In a downturn there are a number of opportunities to invest in property at a reduced price at auction – but make sure you go prepared.Whether this is a commercial property where receivers have been appointed and are looking to secure a quick sale or a residential property put into auction by a lender or an owner wishing to downsize their portfolio, there are good deals to be made.
This is if you have access to liquidated funds or a sound relationship with a good lender who can agree finance in principle and can provide a firm offer within days of your bid being accepted. However having your finances in order is just the first step.
Before leaping forward to the day of auction there are plenty of further steps which you should take:
I have recently reviewed a leasehold contract for sale post auction where the buyer failed to seek advice before the auction – the legal pack did not contain any information regarding the management of the building or copy service charge accounts and the first thing the buyer had to do on completion was pay almost £2000 of service charges in arrears. Had we been instructed to review the legal pack prior to auction suitable enquiries of the sellers solicitor or of the managing agent direct would have revealed the deficit.
Forewarned is forearmed
Attending an auction with full knowledge of the extent of the sellers title to the property and the general physical condition of the property can result in a worthy addition to a property portfolio – on the flip side, attend without that knowledge and you could make significant losses.
The Commercial Property team at Pinney Talfourd have recently advised on a number of auctions of commercial property recently and would be happy to discuss any purchases that you are planning in the future, or even help unravel the details of any recent purchases.
This article was written by Keeley Miller, a Solicitor in our Commercial Property Team. This article is only intended to provide a general summary and does not constitute legal advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at February 2014.