the property 2 weeks before the auction with a short term lease agreement and rent payment evidence provided – He claimed the landlord has done this to facilitate the sale. Having been. Abroad working on the crisis in Europe during the week, i visited the property and it was a run down property with leaks evident from the outside with a bucket taking the drip. The claim of a tenant paying £1000+ for such a property is not possible, and when i enquired around. From those I saw, they confirmed no one lived or moved in 2 weeks ago. The auction house collected their fees and £10k in deposit, I am working on the crisis in Europe at r the moment and having to not only be faced with a deceptive auction house, but the untold stress and anger this has put on me is enormous. Also my mortgage adviser assumes that the size of the studio would be so small that it may not qualify for a mortgage, which was why they discouraged any viewing. Can a claim or request my money back? I just want to move on
Thank you for your comment and we are sorry to hear of this.
If you are able to prove that you were informed that the property was tenanted and that it was yielding a certain rent, but this was not true, then there could be a fraudulent misrepresentation.
With auction sales, the main way to get around the invariably one sided terms and conditions is to show fraud (but sometimes also recklessness). There is a maxim in law which is “fraud unravels all”. If this is the case, there may be scope to bring a claim.
However, this does not sound straightforward and the basic position with purchasing property at auction is that the buyer should be 100% comfortable with the risks. It is not sufficient to assume matters are in order. If a question is asked but not answered sufficiently, then it is down to the prospective buyer to decide whether or not they want to take the risk.
If you would like to consider the matter in more detail, please do feel free to get in touch.
Note: This is general guidance only and should not be relied on as a substitution for properly considered legal advice.
Delayed completion: what are your options when someone in your chain of property transactions is late? With a group of strangers all working toward completing on the same date, it's a wonder it ever works out on time.
This collection of cases of property misrepresentation claims should remind all of us how important it is to tell the truth on a Property Information Form
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Hi there,
I purchased a hall via auction March 2022. However, having spoken with the Cllr of the area who shut the hall back in 2019 as it was not safe to use (there is concerns about the floor). This was not been documented or mentioned. I raised my concerns with my solicitor who has said “I can raise your concerns and raise enquiries regarding the contract pack that has been provided however the legal team acting for the seller are not obliged to answer any of the enquiries should they choose not too as contracts have already been exchanged.” This makes me unsure why they would not want to answer simple queries?
Now I would like to withdraw from the sale of a purchase due to concerns – the seller is saying they will not only keep the deposit (Which is fine and I have agreed too) but “could request you pay for them to resell the property and if it is sold for a reduced price you may be required to pay on top of that amount to meet the price you were to pay for it.”
I am not willing to lose anymore money – can they really push for this as an option?
Thanks
Thank you for your comment. While we are unable to advise fully without having seen all the documentation, the answer to this will usually depend on the terms of the contract.
Firstly, there is no obligation upon the seller to volunteer information even when asked. In addition, it is usually a term of auction property sale contracts that the Buyer is agreeing to purchase the property on the proviso that they have satisfied themselves with the condition of the property and that they have had reasonable opportunity to inspect it and satisfy themselves that it is acceptable to them. Moreover, once you bid on an auction, and are the highest bidder, you are contractually bound by all the terms of the contract and also by the auctioneer’s terms and conditions. In those circumstances, it is usually entirely correct that the seller can refuse to answer further enquiries and it is often a term of the contract that they can. However this will depend on the precise wording of your contract.
Regarding pulling out of the sale. You are correct that usually this will mean loss of your deposit. However you may also be liable for further losses as threatened by the seller. Depending on the terms of your contract you could be liable for any losses of and occasioned by your failure to complete the sale and these could be significant. What these losses may be is once again governed by the terms of your contract though in principle they can only recover those losses that are reasonably foreseeable.
If you do want to try to rescind the contract via misrepresentation this is in theory possible but it is difficult and you would have to point to a knowingly false statement made by the seller that you relied upon and that you were entitled to rely upon. However auction property sale contracts are often filled with exclusion clauses such that only a fraudulent misrepresentation will be enough. That they did not volunteer information is not a misrepresentation. They must only ensure that any information they do give is correct. Once again, without having seen the terms of the contract this is not something we can definitively advise upon.
Hello,
I’ve just recently agreed on a auction purchase and have paid the 10% [50k] deposit.
It has now come to my attention that the structure of the house is made of concrete which was not declared in the legal pack-and also there was no mention of a council enforcement regarding a side extension. To my knowledge the council had told the occupants to demolish the extension and thereafter a new one was rebuilt and approved.
My concern at this moment is that the bank has refused my mortgage application due to the concrete structure and I am now waiting on another bank to review my application.
With this being the case and I’ am unable to obtain a mortgage what would be the financial consequences? Or would I be in a position to get my deposit back as the auction house has failed to disclose vital information regarding the property.
Thanks
Thank you for your comment. While we are unable to give specific advice on this platform, it should be noted that there is no specific obligation on the seller – or the auctioneer – to volunteer information regarding the property. They only have to ensure that where they do volunteer information, that it is correct. Therefore, unless they were specifically asked, and responded, falsely, that there were no planning enforcement issues or that they answered incorrectly regarding what the structure of the property was if so asked, that they did not disclose this is not in and of itself a misrepresentation.
Therefore unless you can point to a false statement in the auction pack or other documents that you could have had sight of at the time you inserted the bid, it is unlikely that there would be a case here. At an auction of property your being the highest bidder at the point the hammer falls is a legally binding contract to purchase the property and the terms of that contract are in the form of the draft contract that usually forms part of the auction terms or the information about the property. Although we would need to have sight of the auction terms and the exact terms of the contract of sale, usually terms of auction contracts are also very restrictive in terms of when a buyer can claim for misrepresentation.
If you are unable to gain funding to complete on the sale, then the usual redress that the buyer has (though this is once again subject to the terms of the contract of sale) is to retain the deposit and to claim from you for all losses of and occasioned by the failed completion. There may also be contractual late fees that you have agreed to.
You should not bid on a property unless you are 100% sure that you will be able to complete, or unless you are unconcerned about losing your deposit.
If you are seeking any further advice on this then please feel free to contact our Litigation team at the Braintree office.
I purchased a property after an Auction which i was not able to attend.. The account representative was contacted on 3 properties but insisted on this particular property.
I asked home several questions about the specials conditions of sale – such as visiting the property, which he replied was not possible because it was tenanted.
I further enquired about the conditions and size of the apartment and he told me he cannot give me the size because they have not visited the property, but confirmed that a tenant moved into the property 2 weeks before the auction with a short term lease agreement and rent payment evidence provided – He claimed the landlord has done this to facilitate the sale.
Having been. Abroad working on the crisis in Europe during the week, i visited the property and it was a run down property with leaks evident from the outside with a bucket taking the drip.
The claim of a tenant paying £1000+ for such a property is not possible, and when i enquired around. From those I saw, they confirmed no one lived or moved in 2 weeks ago.
The auction house collected their fees and £10k in deposit,
I am working on the crisis in Europe at r the moment and having to not only be faced with a deceptive auction house, but the untold stress and anger this has put on me is enormous.
Also my mortgage adviser assumes that the size of the studio would be so small that it may not qualify for a mortgage, which was why they discouraged any viewing.
Can a claim or request my money back? I just want to move on
Thank you for your comment and we are sorry to hear of this.
If you are able to prove that you were informed that the property was tenanted and that it was yielding a certain rent, but this was not true, then there could be a fraudulent misrepresentation.
With auction sales, the main way to get around the invariably one sided terms and conditions is to show fraud (but sometimes also recklessness). There is a maxim in law which is “fraud unravels all”. If this is the case, there may be scope to bring a claim.
However, this does not sound straightforward and the basic position with purchasing property at auction is that the buyer should be 100% comfortable with the risks. It is not sufficient to assume matters are in order. If a question is asked but not answered sufficiently, then it is down to the prospective buyer to decide whether or not they want to take the risk.
If you would like to consider the matter in more detail, please do feel free to get in touch.
Note: This is general guidance only and should not be relied on as a substitution for properly considered legal advice.