290 thoughts on “Dealing with property auction issues”
Hi, I won an auction property of 9 garages. I was digging for more information after winning the auction, and then I discovered the advertised garages did not match the legal paperwork provided by the auction. Title number, land registry and address are different I paid the deposit to the auction house, but I am not sure if I continue, I would end up buying the correct thing. The provided title number in the legal pack is for another property, which is a house that is worth plenty of money compared to the garages. What are my options? How do I know for sure that I am buying what was advertised and not part of it only? Can I sue the auction house and the seller for misrepresentation?
Clearly there has been some sort of mistake here. However, whether or not it entitles you to bring some sort of claim, or even rescind the contract does depend on a number of things. We are not sure that we can provide even general pointers without understanding the position further. It does strike us that fundamentally, the seller wanted to sell the garages and you wanted to buy them, so there is no real mistake in this respect and presumably no misrepresentation (unless you were led to believe you were buying garages but you were not).
We would have to spend some time understanding and investigating the position before we could identify what the legal position was.
Hi, I won a property at auction singed contract and paid 10% deposit. The property had ‘special conditions’ attached which I do not believe were uploaded to the legal pack until the day of the auction so I was not aware of them as the property was one of the first lots. I had spoken to the auctioneer the day before the auction to ask about the ownership of the property and was assured that the company who are effectively selling it deal with probate and take the house in return (thereby implying that probate had been granted), that the auction house do a lot of work with them and all is above board. The special conditions state that completion takes place within 28 days of grant of probate, and that should completion not be achieved within 8 months of exchange the seller has the right to withdraw. However, on my side the contract is open-ended. I have chased details on the probate and the auctioneer has repeatedly told me the vendors are ‘chasing the probate office’ however it has come to my attention through the vendors solicitors that the original sellers are still waiting on HMRC to confirm tax liabilities and so the probate application has not been made yet. Can I insist on a variation to contract to ensure tthat the termination option is reciprocal?
The terms of any contract are formed by one party making an offer (the “offeror”) and that offer being accepted by the other party (the “offeree”).
There is lots of historical case law on offer and acceptance but a particular aspect of what you refer to is the “incorporation of terms”.
Parties can reach an agreement “subject to contract”, meaning that it is an agreement in principle subject to agreeing the terms of the written contract itself later. If the terms of the contract cannot be agreed, that is the end of the matter. This is what normally happens in “normal” property transactions.
Alternatively, and what appears to be the issue here, is when the offer is made subject to existing terms and conditions. Those existing terms and conditions must be brought to the attention of the offeree person before it can be said that those terms have been accepted. This can be done in various ways. For example, they can be provided in full to be read. Alternatively, reference to them can be made and the offeree can ask for them. It’s all too easy these days to simply tick the box when you buy something online to confirm that you accept the terms and conditions.
We cannot provide specific advice on our website but if particular terms and conditions were not brought to the attention of an offeree, they may not be binding or the contract may be void or voidable. A void contract is one that is treated by law as never having come into existence. A voidable contract is one that can be “cancelled” at the election of the aggrieved party. There are a number of considerations to take account of.
What is often important is what happens after the omission is identified. A contract can be “affirmed”. If there is a breach of contract or a right to bring the contract to an end by someone, if that person affirms the contract or waives the breach, they lose the right to end to contract. Put another way, if the party with a right to bring the contract to an end effectively gives up that right, either by saying “it’s ok” or renegotiating terms, the their right to “get out of the contract” no longer exists.
Any party to a contract can look to renegotiate its terms. Normally, however, some “consideration” is needed for this. It is effectively like negotiating a new contract. This could be an agreement to waive the right to terminate the contract, in exchange for some new term that the aggrieved party wants to now include.
Hi – I recently bought a property at auction but legal documents and thought that they are fine since there is an absolute title on the property register. However, aftee exchanged of contracts and paying for my deposit at 10%, I have received the copy of contracts and the seller is a limited company which I cannot see in the title. What are my options if I decided not to push through in the sale? Also had read the contracts and it is so onerous to me as the buyer as I cannot sue the seller if there are misrepresentations on the sale.
We can’t provide specific advice on our website, however, it does not sound to us that you do have the option not to proceed with the purchase. If you do not proceed with the purchase, there is every probability that you will be in breach of contract. Most of the time, if a buyer does not proceed, they will forfeit their deposit. However, the precise contractual terms need to be considered, as there could be additional sums or losses that the seller can claim from you. As you have noted, properties sold at auction are often very heavily biased towards the seller and it wouldn’t be unusual if you also agreed to pay the seller’s costs associated with auctioning the property, even if you don’t proceed with the transaction.
A limited company can own property with absolute title. If it is not named as the proprietor, it may not be entitled to sell the property. However, it is more likely that the company has purchased the property and “flipped” it. It happens quite a lot in auctions. Flipping property means buying it and then selling it on very quickly, with the aim of making a profit. Sometimes, the application to register the purchaser of a property is delayed. The Land Registry is also quite slow generally. The company may very well be the beneficial owner of the property and entitled to sell it, however it’s application to be registered on the actual title as the legal owner has not yet been completed by the Land Registry. This is called “the registration gap”.
It is also fairly standard to have a clause in most contracts, not just contracts for the sale of land, which limits the ability for a contracting party to bring a misrepresentation claim against the other. This is called a “whole agreement” clause or “non-reliance” clause. These are in fact reasonably sensible to bring some finality to a transaction and to stop parties from trying to pursue claims against each other later. If a particular point is important to a contracting party, they should be insisting that this point is reflected in the contract itself. If that cannot be agreed, or a party is not given the opportunity to negotiate terms, then it is generally up to them to decide whether or not to take the risk in proceeding.
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Hi,
I won an auction property of 9 garages.
I was digging for more information after winning the auction, and then I discovered the advertised garages did not match the legal paperwork provided by the auction.
Title number, land registry and address are different
I paid the deposit to the auction house, but I am not sure if I continue, I would end up buying the correct thing. The provided title number in the legal pack is for another property, which is a house that is worth plenty of money compared to the garages.
What are my options?
How do I know for sure that I am buying what was advertised and not part of it only?
Can I sue the auction house and the seller for misrepresentation?
Thanks
Abdo Sukari
Thank you for your comment.
Clearly there has been some sort of mistake here. However, whether or not it entitles you to bring
some sort of claim, or even rescind the contract does depend on a number of things.
We are not sure that we can provide even general pointers without understanding the position further.
It does strike us that fundamentally, the seller wanted to sell the garages and you wanted to buy them,
so there is no real mistake in this respect and presumably no misrepresentation (unless you were led to
believe you were buying garages but you were not).
We would have to spend some time understanding and investigating the position before we could
identify what the legal position was.
Hi, I won a property at auction singed contract and paid 10% deposit. The property had ‘special conditions’ attached which I do not believe were uploaded to the legal pack until the day of the auction so I was not aware of them as the property was one of the first lots.
I had spoken to the auctioneer the day before the auction to ask about the ownership of the property and was assured that the company who are effectively selling it deal with probate and take the house in return (thereby implying that probate had been granted), that the auction house do a lot of work with them and all is above board.
The special conditions state that completion takes place within 28 days of grant of probate, and that should completion not be achieved within 8 months of exchange the seller has the right to withdraw. However, on my side the contract is open-ended.
I have chased details on the probate and the auctioneer has repeatedly told me the vendors are ‘chasing the probate office’ however it has come to my attention through the vendors solicitors that the original sellers are still waiting on HMRC to confirm tax liabilities and so the probate application has not been made yet.
Can I insist on a variation to contract to ensure tthat the termination option is reciprocal?
Thank you for your comment.
The terms of any contract are formed by one party making an offer (the “offeror”) and that offer being
accepted by the other party (the “offeree”).
There is lots of historical case law on offer and acceptance but a particular aspect of what you refer to is
the “incorporation of terms”.
Parties can reach an agreement “subject to contract”, meaning that it is an agreement in principle
subject to agreeing the terms of the written contract itself later. If the terms of the contract cannot be
agreed, that is the end of the matter. This is what normally happens in “normal” property transactions.
Alternatively, and what appears to be the issue here, is when the offer is made subject to existing terms
and conditions. Those existing terms and conditions must be brought to the attention of the offeree
person before it can be said that those terms have been accepted. This can be done in various ways.
For example, they can be provided in full to be read. Alternatively, reference to them can be made and
the offeree can ask for them. It’s all too easy these days to simply tick the box when you buy something
online to confirm that you accept the terms and conditions.
We cannot provide specific advice on our website but if particular terms and conditions were not
brought to the attention of an offeree, they may not be binding or the contract may be void or voidable.
A void contract is one that is treated by law as never having come into existence. A voidable contract is
one that can be “cancelled” at the election of the aggrieved party. There are a number of
considerations to take account of.
What is often important is what happens after the omission is identified. A contract can be “affirmed”.
If there is a breach of contract or a right to bring the contract to an end by someone, if that person
affirms the contract or waives the breach, they lose the right to end to contract. Put another way, if the
party with a right to bring the contract to an end effectively gives up that right, either by saying “it’s ok”
or renegotiating terms, the their right to “get out of the contract” no longer exists.
Any party to a contract can look to renegotiate its terms. Normally, however, some “consideration” is
needed for this. It is effectively like negotiating a new contract. This could be an agreement to waive
the right to terminate the contract, in exchange for some new term that the aggrieved party wants to
now include.
Hi – I recently bought a property at auction but legal documents and thought that they are fine since there is an absolute title on the property register. However, aftee exchanged of contracts and paying for my deposit at 10%, I have received the copy of contracts and the seller is a limited company which I cannot see in the title. What are my options if I decided not to push through in the sale? Also had read the contracts and it is so onerous to me as the buyer as I cannot sue the seller if there are misrepresentations on the sale.
Thank you for your comment.
We can’t provide specific advice on our website, however, it does not sound to us that you do have the
option not to proceed with the purchase. If you do not proceed with the purchase, there is every
probability that you will be in breach of contract. Most of the time, if a buyer does not proceed, they
will forfeit their deposit. However, the precise contractual terms need to be considered, as there could
be additional sums or losses that the seller can claim from you. As you have noted, properties sold at
auction are often very heavily biased towards the seller and it wouldn’t be unusual if you also agreed to
pay the seller’s costs associated with auctioning the property, even if you don’t proceed with the
transaction.
A limited company can own property with absolute title. If it is not named as the proprietor, it may not
be entitled to sell the property. However, it is more likely that the company has purchased the property
and “flipped” it. It happens quite a lot in auctions. Flipping property means buying it and then selling it
on very quickly, with the aim of making a profit. Sometimes, the application to register the purchaser of
a property is delayed. The Land Registry is also quite slow generally. The company may very well be the
beneficial owner of the property and entitled to sell it, however it’s application to be registered on the
actual title as the legal owner has not yet been completed by the Land Registry. This is called “the
registration gap”.
It is also fairly standard to have a clause in most contracts, not just contracts for the sale of land, which
limits the ability for a contracting party to bring a misrepresentation claim against the other. This is
called a “whole agreement” clause or “non-reliance” clause. These are in fact reasonably sensible to
bring some finality to a transaction and to stop parties from trying to pursue claims against each other
later. If a particular point is important to a contracting party, they should be insisting that this point is
reflected in the contract itself. If that cannot be agreed, or a party is not given the opportunity to
negotiate terms, then it is generally up to them to decide whether or not to take the risk in proceeding.