290 thoughts on “Dealing with property auction issues”
Hi, I bought a property at auction, while we conducted our due diligence based on the information that was made available prior to bidding, the construction type of the property was not disclosed. When this happens, one would normally assume that the property is of standard construction. Post bid, it was then discovered that the property was of non standard BSIF construction which has been classified as defect as per Housing Defect Acts 1985. Which implies the property is not mortgageable and also non-favourable bridging loan options.
I reached out to the auctioneer and of course they played the “Buyer Beware” card saying they do not carry out surveys prior to auction. Whilst doing my research, I discovered the auctioneer had sold identical property on the same street about a year ago for which they have declared on that listing that the property was of non standard BSIF construction and it was sold at a rate cheaper than what I have payed today.
Non-disclosure of such vital detail, has affected me because if the construction type was disclosed, I wouldn’t have placed the bid and if I would have, the maximum bid would have been lower than what I have paid.
Could issue like mine be governed by Section 3 of the Misrepresentations Act 1967?
A seller is not obliged to volunteer any particular information about a property to a prospective buyer. Unless it can be said that a seller, or their agent (who should not engage in misleading practices), represented to you that the property was in some way a non-standard construction, it is unlikely that there would be a claim. Unless a seller says something to a buyer for the buyer to rely upon, it can only realistically be the case that the buyer has relied on his own information and assumptions in deciding whether or not to proceed.
We successfully bid for a two-bed property and paid our deposit in Apr 2024. While processing the bridging loan, we understood that it is classified as a one-bed house as there is no family bathroom and the valuation was too low.
Further digging about the property, we understood that the same property was advertised as a 1-bed property in Oct 2023 with a floor map from online history. With any changes, the same auction house advertised the property as a two-bed. We have completed the purchase process to honor the agreement and not lose the deposit, but we notified the sellers about the misleading advert before its completion.
I want your advise on suing the auction house for deliberately misleading advert. Do we have a point here to sue them? How do we proceed from here?
We are not sure about this. Fundamentally, for a misrepresentation claim to exists, there must be an inaccurate statement of fact. An opinion, or statement of law is not generally sufficient for a claim to arise.
Put into context, we suppose that you could strip every room out of a “one bedroom property” (i.e. kitchen, bathroom and living room) and then say it had four bedrooms (or at least four rooms that could be used as bedrooms). The fact that it didn’t have anything else would obviously be an issue (and a buyer might be entitled to assume that a property had a bathroom and kitchen, so perhaps not the best example), but the point is that this could be considered a statement of opinion – whilst the rooms might not be as intended by a prospective owner, as far as the seller was concerned, they were bedrooms. We are not aware of any statutory definition of a “bedroom”. If the issue is the lender’s classification of the property, then again, this is presumably their own opinion of what constitutes a one bedroomed property, illustrating the point. It would be for a buyer to ensure that whatever lending criteria which needed to be met was capable of being met by the property being purchased. If the buyer did not have this information, they would be proceeding at their own risk.
The fact that you completed may also have an impact on matters. Certainly, when it comes to a breach of contract, the aggrieved party may have the right to rescind the contract. However, if they proceed with the purchase nonetheless, there is a risk that they have legally affirmed, or “accepted” the breach of contract and impliedly agreed to waive any rights to pursue it.
After bidding and winning a bid for a property at auction, I found out that the seller had bought the house a month prior themselves. It that auction the house was described as having serious structural issues, and all associated documents were included. However in the auction I bid at, the now new owner chose to remove all signs of structural defects and present the property on the agents sheet and in the legal pack as though it was a normal house with no issues. It was by chance I found out the truth about what the seller had done. They are however choosing to not answer my questions and insist I complete.
This is likely a case of “buyer beware”. There is generally no duty on a seller of anything, including property, to disclose specific things about what they are selling. It is up to the buyer to decide whether or not they want to proceed based on the information that they have. If the buyer is not given the opportunity to ask questions, or indeed questions asked are not responded to, the position does not change. It is the buyer that has decided to take the risk in proceeding based on their own assumption and appetite for risk.
Sometimes, but the extent to which the principle will apply here and this would require careful consideration, a misrepresentation can occur by reason of something which is left unsaid. If it can genuinely be said that the property was represented as one with no issues of the nature that you have now discovered, and the seller was aware of those issues, then there may be a misrepresentation claim. However, such claims are risky, as a great deal turns on the extent to which it can be said that a reasonable buyer would have understood that the seller was representing that the property was free from defects. If there is room to suggest that the buyer made any assumptions themselves on the point, then the risk increases.
The fundamental basis of a misrepresentation claim is that one party induces another party to enter into the contract based on something that is factually inaccurate, and would have changed the other party’s mind about proceeding in some way. If a buyer of property has made assumptions, it cannot really be said that the seller said something that induced the buyer to enter into the contract.
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Hi,
I bought a property at auction, while we conducted our due diligence based on the information that was made available prior to bidding, the construction type of the property was not disclosed. When this happens, one would normally assume that the property is of standard construction.
Post bid, it was then discovered that the property was of non standard BSIF construction which has been classified as defect as per Housing Defect Acts 1985. Which implies the property is not mortgageable and also non-favourable bridging loan options.
I reached out to the auctioneer and of course they played the “Buyer Beware” card saying they do not carry out surveys prior to auction. Whilst doing my research, I discovered the auctioneer had sold identical property on the same street about a year ago for which they have declared on that listing that the property was of non standard BSIF construction and it was sold at a rate cheaper than what I have payed today.
Non-disclosure of such vital detail, has affected me because if the construction type was disclosed, I wouldn’t have placed the bid and if I would have, the maximum bid would have been lower than what I have paid.
Could issue like mine be governed by Section 3 of the Misrepresentations Act 1967?
Thank you for your comment.
A seller is not obliged to volunteer any particular information about a property to a prospective buyer. Unless it can be said that a seller, or their agent (who should not engage in misleading practices), represented to you that the property was in some way a non-standard construction, it is unlikely that there would be a claim. Unless a seller says something to a buyer for the buyer to rely upon, it can only realistically be the case that the buyer has relied on his own information and assumptions in deciding whether or not to proceed.
Dear Experts,
We successfully bid for a two-bed property and paid our deposit in Apr 2024. While processing the bridging loan, we understood that it is classified as a one-bed house as there is no family bathroom and the valuation was too low.
Further digging about the property, we understood that the same property was advertised as a 1-bed property in Oct 2023 with a floor map from online history. With any changes, the same auction house advertised the property as a two-bed. We have completed the purchase process to honor the agreement and not lose the deposit, but we notified the sellers about the misleading advert before its completion.
I want your advise on suing the auction house for deliberately misleading advert.
Do we have a point here to sue them?
How do we proceed from here?
Thanks in advance.
Thank you for your comment.
We are not sure about this. Fundamentally, for a misrepresentation claim to exists, there must be an inaccurate statement of fact. An opinion, or statement of law is not generally sufficient for a claim to arise.
Put into context, we suppose that you could strip every room out of a “one bedroom property” (i.e. kitchen, bathroom and living room) and then say it had four bedrooms (or at least four rooms that could be used as bedrooms). The fact that it didn’t have anything else would obviously be an issue (and a buyer might be entitled to assume that a property had a bathroom and kitchen, so perhaps not the best example), but the point is that this could be considered a statement of opinion – whilst the rooms might not be as intended by a prospective owner, as far as the seller was concerned, they were bedrooms. We are not aware of any statutory definition of a “bedroom”. If the issue is the lender’s classification of the property, then again, this is presumably their own opinion of what constitutes a one bedroomed property, illustrating the point. It would be for a buyer to ensure that whatever lending criteria which needed to be met was capable of being met by the property being purchased. If the buyer did not have this information, they would be proceeding at their own risk.
The fact that you completed may also have an impact on matters. Certainly, when it comes to a breach of contract, the aggrieved party may have the right to rescind the contract. However, if they proceed with the purchase nonetheless, there is a risk that they have legally affirmed, or “accepted” the breach of contract and impliedly agreed to waive any rights to pursue it.
After bidding and winning a bid for a property at auction, I found out that the seller had bought the house a month prior themselves. It that auction the house was described as having serious structural issues, and all associated documents were included. However in the auction I bid at, the now new owner chose to remove all signs of structural defects and present the property on the agents sheet and in the legal pack as though it was a normal house with no issues. It was by chance I found out the truth about what the seller had done. They are however choosing to not answer my questions and insist I complete.
This is likely a case of “buyer beware”. There is generally no duty on a seller of anything, including property, to disclose specific things about what they are selling. It is up to the buyer to decide whether or not they want to proceed based on the information that they have. If the buyer is not given the opportunity to ask questions, or indeed questions asked are not responded to, the position does not change. It is the buyer that has decided to take the risk in proceeding based on their own assumption and appetite for risk.
Sometimes, but the extent to which the principle will apply here and this would require careful consideration, a misrepresentation can occur by reason of something which is left unsaid. If it can genuinely be said that the property was represented as one with no issues of the nature that you have now discovered, and the seller was aware of those issues, then there may be a misrepresentation claim. However, such claims are risky, as a great deal turns on the extent to which it can be said that a reasonable buyer would have understood that the seller was representing that the property was free from defects. If there is room to suggest that the buyer made any assumptions themselves on the point, then the risk increases.
The fundamental basis of a misrepresentation claim is that one party induces another party to enter into the contract based on something that is factually inaccurate, and would have changed the other party’s mind about proceeding in some way. If a buyer of property has made assumptions, it cannot really be said that the seller said something that induced the buyer to enter into the contract.