288 thoughts on “Dealing with property auction issues”
Bought a 16 rooms HMO , 2 houses, July 22 Had HMO licenses on the legal pack. On the special condition it was stated, buyer can not dispute Whilst visited the property as a successful bidder, a local contractor that was dealing with Green Deal and City Council, raised the concerns of the HMO License . City Council confirmed by email that one property, 7 rooms does not have HMO License, the other property had just Initial HMO License. Do we have a case against the seller or the Auction house for misrepresentation?
In our blog Property Misrepresentation Claims: Example Cases and Advice, we refer to a case called Atlantic Estates Ltd v Ezekiel [1991]. This may have some application in your matter. It involved an auction sale of a property described as a wine bar. It also contained pictures showing the property being used as a wine bar. However, the property did not in fact have a licence. This was held to be a representation that the property could be used as a wine bar, which it couldn’t, because it didn’t have a licence.
There is a difference between a “statement of fact”, which can form the basis of a misrepresentation claim and a “statement of opinion” which cannot. It has been held that a “statement of law”, i.e. an explanation as to the legal position given by a seller, can sometimes form the basis of a misrepresentation claim, but not always.
The matter would probably turn on the question of whether or not a person, provided with the same information as you, would realistically have reached the conclusion that the seller was saying that property did have a HMO licence.
Bought a property at auction..on day of completion having paid the balance …informed that the auction was subject to back to back sale from existing owner to a company whose sale failed. How do I get my money back including deposit and own sales fees and sellers fees
We are not sure precisely of what the issue is, but if it is that the seller was not the current owner, but is still able to transfer the legal and equitable interest in the property to you unencumbered, it is unlikely that you have suffered any financial loss.
If there is some sort of loss or damage to you, then there may be a claim on the basis that offering something for sale more than likely amounts to a statement of fact that they are entitled to sell it.
I have a question about falsely advertised rent from a property auction. I bought ground rent at an auction for 35k, with the rent generated being advertised at 2.5k per annum. However after I bought the ground rent I found out I would actually receive 1.5 k instead. Before the sale, I looked at the legal pack and this contained the income of 1.5k for flats, but the advert stated a shop pays 1k in ground rent. There was no way to confirm this with the land registry before the auction as they did not have the documents ready (the shop ground rent was a subsale). After 2 months, they finally sent the documents and it was apparent there was no ground rent for the shop. We found out the seller was dodgy, not only did he lie for the advert, he also sold the freehold without telling the leaseholders and so did not give them the notice he should have
Is there any way I can sue the seller for fraud? The auction house has said they can’t take liability as the seller also told them the income was 2.5k.
If it can be said that the auction pack contained misleading information about rental yields, there could be a claim for misrepresentation. However, there is a difference between stating something as a matter of fact and expressing an “opinion”. A seller’s opinion of something, namely that the property could achieve rental yields of a certain amount, is very unlikely to lead to an actionable misrepresentation. Broadly, the Court will only allow a misrepresentation claim if the representation is a statement about the actual, factual circumstances of the matter.
We are not sure precisely what the issue is, in terms of whether you sought to purchase the freehold or leasehold, but broadly if there was an express representation that the freehold yielded a specific rent when this was not the case, subject to the terms of any contract (which will affect the legal position) then there may be a claim for misrepresentation.
As for selling the freehold without first giving the tenants a right of first refusal, this can be actionable. There are exceptions to the requirement to give tenants notice but if there has been a breach of the requirement, then enforcement action could potentially be commenced against the new owner of the freehold.
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Bought a 16 rooms HMO , 2 houses, July 22
Had HMO licenses on the legal pack.
On the special condition it was stated, buyer can not dispute
Whilst visited the property as a successful bidder, a local contractor that was dealing with Green Deal and City Council, raised the concerns of the HMO License .
City Council confirmed by email that one property, 7 rooms does not have HMO License, the other property had just Initial HMO License.
Do we have a case against the seller or the Auction house for misrepresentation?
Thank you for comment.
In our blog Property Misrepresentation Claims: Example Cases and Advice, we refer to a case called Atlantic Estates Ltd v Ezekiel [1991]. This may have some application in your matter. It involved an auction sale of a property described as a wine bar. It also contained pictures showing the property being used as a wine bar. However, the property did not in fact have a licence. This was held to be a representation that the property could be used as a wine bar, which it couldn’t, because it didn’t have a licence.
There is a difference between a “statement of fact”, which can form the basis of a misrepresentation claim and a “statement of opinion” which cannot. It has been held that a “statement of law”, i.e. an explanation as to the legal position given by a seller, can sometimes form the basis of a misrepresentation claim, but not always.
The matter would probably turn on the question of whether or not a person, provided with the same information as you, would realistically have reached the conclusion that the seller was saying that property did have a HMO licence.
Bought a property at auction..on day of completion having paid the balance …informed that the auction was subject to back to back sale from existing owner to a company whose sale failed.
How do I get my money back including deposit and own sales fees and sellers fees
Thank you for your comment.
We are not sure precisely of what the issue is, but if it is that the seller was not the current owner, but is still able to transfer the legal and equitable interest in the property to you unencumbered, it is unlikely that you have suffered any financial loss.
If there is some sort of loss or damage to you, then there may be a claim on the basis that offering something for sale more than likely amounts to a statement of fact that they are entitled to sell it.
I have a question about falsely advertised rent from a property auction. I bought ground rent at an auction for 35k, with the rent generated being advertised at 2.5k per annum. However after I bought the ground rent I found out I would actually receive 1.5 k instead. Before the sale, I looked at the legal pack and this contained the income of 1.5k for flats, but the advert stated a shop pays 1k in ground rent. There was no way to confirm this with the land registry before the auction as they did not have the documents ready (the shop ground rent was a subsale). After 2 months, they finally sent the documents and it was apparent there was no ground rent for the shop. We found out the seller was dodgy, not only did he lie for the advert, he also sold the freehold without telling the leaseholders and so did not give them the notice he should have
Is there any way I can sue the seller for fraud? The auction house has said they can’t take liability as the seller also told them the income was 2.5k.
Thank you for your comment.
If it can be said that the auction pack contained misleading information about rental yields, there could be a claim for misrepresentation. However, there is a difference between stating something as a matter of fact and expressing an “opinion”. A seller’s opinion of something, namely that the property could achieve rental yields of a certain amount, is very unlikely to lead to an actionable misrepresentation. Broadly, the Court will only allow a misrepresentation claim if the representation is a statement about the actual, factual circumstances of the matter.
We are not sure precisely what the issue is, in terms of whether you sought to purchase the freehold or leasehold, but broadly if there was an express representation that the freehold yielded a specific rent when this was not the case, subject to the terms of any contract (which will affect the legal position) then there may be a claim for misrepresentation.
As for selling the freehold without first giving the tenants a right of first refusal, this can be actionable. There are exceptions to the requirement to give tenants notice but if there has been a breach of the requirement, then enforcement action could potentially be commenced against the new owner of the freehold.
We suggest that you get in touch with us to discuss further, as this is legally complex.