By Kamran Shah, Partner – Head of Residential, Penman Sedgwick LLP

Kamran Shah Penman Sedgwick solicitors WatfordOver recent times it has become common for people to buy property in auctions, and it is not just restricted to property investors as day time TV testifies.

It has become an attractive proposition as it can avoid endless viewings and negotiations with sellers, and disappointment. There is also the added buzz in knowing that you have committed to one of your biggest lifetime purchases at the drop of a hammer.

One must of course be cautious and do some necessary homework on the particular property that you wish to bid on, including a viewing, arranging a survey and knowing that you have the funding in place to complete on the purchase once you commit on it.

You should also engage a Solicitor beforehand to view the legal pack and peruse the Special Conditions so that you are aware of all the legal and financial implications of buying the property, rather than discover those post auction, as you will be unable to negotiate these later on. There is always the possibility of being out-bid on the particular property that you are interested in, and it is not uncommon for a Solicitor to receive a telephone call from their client following the auction saying that the client has ended up buying another property altogether…

With regard to the Special Conditions, you must be fully aware of all the implications of buying the property, including the actual extent of the property to be sold, the Title, and all relevant legal issues, as well as the detailed terms set out in the Special Conditions – these may include terms asking you to cover the Vendor’s legal and auction costs, which could be onerous and add many thousands of extra pounds to the purchase. You must therefore always proceed with caution.

Most auction purchases require you to complete the purchase within 4 or 6 weeks of the auction date, so there is very little time for you to arrange mortgage finance after the auction. You must therefore ensure that you have your finance in place before you attend the auction, otherwise if you are late in completing you will be liable for costs and interest, and if you fail to complete altogether then you risk your deposit being forfeited and a claim for damages.

If you need legal advice, then we can help. Email kshah@penmansedgwick.com or call 01923 225 212