1. Get a full structural survey
Get a good surveyor to survey the property prior to the auction. This will not only assist you and your funder, but as the cost of remedying defects could be substantial, it is worth knowing the full cost of the property (purchase price plus repair works) prior to bidding.
2. Think about finance
The moment that hammer goes down on your bid, you have exchanged contracts. The time limit for completing the sale would then be set out in the contract. This varies between 4 to 6 weeks.
Make sure that you speak to your bank or mortgage broker in good time before the auction to ensure that funding can be put in place without delay if you are successful. Obtain a written offer of finance if you can.
3. Know your budget
Bear in mind that in addition to legal costs, you would also have to pay stamp duty land tax on the purchase price and Land Registry fees to register the property in your name. The contract would also be likely to state that you must reimburse the seller any search fees that he has paid out.
4. Who will the buyer be?
As you are exchanging contracts, make sure that you exchange contracts in the correct name as you may not be able to change the buyer’s identity after the auction.
Get advice from your accountant as to whether to purchase the property in your name, a limited company, a SIPPor an LLP and ensure that the entity is set up prior to the auction date.
5. Obtain legal advice
Make sure that you instruct legal advisors in good time prior to the auction date to go through and report to you on the legal pack. You would need to ensure, among other things, that the property has appropriate rights of access from the highway and there are no contamination issues. Any tenancies that are currently in place at the property would also need to be looked at to ensure that there are no onerous terms, heavy rent arrears or disputes.
If you would like to discuss purchasing or selling a property at auction, then please contact Lily Meyer of Morrisons Solicitors Commercial Property Team in Wimbledon on 020 8614 4590 or by e-mail on [email protected].
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.