288 thoughts on “Dealing with property auction issues”
Hi, I bid for property at auction sold by mortgage company and only later found out that there will be additional council tax and insurance arrears of previous owner that I will have to pay in addition. These could be substantial. So I will only know final price after completion. This was deliberately not made clear in legal pack and if I go through with sale I am likely to go over what I can afford to pay. It seems very dubious practice. Is there anything I can do? Thanks
Properties are often sold at auction when there are “problems” with them. The question always arises as why a property could not be sold on the open market. The basic position in any property transaction is ”buyer beware” or “caveat emptor”. This means that it is down to the buyer to decide, whether or not on the information that they have, they are prepared to proceed with the transaction. It is not normally until something else happens, such as the seller actively misleading the buyer about something, does this position change to the extent that it gives rise to a claim.
Hi there A friend of mine has had their property up for auction for a few months with only a couple of bids that were too low for the them to accept. One of these bidders has contacted them privately to ask if they could purchase the property outside of auction, giving my friend/ the seller the % fee the auction house would have taken. My friend is tempted, but in the auction contract, it says they would be liable for fees if anyone who has had negotiations with the auction house exchanged with them outside of auction. I wondered how the auction house would know if this happened – do they keep checks on land registry/ the property ? i suggested to my friend it might be too risky, but then noticed this forum so thought I would ask . Thanks
It would be a fairly standard estate agency contract to include a clause making the seller liable to pay their commission if a sale proceeded with someone that the agent had introduced. This is of course what they are being paid to do. We cannot say with any certainty (and cannot provide any specific advice here in any event) what would happen or what your friend would become liable for if they proceeded with a sale to someone that bid on the property during the auction.
As to whether or not the auction house/agent would find out, this depends on what they keep a record of or monitor. We have acted for estate agencies in commission disputes. Our clients are normally well advised to keep an eye on the HM Land Registry registers. When a transaction takes place, this normally triggers a change to the register. If it transpires that the sale proceeded to a person introduced by the agent during, for example, a period of sole selling rights, or the sale otherwise triggers the payment of a commission according to the terms of the contract, then the failure to pay this commission would normally amount to a breach of contract, entitling the agent to pursue that commission. We have also successfully recovered interest on sums due, when the transaction has been identified at a later point in time, well after completion, but the contract says that the commission is payable at an earlier point in time, normally on completion.
I understand that a damages claim after breach of contract attempts to put the innocent party into the same position if the contract was completed. How often is a damages claim taken to court. Is there any case law. What are the considerations bearing in mind the seller receives a significant amount from the 10% deposit.
Your question is in fact immensely broad. Entire books are written about the law of damages. The vast majority of cases that go to Court claim damages. There are therefore countless cases on the subject.
You are correct that to a large degree, damages for breach of contract aim to put the aggrieved party in the position they would have been in had the contract been performed.
Because damages are compensatory, the Court can award damages that take account of consequential losses that follow the breach. There are tests to apply regarding the “remoteness” of the loss caused by the breach and broadly, the type of loss suffered would have to be within the contemplation of the parties at the time the contract was entered into.
The terms of the contract itself can also have a material impact on the level and type of damages that can be claimed. Limitation and exclusion of liability clauses are very common.
We are not really sure what you mean about the seller receiving a significant sum from the deposit. In any case where a breach of contract is alleged and the claimant seeks damages, if the claimant also legally owes the defendant money, then the defendant can claim “set-off” and effectively say that what they are owed should reduce the amount of the claim.
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Hi, I bid for property at auction sold by mortgage company and only later found out that there will be additional council tax and insurance arrears of previous owner that I will have to pay in addition. These could be substantial. So I will only know final price after completion. This was deliberately not made clear in legal pack and if I go through with sale I am likely to go over what I can afford to pay. It seems very dubious practice. Is there anything I can do? Thanks
Properties are often sold at auction when there are “problems” with them. The question always arises as why a property could not be sold on the open market. The basic position in any property transaction is ”buyer beware” or “caveat emptor”. This means that it is down to the buyer to decide, whether or not on the information that they have, they are prepared to proceed with the transaction. It is not normally until something else happens, such as the seller actively misleading the buyer about something, does this position change to the extent that it gives rise to a claim.
Hi there
A friend of mine has had their property up for auction for a few months with only a couple of bids that were too low for the them to accept. One of these bidders has contacted them privately to ask if they could purchase the property outside of auction, giving my friend/ the seller the % fee the auction house would have taken. My friend is tempted, but in the auction contract, it says they would be liable for fees if anyone who has had negotiations with the auction house exchanged with them outside of auction.
I wondered how the auction house would know if this happened – do they keep checks on land registry/ the property ? i suggested to my friend it might be too risky, but then noticed this forum so thought I would ask .
Thanks
Thank you for your comment.
It would be a fairly standard estate agency contract to include a clause making the seller liable to pay their commission if a sale proceeded with someone that the agent had introduced. This is of course what they are being paid to do. We cannot say with any certainty (and cannot provide any specific advice here in any event) what would happen or what your friend would become liable for if they proceeded with a sale to someone that bid on the property during the auction.
As to whether or not the auction house/agent would find out, this depends on what they keep a record of or monitor. We have acted for estate agencies in commission disputes. Our clients are normally well advised to keep an eye on the HM Land Registry registers. When a transaction takes place, this normally triggers a change to the register. If it transpires that the sale proceeded to a person introduced by the agent during, for example, a period of sole selling rights, or the sale otherwise triggers the payment of a commission according to the terms of the contract, then the failure to pay this commission would normally amount to a breach of contract, entitling the agent to pursue that commission. We have also successfully recovered interest on sums due, when the transaction has been identified at a later point in time, well after completion, but the contract says that the commission is payable at an earlier point in time, normally on completion.
I understand that a damages claim after breach of contract attempts to put the innocent party into the same position if the contract was completed. How often is a damages claim taken to court. Is there any case law. What are the considerations bearing in mind the seller receives a significant amount from the 10% deposit.
Thank you for your comment.
Your question is in fact immensely broad. Entire books are written about the law of damages. The vast majority of cases that go to Court claim damages. There are therefore countless cases on the subject.
You are correct that to a large degree, damages for breach of contract aim to put the aggrieved party in the position they would have been in had the contract been performed.
Because damages are compensatory, the Court can award damages that take account of consequential losses that follow the breach. There are tests to apply regarding the “remoteness” of the loss caused by the breach and broadly, the type of loss suffered would have to be within the contemplation of the parties at the time the contract was entered into.
The terms of the contract itself can also have a material impact on the level and type of damages that can be claimed. Limitation and exclusion of liability clauses are very common.
We are not really sure what you mean about the seller receiving a significant sum from the deposit. In any case where a breach of contract is alleged and the claimant seeks damages, if the claimant also legally owes the defendant money, then the defendant can claim “set-off” and effectively say that what they are owed should reduce the amount of the claim.