Buying a house at auction is very different to buying privately from a seller direct! Where you attend an auction, raise your hand to make a bid and are the successful winner, contracts are legally exchanged as soon as the auctioneer’s hammer falls.

You will be expected to pay a deposit on the day of the auction, which is often 10% of the final auction purchase price. There are often additional hidden expenses that you might not be aware of – unless the auction contract, terms and conditions are examined carefully.

These might be auctioneer’s fees or possibly contributions to the vendor’s legal fees! Legal completion is often set for a tight timescale – usually 20 working days from the date of the auction.

Find out more below about what you should expect the legal process to entail and everything you need to consider when buying a house at auction.

Legal Considerations for Buying a House at Auction

View the Property

The general principle in English law with regards to the purchase of property is caveat emptor – or, in plain English, “let the buyer beware!”

It is widely accepted that the condition of the property at the time at which a contract is legally exchanged shall be the condition in which a buyer must accept it!  This is all the more important in respect of auction contracts that are legally exchanged on the day of the auction.

We strongly advise that you arrange a physical inspection before making any bids. You must also bear in mind that because the auction contract is legally exchanged on the day of an auction, a vendor’s solicitor is very unlikely to respond to any of the standard enquiries that a buyer’s legal representative would ordinarily raise in respect of a private sale.

Whilst we would do our best as your legal representative when acting on your behalf in an auction purchase, there is no guarantee that answers to our questions will be forthcoming. The responsibility is therefore on you to make sure you are completely happy with the property before bidding on it. If you intend on using third-party funding in respect of the purchase consideration, any lender may well have more stringent survey requirements that might not necessarily be met by the contents of the auction legal pack.

Obtain Searches

Sometimes, a prudent vendor will have included some property searches in the auction legal pack – however, this is not always the case.

Where your transaction does not require a loan facility or mortgage and where you are using your own cash funds to complete, there is no law or rule that requires you to obtain property searches. You are free to rely on the searches adduced as part of the auction legal pack (if any).

However, our advice is that full property searches should be carried out in all transactions which involve a commercial or residential property or bare land.  You must be aware that if you are intending on seeking a loan facility or mortgage to fund your purchase, the lender may have specific requirements in respect of property searches that might not be satisfied by any or all of such searches included in the auction legal pack.

Obtain Legal Pack and T&C’s

Often, clients will approach us after a successful auction bid and ask if we can act on their behalf in completing the auction purchase. Our advice is always the same – we can certainly offer a fixed fee to facilitate the signing of the transfer deed, receipt and onward transmission of completion funds and registration of the transfer at the Land Registry.

However, what we cannot do for you at this post-exchange stage is advise you on the auction legal pack productively. We offer fixed fee services to review the auction legal pack in full and in advance of an auction before you make a bid.

This will include the provision of a report on title, which will reveal any issues on the title to the property that you might wish to consider (such as restrictions on development, invasive rights of access by third parties or onerous positive obligations towards maintenance payments or duties for party fences, roads or walls etc.)

The auction contract terms and conditions themselves will often contain hidden costs that you might not be aware of – such as auctioneers’ administration fees and buyer’s contributions towards the vendor’s solicitor’s legal fees and disbursements! The only way to be sure of such costs and receive focused advice on the same is to instruct us in good time prior to the auction in which you intend to make a bid.

Arrange Finance if Required

On the basis that most auction contracts will require legal completion within 20 working days, it is absolutely essential that buyers know well in advance the source from which the completion funds will be drawn.

Cash buyers are reminded that we – as a firm of a solicitors – are under extremely strict legislative and regulatory obligations in respect of successfully identifying satisfactory evidence of the source of funds. Whether that be shareholder dividends, personal savings, returns on investment or the sale of an asset, we will need adequate time to explain to you what we need and procure the same.

Where it is your intention to fund the purchase via a third-party facility agreement or mortgage, we must remind you that lenders will often have their own bespoke requirements (including instructing their own legal representatives) that might well require more invasive information that is required within the auction legal pack.  Whilst we will offer a fixed fee service to complete an auction purchase, we cannot and will not be held responsible for a failure to complete as a result of lack of adequate funding and our scope of engagement (both pre and post auction) will be limited accordingly.

Have All Necessary Documents Ready

We would always advise instructing us in good time prior to an auction.  However, as general guidance for your attendance at an auction, you should be expected to be asked for and therefore have available the following documentation:

• Original Photo ID – either a currently valid and signed UK passport or full photocard driving licence.
• Original proof of address (original bank account statement less than three months old, a receipted utility bill less than three months old, a council tax bill less than three months old or council rent book showing rent paid for three months).
• Cleared funds to pay on the day at least 10% of your anticipated purchase price, together with proof of cleared funds for that deposit.
• Details of your acting solicitor – which will hopefully be this firm. It is very important to ascertain in advance your chosen firm’s availability to represent you and also details of the acting fee earner, whose details will be required on the auction contract.

Send our friendly team of Solicitors a message to find out more about how we can help you when buying a house at auction.