Liverpool UK Property Auctions: Legal Pack Special Conditions

This excerpt is from a chapter in the book, THE TRUTH ABOUT PROPERTY, written by NRLA trainer, Henry Davis, www.henrydavisproperty.com. 

The next stage is to have a closer look at the legal pack. I strongly suggest you employ the services of a solicitor and do not buy any property at auction without your solicitor reviewing the legal pack first. It amazes me that most would never consider buying a less risky conventional property through an estate agent (with disclosed faults) without a solicitor, yet many are happy to buy a property (with undisclosed faults) at the auction, without asking a solicitor to look at the legal pack.

In the legal pack it is also common for there to be separate special conditions relating to each property in the sale called ‘The Special Conditions’ and ‘The addendum’. The addendum is effectively an update of the special conditions and usually available at the last minute on the day of the auction. It is vital you pay very close attention to both. Such special conditions of sale could, for example, impose new restrictive covenants on the property or requiring the buyer to reimburse the seller for the cost of searches and remove the buyer’s right to raise any requisitions on title after the auction

I then check that it’s not an Article 4 Direction (a governed rule that will restrict planning permission for structural refurbishment, for example, turning the property into an HMO), or not listed, and then have a look at my local LPA (Local Planning Authority) Planning Portal, to see any planning history, including any floor plans from previous planning applications. I also check the EPC Register (Energy Performance Certificate) for floor plans, although they are not guaranteed to be accurate.

The most common and growing onerous area to beware of is what the terms say about the fees, as a clause obliging the bidder to pay the seller’s legal costs could prove to be quite high. Furthermore, many auctioneers charge a ‘Buyer’s Premium’, which is another fee payable by a potential buyer to the auctioneer directly.

Personally, I don’t like the rushed feeling of the official auction house viewings. Although we’re spending considerable sums, we’re all herded in quickly with no time to really understand the dynamics or structural problems inherent with the property. It’s not in the auction houses’ interest to give you enough time to find issues, as this reduces bidding demand.

For example, here are the fees from an Auction House North West listing recently:

“Additional Fees Buyer’s Premium – 1.2% including VAT, of the purchase price payable on exchange of contracts, PLUS an administration charge of 1.2% including VAT, of the purchase price, subject to a minimum of £1,200 including VAT, payable on exchange of contracts.”

Title Document:

There are often ‘charges’ over the property or ‘unilateral notices’ and these need to be discharged and paid off on sale completion. But from my experience, unfortunately this doesn’t always happen before completion.

If a property has ever suffered from subsidence, damp or Japanese Knotweed, these should be declared in the legal pack and warranties provided. However, I often find the work has only been partly done and not completed to a good standard, or that the work is no longer covered against future issues, or, worse still, there are unsolved current ongoing issues. Often, there are no warranties for this work; the warranty may have expired or the company who provided this warranty no longer exists.

Tip:

Be extra wary of missing information and poorly drafted legal packs, or one that is uploaded very late. Look out for building control or council enforcement notices: these are normally located on the ‘local search’. Also, check the title document copy has been recently downloaded from the Land Registry as if it’s an old copy, someone could have since registered some new changes or notices.

Henry is the CEO of We Buy Any House and Genii Developments Ltd and a developer for over 32 years. He is also an accredited Property trainer for the National Residential Landlords Association. 

Copyright, Henry Davis. www.henrydavisproperty.com