By Tiffany Wan – Lawyer
Post Brexit and a weaker pound has led to Chinese Investors increasingly seeking to purchase property in United Kingdom. Besides online property agents who assist foreign buyers in finding property, international property trade fairs and exhibition; the other source of supply comes from property auctions.
Allsop, Bernard Marcus, Savills and Strettons are a few well known auction houses in London. The buzz surrounding auctions and the buyer’s relief when the auctioneer’s hammer has fallen is attractive to many purchasers who are on the hunt for bargain properties and good buys. The swift timeframe is often favoured by many eager property owners and developers.
In this article I aim to answer some main Q&As for readers.
Q: When does an auction purchase become legally binding?
A: Under section 2 Law of Property (Miscellaneous Provisions) Act 1989, contracts become legally binding once the hammer falls.
Normally a 10% deposit is required to be paid alongside an auctioneer’s fee.
Q: When do I get keys to the property?
A: Keys are released when completion takes place. The actual location is stated within the terms and conditions; sometimes it will be back at the Auction house. Most auction sales adopt the Common Auction Conditions which are supplied by the Royal Institution of Chartered Surveyors giving 20 working days from the auction for completion take place.
The number of days can be varied under the Special Terms & Conditions to suit the Vendor’s preference, the progress of a build or when the property becomes vacant, for instance, if there needs to be eviction of tenants.
Q: Before attending an auction is there anything one needs to do as part of the preparation?
A: Interested buyers would normally inspect the sales package supplied by the Auctioneers. As a solicitor; I have been instructed by many potential purchasers to check the auction package including the contract paperwork, title documents, seller’s replies, searches and lease terms (where applicable). I would look to simplify the vast amount of information for the buyer and highlight to my client potential problem areas or areas requiring further investigation.
Buyers should also consider getting finances in place; as legal completion takes place very soon after (20 working days from the date of the auction). Speaking to a financial adviser or mortgage broker to have an initial idea of affordability and availability of loans (if required) would be good preparation.
If readers have any further questions or wish to discuss any pending auction sales or purchases please do not hesitate to contact me at [email protected] or call me on 020 8514 9000.