290 thoughts on “Dealing with property auction issues”
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?
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.
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.
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.
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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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.