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- Including out-of-date searches in the auction pack, which did not reflect the true position.
In all cases, it is vital that you read the small print, and that you are aware of issues like the difference between buying at a traditional auction and a modern method auction.
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 talking to a property auction conveyancing solicitor before bidding on property at auction may not seem like a necessary expense, 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?
As you can appreciate, it is much easier to avoid legal problems with a property before you bid on it. So we would strongly recommend inspecting a property first, as well as talking to a property conveyancing solicitor. Otherwise, any savings you make through buying property at auction could disappear in a misrepresentation claim.
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 below.
Hello
I have a few questions as I may consider to contact your legal team after a detailed reply:
1. I placed a bid with my investors on a commercial property in Central London with a well-known and established estate agent.
2. The estate agent announced three separate bid dates with cut-off times, for which each bid had to be issued within this time frame to be accepted. The last and final best offer was also accepted with a specific date and cut-off time.
3. I offered the highest bid, ten minutes before the final date and last cut-off time.
4. Within a week after the final bid date had expired, the seller negotiated and accepted a vastly lower bid offer (substantially lower), and without disclosure issued to me, from my own investors outside the cut-off date and time.
My questions are,
A. Is the seller and estate agent legally obliged to follow regulations related to the bid dates and cut off times or can they circumvent these restricted requirements they put on potential buyers and sell outside these restricted dates?
B. I do understand that no seller is obligated to accept a higher bid. My bid met all requirement for a qualified buyer with bank verified funds and a quick ability to process a payment for the purchase, and no demands or restrictions put on the purchase. Despite this my purchase offer was rejected for a much lower price.
C. Although there was no specified information that the property was sold on an auction, would the fact that the property was offered on specific set dates and times for bid offers fall within the laws of a property auction and auction rules?
D. My investors had promised to provide the funding but had never been able to inspect the building, nor had access to any data room documentation. Would a sale bid require them to view and accept all documentation before placing their purchasing price offer?
E. What regulations would the seller violate by circumventing me and selling the property covertly to my own investors,
1) if there was no contract in place between myself and the investors that would restricted them to place a bid of their own, apart from a terms and condition in a presentation I issued to them upon which terms they had to agree upon to invest in my property purchase,
2) if there was no contract that specified that the investors cannot approach the seller for their own personal intentions to buy in conflict of interest?
The Letter of Intent and funding verification provided by the investors to the seller did stipulate that the investors had no conflict of interest. Would that statement in the Letter of Intent and funding verification protect me to some degree in the transaction arguing that the seller and/or investor engaged in conflict of interest by accepting their purchase offer?
Thank you for your comment.
We do not think from what you describe this is directly a matter to which auction law relates. Depending specifically on what was agreed, it appears to us that you had an agreement with third party investors to purchase a property. This may be considered a joint venture. If in breach of anything agreed, they have concluded the matter themselves, then your claim for any losses you have suffered could be against them.
There is also not a general and inviolable rule that an auctioneer must accept a particular bid and what the legal position and applicable law that applies to the position will also depend on the format of the auction. We are hesitant to suggest that there would be a basis of claim.
Further, we are not certain what your loss is. Whilst you may have lost the opportunity to invest in a particular property, you have not financially lost anything and could presumably find an alternative investment.
Save in some rare circumstances (such as a claim for trespass) it is necessary to prove what the damage or financial loss is. Further, those losses are only recoverable so far as they were in the reasonable contemplation of the parties. This is called remoteness of damage. If the losses suffered could not realistically be considered to have arisen, they would not normally be recoverable in law.
I won the bid for a property that was published by the Auction House with an address which I went to view. However, I found out that the address of the property published by the Auction House is different from the address in the planning application. I think this is deceitful and a ‘misrepresentation.’
I am asking for a refund of my 10% deposit, and administration fee.
Thank you for your comment.
A misrepresentation normally occurs when a seller actively misleads the buyer. Much of the time, a property will be sold subject to the Law Society’s Standard Conditions of Sale. This will normally include an exclusion clause that the buyer agrees not to pursue any claims for misrepresentation except so far as this arose from correspondence passing between the parties or their solicitors and only then, if they were fraudulent.
Further, an advertisement by an estate agent or auction house could be misleading, but it is questionable the extent to which this would create an actionable claim. This could conceivably be considered nothing more than an “invitation to treat”, which is an invitation to negotiate (or in the case of an auction, an invitation to bid) but what is important is what is included in the auction pack, which, subject to any relevant terms and conditions, is supplied for the purposes of enabling bidder to consider the risks of bidding. If the prospective bidder is uncomfortable with the risk, they should ask questions of the seller. If the seller refuses to answer such questions (and there is no obligation on a seller to do so) then it is up to the buyer to decide whether or not to take the risk of bidding.
We would also question the loss which has been caused. Much of the time, the loss in property transactions coming about by reason of misrepresentations is based on diminution in value. This is the difference in value between what was paid for the property and what it was worth with the defect complained of. A planning application is not the same planning permission having been granted. Unless some assurances were given that planning permission had been obtained (or perhaps would definitely be granted) there probably is a negligible effect on the value of the property, but this is something a solicitor would need expert input on from a suitably qualified surveyor who is trained to value property.
Hi
I have recently sold a property at auction but unfortunately the buyers haven’t got the funds. I have found out that they were having to go to a lender. My solicitor has sent them a notice order for the 10 days which ends on the 13th May 2022. They paid the 10% deposit which the solicitor is holding. My query is that my solicitor has just told me that if the buyers still cannot pay we get to keep the 10% deposit but would have to pay all the auctioneer and solicitor costs. This was originally supposed to be paid by the buyer. Would this be correct that out of the deposit I would then have to pay all costs.
Thank you for your comment.
We would need to consider the terms of the contracts that you agreed with the various parties involved.
In theory and subject to the terms of the contract between you and the buyer, there is a possibility that the additional costs to you could be claimed from the buyer by way of damages. However, it is also most likely that you would be liable to pay your costs yourself irrespective of the position between you and the buyer in the first instance.
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.
Hi bought a piece of land at auction later found out approx 40% of the land is shared (not stated) sellers solicitor has been asked twice to produce the contract without sucess do I have to complete purchase
Regards John
Thank you for your comment.
A contract can only be legally rescinded (rescission is where the contract is “reversed” and the parties are put into the positions that they would have been as if the contract was ever entered into) if there is a contractual clause to this effect.
Often, the standard conditions of sale, which normally apply to the contract for the sale of land, contain provisions for rescinding the contract in certain circumstances, such as where there is a material difference between what was thought was being sold and what actually is being sold. However, auction terms and conditions will often modify the standard conditions of sale. The contract should be reviewed carefully.
Sometimes, if damages are not a suitable remedy, the court can order rescission in a case of misrepresentation. It does not arise often because of the obvious difficulties in effectively transferring property back to the seller and damages to compensate for the loss are normally considered an adequate remedy.
In the absence of any reason, contractual or legal, to rescind the contract, then the basic position is that you would have to complete or you would lose your deposit.
It is not clear how the land is shared. There is a difference between a joint owner and someone that has a right to use the land. There may be other avenues available, depending on the circumstances, to resolve any issues.
Please do feel free to get in touch if you would like to consider the matter further.
Note: This is general guidance only and should not be relied on as a substitution for properly considered legal advice.
Hi,
Bought house in auction. My solicitor found out company selling property does not own it. Seller solicitor confirmed it was mistake on Memorandum of sale. Seller solicitor says company mentioned on Memorandum of sale is also owned by same person and refused to change name to actual company who owned property. My solicitor wants to rescind the contract based on misrepresentation. Please advise if I can take matter to court or litigation team. Thanks
Thank you for your comment.
An individual with any claim can progress the matter through the Courts. This is their prerogative and the legal system exists to resolve disputes and claims. We think your query relates more to whether or not it would be advisable to proceed with a claim. This is a different question and depends on all of the circumstances of the matter as a whole, including the legal position.
We cannot provide specific advice on our website. We would need to consider the matter as a whole, including the contractual documentation. However, it is an interesting point and one which we are not immediately aware of any case law on. The basic position is that you cannot sell something that does not belong to you, at least not without making a suitable contractual provision for this in any relevant contract. On this basis, then it would conceivably be possible to rescind the contract, as the seller company (i.e. the contracting party) cannot complete and cannot transfer title in the property to you.
However, the memorandum of sale is not a contractual document per se. All this does is record the proposed parties to the transaction. It may be that the auction pack contained the details of the owner and the argument would then arise as to whether or not it was reasonable to rely on the memorandum of sale as a representation.
We would suggest that you speak with your solicitor in detail about the contractual position.
Hi Cunningtons,
I purchased a property via auction in September 2021, with a mortgage in principal. At the time of purchase I ensured the seller was aware that I was a first time buyer and the purchase would be dependent on the mortgage to which they offered me 4 months for completion, taking the completion date to 13th January 2022.
Since then I have conducted the initial homebuyers report as instructed by my lender, which came back with some issues in the property and they advised I would need to further arrange an additional damp & timber report for the property before they would be able to move forward with valuation for the mortgage application, this was in November 2021. I had the additional report arranged, which had 5 recommendations advised to be finalized, my lender at this point confirmed that if these works were conducted and an additional report arranged, the mortgage would be approved. I advised the seller of the report findings and had asked for access to the property to arrange the works to be completed and also if an extension on completion would be granted at all as I was a little concerned that we were already heading in to December and I would not have enough time to have the works completed, along with the additional report arranged and all the administration completed from both the solicitors and lenders side. I had no response from the lender until the 5th January 2022 to advise they are happy to provide access, which at this point was already to late for me to arrange any works to be conducted as the completion date was still set for the 13th January. I requested the extension again and having been going back and forth with my solicitor with no response from the seller until today when I was advised that they have served the notice to complete on the property.
My problem is that I have already paid a 5% deposit and reservation fee’s to a total of over £16k and stand to potentially lose and additional 10% per the terms of the auction contract, however I do not think that I should be liable to pay any of the deposit as I had done everything in my power to try to arrange for the works to be conducted for me to obtain the mortgage and move forward with the sale. I feel like the seller had genuinely just ignored all correspondence as the contract works in their favor but surely there must be something in place for buyers that are unable to conduct any works due to the seller hindering them in doing so and in turn not being able to complete.
I understand fully that I would be at breach of contract if I did not try to complete the sale, but how can I complete works on a property that 1) does not belong to me & 2) I have no access to? It does not make any sense that I should have to lose £30k because the seller did not want to answer in a timely manner or grant me access.
Please help as this is all quite stressful and I do not believe that I am at fault, I have no issue with the reservation fee’s being taken as I entered in to the auction contract but I do not think it is fair for me to lose a 15% deposit for something that I had no control over.
Kind Regards
Thank you for your comment.
We do absolutely understand how stressful the position must be and we are sorry to hear about this.
Purchasing property at auction is high risk. A good consideration of the contractual terms is absolutely vital before bidding on a property. If the contractual terms do not allow for some leeway in a situation where a lender’s mortgage offer is conditional, then it is really down to the buyer to ask for different contract terms or decide whether or not to take the risk. Most of the time, the contractual terms are not negotiable. It is very important for any prospective bidder to consider whether or not they are able to complete, or if there is something that could hinder this. If a buyer is purchasing with finance, then it is very important to consider the circumstances in which any mortgage offers could be withdrawn and consider whether or not there is a possibility of this occurring before bidding.
The premise behind an auction is that it places all the risk on the buyer. It is unlikely that there was a contractual term or obligation on the seller to do anything to facilitate the sale. We would suggest that trying to negotiate with the seller is important to try and obtain an extension of time to mitigate any loss to you.
Depending on the terms and conditions applicable, there could be scope to argue that by giving you 4 months to complete (provided that this was before the auction concluded), it was perhaps an implied term of the agreement that they would respond promptly to requests for access. Having said this, we are very hesitant to suggest that this would be the case and we are not aware of any case law on the point.
We do have to point out that we cannot give legal advice on our website. We can only provide general guidance, which is not a substitution for proper legal advice which takes account of all of the circumstances and relevant documentation.
I would like to tell you my experience to seek your advice.
We bought a property at auction but the seller’s registration at the Land Registry has not yet completed. Land Registry have requested further information and upon receiving that the application will proceed but the seller’s solicitors have not been very cooperative. We are now in the position of potentially completing the sale with their registration not complete so we will not be able to proceed with our registration leaving us in legal limbo over the ownership of the property.
In the legal pack that was provided the seller’s name was not given. A letter of administration of probate was included of the previous (deceased) owner who is still listed as the owner at the Land Registry. It gave the impression that it was being sold as probate but we have since discovered that that was not the case.
Post sale we have found out that the seller is a private limited company who claim that they have owned the property for less than 6 months.and there is a clause saying that the Land Registry registration is ongoing but we cannot delay the completion if it has not been completed. We feel that the legal pack was misleading.
The searches were conducted in June but they only submitted the TR1 form at the end of September, just shortly before the auction. It seems that they have deliberately tried to hide their ownership.
Because the Land Registry record has not been updated we have been unable to verify that they are indeed the legal owner and despite requests to do so, they have failed to provide any written documentation confirming such.
This has made us concerned that we are a victim of fraud and face losing our life savings and our new home.
Both the estate agents and auction house involved, who are owned by the same people, say that they conducted AML checks but will not provide us with any written proof, saying that it is the job of the solicitor. The solicitor we are using is on a panel of the auction house but we feel that she is not representing our interests fully.
We do not know what we should do. Pull out and forfeit the money we have already paid plus possibly sued for damages or proceed with completion and possibly having to fight for the property. Also, since it is a private company which could be closed down at a moment’s notice leaving us in a bigger mess.
Thank you for your comment.
We cannot provide specific advice on our website. Your situation looks a little complex and would need to be considered in more detail.
What we would say is that whilst much more than a mere formality, registration of your legal ownership at the Land Registry is not the point in time that you become the owner of the property. Once completion takes place, technically you become the “owner”. If the seller was not entitled to sell the property, then there is a breach of contract and you would be able to pursue the seller for a refund.
We would suggest that you speak in detail with your solicitor and make sure you understand the position. Whilst a panel solicitor recommended by the auction house, they are still solicitors and obliged to act in your best interests and provide you with advice within the scope of their retainer and expertise.
Hello solicitors at cunningtons,
We have purchased a property through auction company, the auction took place 27th October. The exchange was on the fall of the hammer on 27th October 2021.
The action pack contained information about the property recent sale and purchases land (registery documents). The last time the property changed ownership in the information provided in the legal pack was 2017. My own solicitor has done new searches after exchange it appears now the property was purchased on 18th October 2021 and sold at the auction on 27th October . Which means it’s less than 6months old. My mortgage will refuse to offer based on this.
It was not declared , the recent change in ownership, the special conditions of the auctioneer does clearly state that they will provide all paperwork they can but they may not be in date in all circumstances and it is for the buyer to do their own searches.
We will not be able to complete the purchase, as we have now lost the fees and 10% deposit deposit. Do we have a case for a claim?
Do we have a case, as the purchase without a mortgage offer is going to be extremely difficult.
Thank you for your comment.
We are unable to provide advice which is specific, as we are not aware of the full circumstances. However, we would suggest that if the documentation contained in the auction pack was misleading, there may be a basis of claim. Whilst the auction terms will almost certainly suggest that the buyer should make their own enquiries, there is a reasonable argument to ask why would an old, rather than up to date, official copy of title be included in the auction pack, if not with a view to imparting the information contained in it?
Do feel free to get in touch if you would like to consider the matter further.
Hi there,
I tried to buy a flat through an online auction but the sale collapsed because the seller could not arrange for an EWS1 Form to be uploaded to the Building Safety Portal as requested by my mortgage lender. The seller then terminated the contract and kept my £9000 deposit and the auctioneers kept the £6000 reservation fee.
Google search has lots of information about EWS1 Forms and articles about problems with property (flat) sales caused by EWS1 Forms.
Here are some pertinent points for my case:
When I first inquired about the online auction process and also when negotiating my bid price the Auction staff told me (over the phone) it would be a good idea for me to get a Mortgage in Principle in place before the bid, which is what I did.
The Buyers Contract I signed offered the option to purchase the property with a mortgage and this is the option I selected.
It was only realized later when the mortgage valuation report was produced that the property required an EWS1 Form to be uploaded to the Building Safety Portal. Without an EWS1 Form a mortgage was not obtainable.
The EWS1 Form is not a legal requirement, however it is a requirement for mortgage lenders where an EWS1 Form is applicable, like in this case.
The seller was made aware of the requirement for an EWS 1 Form.
The seller issued me with a Notice to Complete which was obviously impossible for me to comply with unless the seller arranged for EWS1 Form to be uploaded to the Building Safety Portal so I could get a mortgage.
The seller then terminated the contract and kept the deposit.
Do you think I may have grounds for a case (in court) to get my money back based on the following points :
– The Notice to Complete was served under an auction contract condition which said the seller must be ‘ready to complete’ otherwise they buyer may recover their deposit.
The Glossary section of the auction pack defines ‘Ready to complete’ as being : “if completion would enable the seller to discharge all financial charges secured on the lot that have to be discharged by completion, then those outstanding financial charges do not prevent the seller from being ready to complete. “
Given the above glossary definition is still the case that because the seller had not provided the information required (i.e the EWS1 Form) for a Sale Completion then therefore they (the seller) were not ready to complete?
– Without an EWS1 Form for the property a mortgage is not obtainable and the property can only be sold to a cash buyer. The Buyers Contract provided to me by the auctioneers gave me the option to buy the property using a mortgage and this is the contract option I selected, I did not select the cash purchase option. i.e the contract was based on a mortgage purchase only.
The Glossary section of the auction pack defines ‘Contract’ as: “the contract by which the seller agrees to sell and the buyer agrees to buy the lot”
Has there been some sort of breach of contract/misrepresentation here?
– Are there other grounds I may have for a case to reclaim my monies?
I look forward to hearing from
Kind Regards
Gurtej Bains
Thank you for your comment. Unfortunately we cannot provide detailed advice on our website. All we are able to provide is general guidance, which is not a substitution for properly and fully considered legal advice. We are therefore unable to respond to your specific points here.
Broadly speaking, a bidder at any auction would be well advised to ensure that they are able to proceed to completion after a successful bid. If the purchase is being financed by a mortgage, careful consideration of the mortgage requirements is absolutely critical. If there is information or documentation missing from the auction pack, and the seller will either not provide this or states that proceeding is solely at the bidder’s risk, then it is generally down to the bidder to decide whether or not to take the risk of proceeding but being unable to complete. We are not aware of any obligation on a seller in any context to supply to a buyer documentation required for the buyer’s mortgage lender’s purposes.
Hi there,
We exchanged an auction contract recently, on the auctioneer website clear description in two occasions that the property has a side garden unfortunately when the solicitors came on board to do completion she found that the side garden not in the title and the seller has not got any legal paper for the side garden.
Based on the informations we read about misrepresentations this is a clear misrepresentation is it the case please regardles the auctioneer terms and conditions as now adays most auctionner trying hard to not take any responsibility for their online auction contents is it possible the auctioneer in this case to be liable for misrepresentations too as they provide false information to attract more buyers? thank you.
Thank you for your comment.
A claim against an auctioneer is less likely to be successful than a claim against a seller. There is generally no contractual or other relationship between an auctioneer and a successful bidder. It would be more likely that your claim lay against the seller.
From what you have written, it does sound as though there is a possible claim for misrepresentation. To expressly state that a garden forms part of a property when it does not would likely amount to a misrepresentation. However, the terms agreed between you and the seller would still be a relevant consideration, in particular as to whether or not there is a breach of contract. Normally, the standard conditions of sale would still be incorporated into the contract. Unless amended, these normally state that a buyer is entitled to compensation if there is a material difference between the description of the property in the contract and what is actually purchased.
Do feel free to get in touch with us if you would like to explore this in more detail.
A property was advertised via a Auction House and a Buy it now offer that i made to purchase the property was accepted however i insisted to cover myself that a clause was put in the contract that was duly signed by both parties that if the buyer of the property i was selling pulled out then the completion time to complete my Auction purchase would be extended to enable a new buyer for my property to be found as i needed funds from my sale to complete, the extension on the contract provided had no specific date inserted other than saying it would be extended to facilitate me finding a new buyer.
Unfortunately my buyer pulled out at the last minute and i have found a new buyer which is in early days of Solicitor work however the seller of the Auction property has become frustrated at the delay and wanted a extra £6000 on the contract price signed, i refused to increase on the contract price agreed and are now aware that the Auction property has been re advertised and a new buyer presumably at a higher price is completing.
The Auction House are refusing to return my deposit paid of several thousand pounds saying i have failed to complete and i have also incurred Solicitor fees for the conveyancing work done and house prices have increased over the past few months which again will cause me a financial loss if i have to seek a new property.
I only agreed to purchase this property at Auction with the clause being inserted which was agreed and signed by all parties and are considering how to proceed for my losses and potential other compensation due.
Thank you for your comment. The position does sound relatively complicated from a contractual point of view, and it would be necessary to have a look at the precise wording that was agreed, and any contemporaneous correspondence relating to that.
We would be happy to look into the position with you in more detail if you would like to get in touch.
Hi, I bought a piece of land for residential development at property auction. 2 days before the auction unbeknown to me the trees on the land had proposed TPO’s Tree preservation Orders placed on them. This information was not disclosed. I do not want to complete the transaction as the development would have little future value now to me. Would there be any chance I can get my 10% deposit back as the buyer would surely have been made aware of this and it was not declared. Let me know if you can help with this matter. Thanks
Thank you for your comment. Whether or not there is any basis to recover your deposit will turn on the contractual position between you and the seller. However, if it can be proved that the seller was aware that tree preservation orders had been placed on the trees but did not update the auction pack accordingly, there may be scope to suggest that there has been a misrepresentation by reason of the fact that the tree preservation orders might prevent development.
I sold my property at auction over a month ago and the completion date has now passed but the buyer still hasn’t even paid the deposit and is apparently not responding to the auctioneer’s telephone calls and e-mails. It looks like he’s trying to back out of the purchase.
Am I right in thinking it’s the responsibility of the auction house to obtain the deposit and pass this on to me if the buyer fails to complete? And if so, what should I do if the auction house doesn’t obtain the deposit?
Also, if the buyer continues to ignore calls etc from the auction house does this mean I’m unable to remarket the property because the buyer hasn’t officially confirmed that he’s not proceeding with the purchase?
Thank you for your comment. Broadly, you would expect an auctioneer to take receipt of a deposit, however, the position will depend on the terms agreed between you and the auction house as to whether or not there is a breach of duty or a breach of contract entitling you to bring a claim against the auction house.
However, it may be the case that the deposit is to be paid direct to you as a seller. It will depend on the terms of the contract between you and the buyer. The chances are, the buyer has already agreed to enter into the transaction and can be held liable for the deposit. You should consult a solicitor about serving notice to complete if you want to pursue the deposit on the basis of a breach of contract.
As for whether or not the property can be placed into auction again without considering the contractual terms agreed between you and the successful bidder, it is not possible to say. The chances are, however, that there may have been a breach of contract and provided that the contract has been brought to an end, normally through a serving a notice to complete, you would be able to put the property back into auction.
Hi all looking for some advice. We are looking at purchasing a canal side property that is freehold. The deeds have no easement of access down the lane to the canal and the house. Although the auction pack states there is a written consent of access. I am worried that if we buy that we would have no rights of access. Regards Sharon
Thanks for your comment. Please bear with us and we’ll respond as fast as we can.
Thank you for your comment. We think you are right to be cautious and whilst you can obviously proceed with bidding on the property, on the basis that you have been told that there is written consent, you are probably well advised to run the point past a solicitor before doing so.
The basic position with any purchase of property, including that at auction, is that it is “buyer beware”. This means that unless you are prepared to take the risk, the only other option is to not bid on the property if you are not satisfied with the information that you have been provided and the seller will not provide anything further to you.
Hi
I bid and won a plot of land in online auction 2 weeks ago . The plot was advertised as plot size of 0.5 acres (2,178 sqm). Clearly labeled in the right-move advert .
As we go through the conveyancing process we release that the actual size of the plot as per the neighbours deeds is that we got hold of is 0.05 acres ( this is 210 sqm)., effectively it is 10 times smaller .
I paid the deposit and admin fee promptly on the day of auction. What are my options in light of misrepresentation at the auction . I obviously do not wish to loose the 5K deposit I payed.
Thank you for your comment. Whether or not this amounts to a misrepresentation will depend to a large degree on what was included in the auction pack. Whilst an advertisement may be misleading, it is really the contents of the auction pack which are most important, as this should state what it is that you intend to buy. If there were no measurements within the auction pack and the only thing a buyer had to rely on was the advertisement, then in all probability there has been a misrepresentation.
Please do feel free to get in touch if you would like us to look into the matter in a bit more detail.
Hi,
I won a property at auction, applied for mortgage, the lender did valuation and said the house has constructional issue of movement and cracks in the walls and they are not able to value, which means no mortgage. I have paid 10% deposit and the completion date is in a week, I cannot pay for the rest in cash. What can I do? Can I withdraw from this sale? Would I be able to get my money back? There was nothing mentioned in the legal pack of the auction regarding this constructional problem.
Thank you for your comment. While we cannot give specific advise based solely on this, the issue here is that when you put in a bid on a property at auction, the moment the hammer falls, if you are the top bidder, you are contractually bound to complete the purchase. If you do not complete, you would be in breach of contract and that contract and/or applicable law may provide for sanctions such as forfeiture of the deposit and/or costs the seller has incurred as a result of failure to complete.
It may be possible to argue that there was a misrepresentation if the seller did not mention the structural issues, for which you may be able to seek damages and/or the rescission of the contract. However merely failing to mention it in the legal pack or other documentation is not enough to give rise to such a claim. You must be able to point to specific false statements made by the seller or those acting for them, on which you relied, and were entitled to rely, and lost out as a result. Please feel free to telephone our Litigation department at the Braintree office to discuss this further.
i bought a property via auction, i was selling my house to a cash buyer, this was to fund my auction purchase, i paid the £6k for auction fees which they said i had to pay the same day as i won the auction (i was the only bid), but my cash buyer has now pulled out of my house sale, i am trying to get a new buyer of my house, can i claim my £6k back if i am unable to sell my house, the auction company knew that i needed the cash buyer to buy my house so i could proceed, or can i extend the time to complete to give me time to find a new buyer
Thank you for your comment and I am sorry to hear of your difficulties.
Unfortunately, our initial view is that you are very unlikely to be able to get a refund of any sums paid to the auction company. Unless you have agreed something contractually in relation to this particular issue, then you will be bound by any contractual terms that you agreed to. From the seller’s point of view, I am sure you are able to appreciate that they want to complete the sale and this is why, unless you have negotiated specific terms, you will be liable under the terms of the contract that you agreed with the seller.
Hi I have a question, our property was entered in auction for month of March but it did not sell, so we had discussions and agreed for next month auction but meanwhile we had to renew our lease and asked not to enter the property for April month which they did, now we have new lease signed and do not wish to sell. But we are asked to pay withdrawal fee of £4000 plus vat. Whereas their terms were no sale no fee.
Please advise if I need to pay this amount.
Thank you for your comment.
Your contractual liability to pay anything to the auctioneers would depend on a review of the terms of the contract agreed and a consideration of the factual circumstances. Even if we were able to provide specific advice on our website, which we cannot do, we would need to consider the contractual documentation and take detailed instructions from you before providing any advice on the position.
Do feel free to get in touch if you would like us to consider the matter further with you.
I won a bid at auction and I was told to pay 10% deposit of property price(£40400), to secure the house. The completion is with 42 days of hummer fall. My broker did find a good mortgage lender deal. After one week of the wining bid The mortgage lender surveyor asked the Auction to see the property . Auction house took more than ten days to sent the house keys to the mortgage surveyor. After the mortgage lender surveyor report came from lender saying the house is invaluable, because the house next door is non-standard and the house I’m purchasing The walls are of PRC construction and appear to have been repaired with a brick outer skin.
Therefore is there a PRC certificate?
The adjoining propetry is not repaired.
The deadline for the completion is coming to the end, the seller solicitor never mentioned and didn’t add PRC certificate to legal package.
My broker is been communicating with seller solicitor, but so far isn’t being helpful. We been asking them for the PRC certificate, but still no reply from them . We believe the PRC certificate should have been together with legal pack. The seller can’t sell the house without PRC certificate. Would you bee able to deal with this situation or to give some options. We do want to loose the deposit
Thank you
Thank you for your comment.
We are unable to provide specific advice on our website. If you would like us to look into your matter in more detail, please do feel free to get in touch.
Auctions often represent a significant risk to purchasers. This is because normally an auction pack is supplied and nothing else. Often a bidder is not given the opportunity to ask questions and gather information about the property before bidding and there is no general obligation on a seller to include anything specific in an auction pack. This often means there can be undisclosed legal or physical problems with the property, particularly if the opportunity to have a survey undertaken is not available.
As a minimum, we would always recommend that a person thinking of bidding on a property at auction take the auction pack to their solicitor for consideration first. Many of our clients who have purchased property at auction have not done this and as a result have committed to purchase a property which they cannot or do not want to complete on for various reasons, meaning that they stand to lose their deposit. However, a solicitor will only be able to advise a client on the legal aspects of the purchase and further, unless specifically instructed to check the position on something, will not be able to identify problems unless they are obvious, particularly if the documentation is lacking. It would therefore be very important for a client to be specific about what they want to know when instructing their solicitor.
Hi all
5Feb 2021
Bought a property through online auction for investment purposes: 56days completion
£6k paid immediately (non-refundable deposit) to secure the property + £300
I asked to complete quickly: Cash buyer & no searches required
Transaction failed as the seller eventually withdrew from sale & sold the property privately citing completion dates passed
My solicitor’s firm:
-was slow & even deterred me from buying
-failed to complete the transaction on time
-received the draft contract early (19Feb2021) but only given to me for signing 30April
The auction house
-they were also dragging their feet (sending EPC late although requested from day 1)
-blamed the seller even though another deadline was agreed among us
-now withholding my deposit of £6k having previously hinted I should get it back due to exceptional circumstances
-Haven’t even suggested to me that I could keep the deposit for another auction
Who is legally responsible for my losses? My solicitor or seller?
Can I claim compensation from my solicitor for suffering financial damages, missing out on potential rental income (2yrs) + reimbursement of my deposit £6k
This situation could happen to anyone: The seller having found a “better deal” or not being happy with the outcome of the auction could withdraw from the sale.
Both solicitors deny responsibility citing unfortunate circumstances.
The buyer losing out on fees, deposit…
Regards
R
Thank you for your comment. While we would need to see the full auction terms and conditions as well as the auction pack and similar to determine whether the seller and/or your solicitor had been at fault here, it would in the first instance seem that the seller is more likely to be liable for this based upon what you have said.
At an auction, when the hammer falls a legally binding contract is formed between the seller of the property and the top bidder. This replaces the normal exchange of contracts that a property transaction on the open market would involve, but it is still a binding contract. If the seller withdrew from the sale after the auction ended with you as the highest bidder, then it may be open to you to seek to recover your losses of and occasioned by his breach of contract, or even seek specific performance of the contract from the seller should you be ready, willing, and able to complete the sale, but since you have said that he has sold to someone else the latter will be unlikely.
As regards a claim against the solicitor, this is less clear-cut. You would need to show that because of his acts or omissions, he breached his professional duty of care to you and directly caused you to lose out on the sale and incur those losses.
In terms of what you would expect to recover in Court, this will very much depend on whether the losses you have undergone were reasonably foreseeable.
Please feel free to telephone our Litigation department at the Braintree office if you wish to discuss this further.
just bought a house from an auction and the legal pack said the house was freehold, even dvla right now says the house is freehold
but 1 day before the auction, the auctineers put a document in the legal pack saying it has a 999 years lease hold.
how can i solve this issue, what is my right. ı have been scammed
Thank you for your comment.
This could be a misrepresentation, however this sounds like an unusual situation. Often the Official Copy of Title from the Land Registry would be included in an auction pack supplied before the auction and this would say whether or not the property is leasehold or freehold. It may very well have been this document was included, albeit only very shortly before the auction.
In some circumstances, a misrepresentation can occur when someone allows the other party to proceed on the basis of a known misapprehension that they do not correct. If you were told that the property was freehold and you were not supplied with anything to suggest otherwise, then there may be a misrepresentation. However, it would be necessary to consider carefully exactly what has occurred. It is not normally a defence to a misrepresentation claim to say that the aggrieved party could have discovered the truth. However, it would be important to consider whether or not it was reasonable of you to have relied on the suggestion that the property was freehold, if the auction pack contained information to the contrary.
Hi, baffled as have successfully bid on a property all proceeded well, full payment and signed contract all sent by me to my solicitor who are waiting for the seller to sign. Their solicitor has reset the completion deadline once already as tgey missed the original deadline to dign. The seller has still not returned their signed completion paperwork over a month after the 28 day deadline for completion. Where do I stand as the buyer? Am I able to withdraw from the purchase?
Thank you for your comment. You should discuss your next steps with your own solicitor as much will depend on the contractual terms you agreed. However, it would be unusual for any contract of sale not to require the service of a notice to complete on the defaulting party before the other party could rescind (withdraw) from the contract. If the notice to complete is not complied with, then the basic position is that the other party can withdraw from the transaction but not before.
Hi Please advice, is the seller required to provide AP1 or proof of ownership of the property because at present as a name on the land registry which is not that of the vendor.
Extra special conditions
1. The seller is selling as the contractual purchaser of the Property. The buyer
acknowledges that the seller is only the contractual purchaser and shall not be
entitled to raise any requisition arising from the seller not being the registered
proprietor of the Property and the buyer shall not be entitled to refuse to complete
for this reason.
2. The seller shall, in addition to the Transfer Deed provide to the buyer:
a) The Transfer Deed from the registered proprietor to the seller
b) SDLT5 Certificate in respect of the Transfer to the seller
c) Form AP1 in respect of the transfer to the seller
3. On Completion, the Buyer shall pay the sum of £365.00 in respect of the searches
provided in the legal pack.
4. If the buyer shall refuse to complete until the seller is the registered proprietor of the
Property the buyer shall on the contractual completion date pay to the seller the
balance of the purchase price to be held by the seller’s solicitors until completion and
on completion the buyer shall pay to the seller in addition to the purchase price the
stamp duty land tax payable by the seller in respect of the Transfer to the seller as a
result of the buyer’s refusal to complete on the completion date
5. Any Notice to Complete served by the seller shall only be required to give five working
days’ notice.
6. The specified time for completion is 12.00 noon and if funds are received after that
time, completion is to be treated as taking place on the next working day. In
addition, the seller shall be forthwith entitled to serve a Notice to Complete.
7. In the event of Notice to Complete being served the Buyer shall as a condition of
Completion pay the Sellers’ solicitor’s costs of £475.00 plus VAT in connection with
the preparation and service of the Notice to Complete.
8. In addition to the purchase price, the Buyer shall pay to the Seller two per cent plus
value added tax of the purchase price as a contribution towards the legal and agent’s
costs incurred by the Seller in connection with the sale of the Property
Thank you for your comment. Unfortunately we can only give general guidance on our website, which should not be considered a substitution for bespoke legal advice. We are therefore unable to respond specifically.
We are aware that there are sellers who “flip” properties at auction, this is buying and then immediately selling at a higher price. Effectively, they are never the registered proprietors but they would normally have to be the legal owner. Unless someone has permission from the owner of specific property to sell it on their behalf (in which case they would be an agent of the seller) it is not possible to sell something that does not belong to them.
Hi there,
I won an auction bid at £30K on a dilapidated garage that was advertised as land and building at the online auction with the LOT picture showing a building size of a bungalow covered in a bush behind it. It was stated that buyers could only view property from the road as there was no access to the back of the building . The same property was previously advertised as a bungalow by a local Agent, so I did not bother going around for any viewings before the auction. It looked like my dream project on pictures trusting that it was land and building as advertised.
Little did I know that it was just a garage attached to a neighbour’s shed with no land to it. I was not happy, so I hesitated on completing the purchase , however I realized that I had no right besides, I did not want to lose my deposit therefore I went on and completed. I immediately filed a complaint to the auctioneers, and they changed the online auction from “LAND and BUILDING” to “BUILDING” within a few minutes later. I waited for around 3 weeks or so to get a decision from them and they still insisted it was the right representation though they offered to pay me £250 as a good will gesture which I never bothered claiming.
I am currently waiting for a planning permission decision to have my garage turned into a small holiday let mezzanine .
Nevertheless, I am still hoping to take further action against the auctioneers for misrepresentation, please advise.
Thanks for your advice in advance and in the meantime, please stay safe!
Thank you for your comment. Misrepresentations can occur at auction and this may be an example of this. If the property is described in a specific way and this transpires to be incorrect, then it may very well be that there has been a misrepresentation if the description was relied on when entering into the contract. It is also not normally a defence to suggest that the aggrieved party could have found out the “truth”, for example, by inspecting the property.
An issue that you may find is that you may be considered to have affirmed the contract and effectively waived a claim for misrepresentation by completing, rather than seeking to rescind the contract. This is a point we would need to consider with you.
If you would like to look into the matter in more detail, please do feel free to get in touch.
Hello there,
My company registered with an auction. As the director I received a call requesting a deposit, however, I never bid on any properties. I then received a call from the auctioneers demanding and pushing for payment. During that time, I had just transferred funds into the business account and they were taken by the auctioneers. I immediately notified the auctioneers to cancel the purchase and issue a refund as no one was coming forward in regards to bidding on the property. A substantial amount has been taken from the businesses account by the auctioneers yet they have gone ahead to sell the property in another auction for £30000 more than what it had originally gone for. This is a predicament as no one is coming forward. Please could you advise what I should do. I promptly notified the bank but they’ve refused to issue the funds back. What would you advise is the way forward to get the funds back?
Is it the responsibility of the auctioneers to issue this refund or the bank as they were both notified of the issue promptly?
Would appreciate your advice
Thank you for your comment. Unfortunately we are unable to provide any specific advice on our website. However, by way of general guidance, who is liable for what will depend on the terms of any contract between you and the auctioneers and/or sellers.
We appreciate that you state that you did not bid on any properties, however it would appear that you did remit funds to the auctioneers for some reason. The reason and basis for that transfer would need to be considered. Clearly no one can take money off of another person unless this is pursuant to some sort of agreement. However, a contract or agreement can come into existence by conduct, there does not necessarily have to be an express written and signed contract. We would need to spend time going through the precise events and considering all of the written correspondence and documentation before we would be able to provide any advice.
Should you wish to progress the matter, please do feel free to get in touch.
hi my partner recently purchased a piece of land with planning permission at auction after some research it has come to light there’s rebel with drainage which means they will not consent to works to be done they have told my partner that the previous owner had done all same searches and water company refused to give them agreement for such works also hence them putting it back into auction none of this was in legal pack we are due to complete any day now – what are our rights? Can we back out of sale on those grounds and get our deposit back?
Thank you for your comment. I am afraid I am not sure what you mean by “rebel with drainage” – can you clarify?
If the seller specifically can be shown to have made a false statement then there may be a claim here. Generally speaking pulling out of a sale for misrepresentation after exchange is risky and puts you at risk for not only loss of deposit but also a legal claim by the seller for consequential losses arising out of your failure to complete or even for an order requiring you to complete the transaction atop that. If you did this any defence would likely have to be to show that there was a misrepresentation of such gravity that it would have justified rescission of the sale had you found out about it after completion, or that they themselves are for some reason in breach of contract by their failure to do this.
However this is something that I think you may want to contact our Litigation team at our Braintree office to discuss in more depth as unfortunately I am not entirely clear what exactly has happened and so I am not sure I can advise properly here.
Hi there,
I bought a property at an online auction on 16 December 2020. I did not read the auction pack or view the property and kept telling this to the agent throughout the process but he persistently encouraged me to buy. He said that it was in a good rental area and was valued more than they were asking. I now understand that I have no recourse for this as it was my responsibility to carry out the necessary checks. I also specifically enquired whether there was a combi boiler and central heating system and was told yes. I found out afterwards that this was not so.
I am now faced with a dilemma: Section 25 of the contract states that “At the time of AUCTION the SELLER is not the registered PROPRIETOR of the PROPERTY. The BUYER will raise no requisition and will have no right to delay or cancel COMPLETION in this regard. Production of the Transfer Deed proving Transfer of ownership to the SELLER will be sufficient to enable COMPLETION.”
Completion was to take place within 28 days of the contract date. On 13 Jan 2021, the contract date for completion, the seller’s solicitor advised that he was not ready to complete. My solicitor thought it was better not to serve a notice to complete while the issue of the Title was being dealt with. I thereafter, tried to have the contract rescinded on 17 Feb and again on 15 March and 22 March for breach of contract as it did not appear that any effort was being made by the seller to deal with the Title registration matter. The seller’s solicitors have refused. On 18 May 2021, they served a notice to complete within 10 working days.
The Seller purchased the property on 16 Feb 2018 with full title guarantee and is still not the registered Proprietor on 21 May 2021. On Zoopla, the property is listed as sold in September 2020 but a Land Registry check on 21 May 2021 shows that title is still with the previous owner. The last sale date on Rightmove is October 2017, the same date that the previous owner is stated as the Proprietor. There is an obvious danger here and the possibility of fraud being committed.
Should I complete on the purchase, I am faced with the possibility of never gaining Title to the property. If the seller has already sold this property to an unwitting buyer(s) who would be in the same situation as myself and then proceeds to fraudulently sell to another party, that party can claim the property if it is registered for that sale. If I refuse to complete the purchase, I stand to lose £7,500 comprising £1,500 reservation fee and £6,000 buyer fee; both of which are stated as non-refundable. They will then obviously put the property on the market again and another unwitting bidder(s) will face the same scenario, I am dealing with.
Please could you advise if there is any redress available to me. If so, is it something your learned selves can deal with on my behalf?
Many thanks for your advice on the matter.
Kind regards
Rita
Thank you for your comment. This seems to be a rather complicated situation, but at heart, the general rule is that to force the other party to a property transaction to complete the sale, that party must themselves be ready, willing, and able to complete. The contract states that as at the date of it the seller does not have title because completion on his purchase of the property is still outstanding, but he must be sure that he will have title to the property to be able to force completion. If he is not ready, willing, and able to complete there may be a defence to any claim for an order requiring you to complete on the purchase on that basis. It would also depend very much on exactly what was stated in the contracts and terms and conditions of auction in full.
This is something where we would have to see the documentation you refer to before we can properly advise. Please feel free to ring our Litigation team at the Braintree office for a confidential discussion and we may be able to direct you as to what can be done about this, what its prospects of success are, and what the likely costs of litigating this may be.