At auction once your bid is accepted you are legally bound to buy the property. You will be required to sign contracts immediately and pay a non-refundable deposit equal to 10% of the purchase price. This process forms a binding contract between you and the seller of the property.
The simplicity of this process is what makes auctions attractive. However, the purchase of that dream property can quickly turn into the stuff of nightmares unless the appropriate steps are taken. If a defect is discovered in the property after you have signed the Contracts of Sale you will have no recourse against the seller or the auctioneer. Furthermore, the thrill of purchasing at auction has been known to cause bidders to depart from their budget and financial reality. Properties up for auction are not sold ‘subject to ﬁnance’. If you are the successful bidder, you are legally obliged to complete the sale. Thus, you could be left in a situation whereby you are bound to purchase a property yet no lender is willing to provide you with adequate finance.
If you are thinking about purchasing a property at auction, the following provides a number of simple steps you should take to ensure the entire process runs as smoothly as possible.
- It will be necessary for you to engage a solicitor in order to request and review the contracts and title documents. Your solicitor will review the documents prior to the auction and deal with any issues that arise with the vendor’s solicitors.
- An engineer should be engaged to examine the property for defects and ensure the property is fully compliant with planning permission and building regulations. Your solicitor can arrange for an engineer to carry out these inspections for you.
- Your solicitor will check the title to the property by conducting searches to ensure there are no judgements against the property or other legal or title problems associated with the property.
- If you intend to obtain a mortgage to purchase the property you will need to sort out your mortgage application in advance of the auction. Your solicitor can guide you through the process involved in making an application for a mortgage.
- At auction, remember your budget! Do not feel pressurised into making bids that you are not comfortable with or cannot afford.
- Following a successful bid your solicitor will complete the legal work and will arrange with your lender or broker for the drawdown of your loan cheque. The timeline for completion of the transfer of sale is usually stated in the Contract. This generally takes four to five weeks from the date of the auction. It is at this stage that you will pay the balance and you will be handed the keys to the property.
As specialist solicitors in the conveyancing of property we have the experience and expertise to advice you on all aspects of purchasing a property at auction. We will deal with any initial queries you may have in the lead up to auction and will be on hand should any issue arise on the day of the auction. If you require further information, please contact our office for a consultation or quote on 091 564011 or e-mail email@example.com.