The vast majority of properties which come to auction do so to sell. But there are those which may have something sinister lurking behind the scenes making them impossible to sell on the open market and that is the reason why they have been placed in auction.
Here’s our guide to why certain properties come to the market at auction as opposed to on the open market. To coin the Latin, caveat emptor, let the buyer beware.
- There could be a major structural problem, which makes the property unmortgageable, or the cost of rectification of which is unclear.
- The property may require refurbishment, the costs of which exceed its current value or which are unclear.
- The property may be of non-standard construction.
- There could be no working kitchen or bathroom, which could make the property unmortgageable.
- There could be Japanese Knotweed on or adjacent to the property, making it difficult to secure a mortgage.
- The property may not comply with building regulations.
- The property may be located in a local authority high rise tower block and so difficult or impossible to mortgage.
- There could be a defect in the title. There are many reasons why a title may be defective. Legal advice should be sought before committing to any purchase.
- The property may be leasehold, with the current remaining lease being of insufficient period to obtain a mortgage.
- The property may be leasehold and there are issues with the lease. For example, liability to pay a high service or repair charge is one of the most common reasons.
- The property might not be available with vacant possession, for example the mortgagees are not in possession and there are squatters in the property.
- There could be a sitting tenant, particularly a protected tenant or regulated tenant, or someone else with rights to occupy the problem in residence.
- There could be a planning issue, for example the property does not have consent for its current use.
- There could be a planning issue, for example a new development or road or railway planned close to the property (or even on it).
- The property may have access issues, for example no direct access to a public right of way and/or a dispute or problem with adjoining properties over rights of access.
- The boundaries of the property could be uncertain, or there could be a boundary dispute with neighbours, or a dispute over shared areas.
- There may be a restrictive covenant on what you can do with the property, or the title may lack the usual easements.
- Ownership of the property may incur certain liabilities, for example chancel repair liability.
- The property might not have any mains services or there is a problem with providing them.
- The property may be at elevated risk of flooding, coastal erosion or there could be some local geological problem. There could be a mineshaft under or adjacent to the property.
If you are interested in buying a property at auction you should always have the legal title checked and carry out a survey prior to the auction. All too often, we are approached by people who have bought at auction and therefore exchanged contracts and paid a ten percent deposit only to find that there are issues with the property of which they were not aware simply because they did not do their homework.
For advice on buying at auction or conveyancing in general why not contact one of Alexander JLO’s expert property lawyers and see what we can do for you?