The Legalities of Buying Property at Auction: What You Need to Know

Before you purchase a property through auction, you should be given a legal pack which is usually free of charge.

The legal pack should provide all the relevant information which you need to review such as:

• Official Copies of the Title Register, Title Plan and any documents that are referred to in the Official Copies;
• If the property is unregistered: an Epitome of Title, i.e. a list of the relevant documents making up the title, will be included together with the deeds and documents referred to within the Epitome of Title;
• The Special Conditions of Sale;
• searches (if the seller is providing any);
• an Energy Performance Certificate (‘EPC’);
• Property Information Form, which is also known as Form TA6, which provides information on: the boundaries, any disputes and complaints, any alterations to the property, details of any guarantees and warranties, insurance information, environmental matters, details of parking arrangements, advice as to any adult occupiers at the property, services connection and providers,  amongst other information; The Fittings and Contents Form, which is also known as Form TA10, will detail which items are being left at the property;
• If the property is leasehold:
  • a Leasehold Information Form, also known as Form TA7, should be provided;
  • the Lease;  and
  • a Leasehold Management Pack, also known as a LPE1. The LPE1 will provide any supporting documents such as details of the ground rent, service charges, notices fees due and building insurance etc.

When to instruct a property lawyer

It is advisable to instruct a property lawyer to review the legal pack well before the auction date because this will avoid any issues which may arise after purchasing at auction.  The further in advance the review is completed, the more opportunity you will have to raise any enquiries to clarify the information or secure further information from the seller, or to allow you to make further investigations, searches and surveys.

If you are successful at the auction, you will be required to sign the contract and pay a non-refundable deposit, which is usually 10% of the purchase price, on the day of the auction. You will also be asked to provide your identification to include photographic and address ID, such as your passport and driving licence. You will become bound by the Terms of the Contract from the time you have successfully made your bid. Completion usually takes place 28 days after the date of the auction, so it is very important that you have your finances in place before you commit to the purchase.

Questions and Answers

Q: Should I view the property I am considering purchasing at auction?

A: Yes, it is strongly recommended that you should view the property you are considering purchasing at auction to be able to inspect the property’s state and condition.  It also allows you to ensure the title plan accords with what is on the ground and that any rights etc. which you believe you need to utilise to enjoy the property fully are included in the title documents.  You can check that there are no obvious breaches of the covenants affecting the property.  You can also check that there are no other rights affecting the property which are not accounted for in the title paperwork.  You can also check whether any alterations or additions have been made to the property which are not accounted for in the paperwork provided by the seller or in the local authority search result.

Q: Should I read the legal pack?

A: Yes, it is important that you understand the legalities affecting the property and transaction.  This includes the matters detailed in the title, together with the conditions of the contract.

Q: Should I set myself a budget?

A: It is very important that you set yourself a budget before you start bidding at auction so that you are aware in advance how high you are willing to bid.  In order to consider a property as viable, you should consider outgoings such as:

• the purchase price of the property;
• Stamp Duty Land Tax Liability;
• Lawyer fees;
• Land Registry fees;
• Any fees payable up front for your mortgage funding;
• Whether the seller requires you to pay their legal fees and any other fees as part of the conditions of sale and you must review the contract and/or Terms and Conditions to confirm this;
• Whether you are required to pay anything to the auction house and you should check the Terms and Conditions to confirm this;

For Leasehold Properties:

• Ground rent and service charge apportioned for the remainder of the financial period;
• Any Landlord/Management Company/Managing Agent fees.

Q: Will I lose my deposit if I pull out of an auction purchase?

A: Yes, once you have been advised you have successfully made your bid on the day of the auction, you are contractually bound to purchase the property and you will lose your deposit if you withdraw from the purchase as the deposit is non-refundable.

Q: Can someone bid on my behalf?

A: Yes, you can instruct someone to bid on your behalf such as an agent or solicitor.  You should consider the auction house’s requirements.

How Pinney Talfourd can help

Our specialist Residential Property team have a wealth of experience dealing with auction properties and are here to guide you through the conveyancing process, offering you the best advice to suit your specific needs. If you wish to discuss this topic further, please do not hesitate to contact Rebecca March. Alternatively, you can contact any member of our Residential Property team.