288 thoughts on “Dealing with property auction issues”
Good evening, I hope that you can help with my predicament!
I purchased a house in London at auction in April 2020. Because of Covid, the completion date was set for July 10. I sent the deposit and auctioneer fees promptly. However, sadly, the seller died of Covid four days after I signed the MofU and no completion has taken place.
Since then, we have barely heard from the seller’s solicitors, but it seems there was an issue with probate – an initial application was rejected due to lack of documentation, it was then resubmitted but we still don’t know the outcome. We also never received a management pack. My solicitor has also pointed out to me an anomaly in the original memorandum of sale – the auctioneer failed to delete either the words conditional or unconditional.
Given the lengthy delays and also a change in my circumstances – I’m not considering relocating to another part of the country, -I am now quite keen to extricate myself from the sale, or to at least know my options. Do you think I have grounds to withdraw and get back the deposit, and also reclaim some of the auctioneers fees considering the contract issue and the lack of management pack?
I have also become frustrated with my lawyer who has taken months to respond, at times, to emails and phone calls. They have also failed to outline an exit strategy for me. I wonder whether there are steps that they could have taken to speed this process along but haven’t.
Please can you help by advising me as to: a) how can I extricate myself with as little financial loss as possible; b) could/should my lawyers have done more – would another lawyer (such as yourself?) be able to speed things along or bring it to closure?
Thank you for your comment. The basic position with any contract is that if a party to the contract dies, it will vest in that person’s estate. This means the estate can potentially enforce the terms of any contract and likewise any other party to the contract can enforce the terms against the estate. I appreciate that your query is whether or not you are able to withdraw from the transaction. However, it is important to understand the context in which your query is raised.
We do not immediately know the answer to whether or not there are any grounds to withdraw from the transaction. Certainly there may within the contractual documentation be some scope to say that completion should have been by a certain date and in breach of this, you are now entitled to terminate the contract and withdraw from it. Having said this, it would not be unusual for there to be a requirement on a party to a contract to have served notice to complete before withdrawing from the contract.
A notice to complete is a formal notice obliging the other party to complete the purchase/sale. If they fail to do so, then a contractual remedy of rescission arises. Rescission enables a party to a transaction to withdraw from it and to be placed in the position it would have been in had it never entered into the contract at all.
Unfortunately we are not in a position to give you any advice on whether or not it would be appropriate to serve notice to complete in this particular matter. In order to do so we would need a better overview of the circumstances as a whole and a proper consideration of the relevant paperwork.
We suspect that what has occurred is that there is a hold up with obtaining a grant of probate and without this it is not going to be possible to convey the legal title to the property to you.
It is not clear whether or not the death of another party to a contract of sale like this would constitute frustration of contract, entitling the parties to go their separate ways. We think much would depend on what was contractually agreed as to the date of completion, as it was presumably envisaged good title being given to the property, which cannot be provided without a grant of probate which may take time.
As to whether or not your solicitor should or should not have taken any particular steps, we are unfortunately not in a position to advise on this. Beyond saying that it would normally be necessary to serve a notice to complete and that the other party would have to fail to comply with that notice before someone is entitled to rescind the contract, we would need to see your conveyancing file in order to provide advice on whether or not there is something further your solicitor should or should not have done.
If you would like to consider the matter in more detail, please do feel free to get in touch.
I bought a property at auction in 2015 which said a new lease would be granted. And that it was owner occupier suitable. It’s not. my solicitor then said there were issues with seller also the freeholder, about owing service charges. My solicitor resolved this. When my new lease came down i was asked to sign it front of solicitor”s secretary. At the time nothing was explained about major changes in it. In fact the freeholder had cut the lease length from 199 to 90. Is this legal? And since then the freeholders have every year chased me for a service charge that they owe. There have been something like 4 firms of solicitors driving me mad. And recently they tried to stop me paying the ground rent, as they claimed that i had not paid their solicitors cost at 2,500 for a bill of a 100 for their solicitors costs of 100. Which i was not billed for. And I thought leaseholders did not have to pay landlords solicitors costs. The landlord are Regus. . I feel like i have been hoodwinked. What can I do?
The first thing that we note is that you purchase the property in 2015. The Limitation Act 1980 imposes “deadlines” to bring claims. The basic position in respect of claims based on a contract is that the limitation period by when a claim can be brought will expire 6 years from the date of the alleged breach of that contract. Therefore any claim against the seller, so far as one exists, may have expired or will shortly be expiring.
As for the issues you are experiencing, we cannot provide specific advice on our website. However, we can set out some of the basic principles. It is normally the case that someone that purchases leasehold properties does so subject to any existing breaches of the lease. This might be, for example, the historical non-payment of service charges or legal costs by the previous owner, so far as these are payable under the terms of the lease. What you are describing is actually a relatively complex area of law but the basic position is that a leaseholder is obliged to pay sums to the landlord if this is what the lease says.
As for the term of the lease, perhaps there has been some misunderstanding here. By way of example only, a lease with a 199 year term commencing on the 1st of January 1906 is the same as a lease of 90 years commencing on 1st January 2015. It sounds as though you may have purchased a property which had a shorter remaining term than would be desirable. In such circumstances, it is often the case that an attempt to extend the lease pursuant to the Leasehold Reform, Housing and Urban Development Act 1993 is made. Sometimes a property is sold or auctioned with the benefit of what is called a Section 42 Notice starting that process.
Unfortunately, we cannot really provide any further guidance without knowing more. If you would like us to look into you matter in more detail, please feel free to get in touch.
Hello There I am hoping you can help. I have purchased a property via auction I was provided with the legal pack 3 days before the auction, despite enquiring about the property 3 weeks previously. The property was advertised as Free Hold, we inspected the property and were aware that part of the upper floor was over a shop next door, however all documentation and legal pack special condition didn’t identify any problems. We have since won the property, paid £9025 in auctions fees and 5% deposit. we cannot secure a mortgage as the property has a 32% flying freehold which renders it un mortgageable. I have gone down every avenue to try and secure funding. We believe that such a large Flying Free Hold should have been in the special condition we had conversations with the auction house prior to auction and they were fully aware we needed a mortgage to complete the sale and at no point was there any indication from the estate agent showing us the property or the auction house discussing it. Where do we stand as the auction house are standing by the fact that the title plan shows a flying free hold albeit not highlighting the size and implications this can have on being able to mortgage the property.??
From what you have written, we are afraid that it is unlikely that you have any recourse against the seller or auction house.
Sometimes it is possible to say that an auction pack was misleading so as to give rise to a claim for misrepresentation. A good example of this is the case of Atlantic Estates v Ezekiel [1991] which we refer to in our blog “Property Misrepresentation Claims in Practice”, which can be found here. In that case, a photograph of the wine bar being auctioned showed it being used as such. In fact the wine bar was unlicensed and the Court of Appeal held that this amounted to a misrepresentation as it could not be used as a wine bar without the licence.
Silence in itself, without some form of incorrect statement about the property, would not give rise to a claim. It is up to the buyer to decide whether or not, based on the information that they have, to take any risk on bidding for a property. There would therefore have to be something expressly stated to suggest that the property would amount to good security for a lender.
Whilst you may have made your intentions known, namely that you were purchasing with the assistance of a mortgage, it is likely that even if you were expressly told that the property would be fine to purchase and was good security for a mortgage, or was even mortgaged at the time, this is still unlikely to amount to a misrepresentation.
One reason for this is that it is more than likely that the contract of sale excluded oral representations. Another reason for this is that there must be a false statement of fact to give rise to a misrepresentation. A statement of opinion (i.e. that someone thinks that the property amounts to good security for a lender) does not amount to a representation. What is said or conveyed to the buyer must be a statement of fact, which is inaccurate.
Sometimes a mistaken statement about the legal position of a matter can amount to a statement of fact, but we are hesitant to suggest that someone’s opinion of the property representing good security for a lender would be anything but opinion, particularly on the basis that lenders consider a range of things, including the borrower’s financial circumstances, before agreeing to offer a mortgage.
If you are interested in reading about the distinction between a false statement of fact, law and opinion, Pankhania v LB Hackeny [2002], which we also refer to here, sets the legal principles out well.
We have to qualify the information that we set out here. We do not know the full facts of the matter what we post on our website is guidance only and sets out only broad principles. It should not be relied upon as a substitute for bespoke and properly considered legal advice. If you would like us to consider the matter in more detail, please do feel free to get in touch.
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Good evening, I hope that you can help with my predicament!
I purchased a house in London at auction in April 2020. Because of Covid, the completion date was set for July 10. I sent the deposit and auctioneer fees promptly. However, sadly, the seller died of Covid four days after I signed the MofU and no completion has taken place.
Since then, we have barely heard from the seller’s solicitors, but it seems there was an issue with probate – an initial application was rejected due to lack of documentation, it was then resubmitted but we still don’t know the outcome. We also never received a management pack. My solicitor has also pointed out to me an anomaly in the original memorandum of sale – the auctioneer failed to delete either the words conditional or unconditional.
Given the lengthy delays and also a change in my circumstances – I’m not considering relocating to another part of the country, -I am now quite keen to extricate myself from the sale, or to at least know my options. Do you think I have grounds to withdraw and get back the deposit, and also reclaim some of the auctioneers fees considering the contract issue and the lack of management pack?
I have also become frustrated with my lawyer who has taken months to respond, at times, to emails and phone calls. They have also failed to outline an exit strategy for me. I wonder whether there are steps that they could have taken to speed this process along but haven’t.
Please can you help by advising me as to:
a) how can I extricate myself with as little financial loss as possible;
b) could/should my lawyers have done more – would another lawyer (such as yourself?) be able to speed things along or bring it to closure?
Many thanks
Thank you for your comment. The basic position with any contract is that if a party to the contract dies, it will vest in that person’s estate. This means the estate can potentially enforce the terms of any contract and likewise any other party to the contract can enforce the terms against the estate. I appreciate that your query is whether or not you are able to withdraw from the transaction. However, it is important to understand the context in which your query is raised.
We do not immediately know the answer to whether or not there are any grounds to withdraw from the transaction. Certainly there may within the contractual documentation be some scope to say that completion should have been by a certain date and in breach of this, you are now entitled to terminate the contract and withdraw from it. Having said this, it would not be unusual for there to be a requirement on a party to a contract to have served notice to complete before withdrawing from the contract.
A notice to complete is a formal notice obliging the other party to complete the purchase/sale. If they fail to do so, then a contractual remedy of rescission arises. Rescission enables a party to a transaction to withdraw from it and to be placed in the position it would have been in had it never entered into the contract at all.
Unfortunately we are not in a position to give you any advice on whether or not it would be appropriate to serve notice to complete in this particular matter. In order to do so we would need a better overview of the circumstances as a whole and a proper consideration of the relevant paperwork.
We suspect that what has occurred is that there is a hold up with obtaining a grant of probate and without this it is not going to be possible to convey the legal title to the property to you.
It is not clear whether or not the death of another party to a contract of sale like this would constitute frustration of contract, entitling the parties to go their separate ways. We think much would depend on what was contractually agreed as to the date of completion, as it was presumably envisaged good title being given to the property, which cannot be provided without a grant of probate which may take time.
As to whether or not your solicitor should or should not have taken any particular steps, we are unfortunately not in a position to advise on this. Beyond saying that it would normally be necessary to serve a notice to complete and that the other party would have to fail to comply with that notice before someone is entitled to rescind the contract, we would need to see your conveyancing file in order to provide advice on whether or not there is something further your solicitor should or should not have done.
If you would like to consider the matter in more detail, please do feel free to get in touch.
I bought a property at auction in 2015 which said a new lease would be granted. And that it was owner occupier suitable. It’s not.
my solicitor then said there were issues with seller also the freeholder, about owing service charges. My solicitor resolved this.
When my new lease came down i was asked to sign it front of solicitor”s secretary. At the time nothing was explained about major changes in it.
In fact the freeholder had cut the lease length from 199 to 90. Is this legal?
And since then the freeholders have every year chased me for a service charge that they owe. There have been something like 4 firms of solicitors driving me mad. And recently they tried to stop me paying the ground rent, as they claimed that i had not paid their solicitors cost at 2,500 for a bill of a 100 for their solicitors costs of 100. Which i was not billed for. And I thought leaseholders did not have to pay landlords solicitors costs. The landlord are Regus.
.
I feel like i have been hoodwinked. What can I do?
Thank you
Thank you for your comment.
The first thing that we note is that you purchase the property in 2015. The Limitation Act 1980 imposes “deadlines” to bring claims. The basic position in respect of claims based on a contract is that the limitation period by when a claim can be brought will expire 6 years from the date of the alleged breach of that contract. Therefore any claim against the seller, so far as one exists, may have expired or will shortly be expiring.
As for the issues you are experiencing, we cannot provide specific advice on our website. However, we can set out some of the basic principles. It is normally the case that someone that purchases leasehold properties does so subject to any existing breaches of the lease. This might be, for example, the historical non-payment of service charges or legal costs by the previous owner, so far as these are payable under the terms of the lease. What you are describing is actually a relatively complex area of law but the basic position is that a leaseholder is obliged to pay sums to the landlord if this is what the lease says.
As for the term of the lease, perhaps there has been some misunderstanding here. By way of example only, a lease with a 199 year term commencing on the 1st of January 1906 is the same as a lease of 90 years commencing on 1st January 2015. It sounds as though you may have purchased a property which had a shorter remaining term than would be desirable. In such circumstances, it is often the case that an attempt to extend the lease pursuant to the Leasehold Reform, Housing and Urban Development Act 1993 is made. Sometimes a property is sold or auctioned with the benefit of what is called a Section 42 Notice starting that process.
Unfortunately, we cannot really provide any further guidance without knowing more. If you would like us to look into you matter in more detail, please feel free to get in touch.
Hello There
I am hoping you can help. I have purchased a property via auction I was provided with the legal pack 3 days before the auction, despite enquiring about the property 3 weeks previously. The property was advertised as Free Hold, we inspected the property and were aware that part of the upper floor was over a shop next door, however all documentation and legal pack special condition didn’t identify any problems. We have since won the property, paid £9025 in auctions fees and 5% deposit. we cannot secure a mortgage as the property has a 32% flying freehold which renders it un mortgageable. I have gone down every avenue to try and secure funding. We believe that such a large Flying Free Hold should have been in the special condition we had conversations with the auction house prior to auction and they were fully aware we needed a mortgage to complete the sale and at no point was there any indication from the estate agent showing us the property or the auction house discussing it. Where do we stand as the auction house are standing by the fact that the title plan shows a flying free hold albeit not highlighting the size and implications this can have on being able to mortgage the property.??
Thank you for your comment.
From what you have written, we are afraid that it is unlikely that you have any recourse against the seller or auction house.
Sometimes it is possible to say that an auction pack was misleading so as to give rise to a claim for misrepresentation. A good example of this is the case of Atlantic Estates v Ezekiel [1991] which we refer to in our blog “Property Misrepresentation Claims in Practice”, which can be found here. In that case, a photograph of the wine bar being auctioned showed it being used as such. In fact the wine bar was unlicensed and the Court of Appeal held that this amounted to a misrepresentation as it could not be used as a wine bar without the licence.
Silence in itself, without some form of incorrect statement about the property, would not give rise to a claim. It is up to the buyer to decide whether or not, based on the information that they have, to take any risk on bidding for a property. There would therefore have to be something expressly stated to suggest that the property would amount to good security for a lender.
Whilst you may have made your intentions known, namely that you were purchasing with the assistance of a mortgage, it is likely that even if you were expressly told that the property would be fine to purchase and was good security for a mortgage, or was even mortgaged at the time, this is still unlikely to amount to a misrepresentation.
One reason for this is that it is more than likely that the contract of sale excluded oral representations. Another reason for this is that there must be a false statement of fact to give rise to a misrepresentation. A statement of opinion (i.e. that someone thinks that the property amounts to good security for a lender) does not amount to a representation. What is said or conveyed to the buyer must be a statement of fact, which is inaccurate.
Sometimes a mistaken statement about the legal position of a matter can amount to a statement of fact, but we are hesitant to suggest that someone’s opinion of the property representing good security for a lender would be anything but opinion, particularly on the basis that lenders consider a range of things, including the borrower’s financial circumstances, before agreeing to offer a mortgage.
If you are interested in reading about the distinction between a false statement of fact, law and opinion, Pankhania v LB Hackeny [2002], which we also refer to here, sets the legal principles out well.
We have to qualify the information that we set out here. We do not know the full facts of the matter what we post on our website is guidance only and sets out only broad principles. It should not be relied upon as a substitute for bespoke and properly considered legal advice. If you would like us to consider the matter in more detail, please do feel free to get in touch.