Top tips for buying a property at auction after Covid-19
As a result of the Covid-19 pandemic, most property auctions are understandably being hosted online. Online auctions have been the trend for a while, and it is possible to inspect remotely and bid totally online. Buyers are potentially more willing to accept the limitations inherent from this auction method during Covid-19 restrictions.
If you are considering bidding on a property in an auction, you should consider the legal aspects and risks that could arise, particularly if you never attend in person. Our property team can provide you with expert legal support; both in preparing for the auction, and progressing the purchase in the event you are successful in securing the property.
Below are some of our top tips questions to ask before buying a property at auction whilst lockdown measures are being lifted:
- Why is this property up for auction? The fundamentals of property have not changed, and auction properties are often difficult to value. A physical inspection will help you to better understand the lot. If this is not possible, consider requesting a full video tour before bidding.
- Do you have a full legal pack? These can normally be easily obtained and can contain crucial information. As a lot of the additional information can be found now online in the public domain. If there are gaps in the initial download from the auctioneer, consider doing more enhanced desktop due diligence.
- Does the property have a clean title? Firstly, confirmation is needed on the tenure of the property (freehold or leasehold). Secondly, if there are any adverse or onerous title matters, the impact of these might be complex. Nevertheless, our property team can provide the legal support to risk assess these.
- Can you move fast enough? As contracts become binding at the auction - sometimes at the click of a mouse - there is no longer the opportunity for the buyer to attempt to negotiate the terms of the contract. Completion usually takes place within a month of the auction, however this can depend on the terms of conditions and the auction method being used. Therefore, make sure to check the auctioneer's catalogue for this and the timescales.
- What are the green credentials? An Energy Performance Certificate (EPC) should be included in the legal pack, which will outline the energy performance of the property. Therefore, it is worth checking if the minimum requirements are met.
- What is the contract and are there extra conditions? The property contract is likely under a standard form, so make sure to check the auction catalogue and legal pack to see what general conditions are being used. Also, look out for any extra conditions of sale which often outline any property specific issues; if there are any tenancies in place, or if there are any additional fees or costs included. Hence, it is worth checking and taking advice on this before bidding.
- What will the transfer deed say? Sometimes, there will be a draft form of land registry transfer deed attached as a special condition. It is important to question 'What is the detail of this and the impact on the property transfer?', as this can be relevant, for instance, if new restrictive covenants are being imposed that might impact your plan for the property.
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