Buying a property at auction is a fast and legally binding process so it’s essential to do your due diligence before bidding on a property. One aspect of this is checking the auction legal pack. But what exactly is this, where do you find it and how do you know what to look for in an auction legal pack?
What is an auction legal pack?
Usually compiled by the seller’s solicitor, an auction legal pack contains documents detailing important information on the property. It provides transparency and allows you to make an informed decision about bidding on the property.
You can obtain a copy of a property’s auction legal pack either from the auction house – you can usually download a copy via their website – or the seller’s solicitor. Be aware that some auctioneers may charge a nominal fee for the legal pack.
Is an auction legal pack mandatory?
An auction legal pack isn’t a legal requirement. However, it’s a fundamental part of an auction purchase. It details the property’s legal status, the terms of sale and any issues that you should be aware of.
From a seller’s point of view, providing a comprehensive auction legal pack shows they are being transparent. This helps to build trust with potential buyers. It also helps them reach a more realistic sale price and negates the risk of legal discrepancies.
From a buyer’s point of view, it instils confidence that the seller has disclosed the necessary legal information. The correct due diligence can then be carried out before deciding whether or not to bid on the property.
What to look for in an auction legal pack
The documents contained in a legal pack vary for each property but, generally, you can expect to find:
- The property title deeds
- Land Registry documents
- The special conditions of sale
- The terms and conditions of sale
- Local authority searches
- An environmental search
- A drainage and water search
- Planning permission documents
- Building regulations documents
- An Energy Performance Certificate (EPC)
- The Property Information Form (TA6)
- The Fittings and Contents Form (TA10)
- Details of warranties and guarantees
Other documentation specific to the type of property or its use may include:
- A Leasehold Information Form (TA7)
- A Leasehold Property Enquiries (LPE1) form
- The Buyers Leasehold Information Summary (LPE2)
- The Leasehold Management Pack
- Copies of tenancy agreements and details of relevant tenancy information
- A copy of the HMO licence
- A Commercial Property Standard Enquiries (CPSE) form
- Searches related to the property’s location, such as a flood risk or mining search
The special conditions of sale
It’s essential to check the special conditions of sale as these detail terms that are specific to the property. For example, the seller may have specified a different completion time, there may be title issues that can only be dealt with after completion, an overage clause may apply, there may be arrears on the property, the property may be tenanted, or there may be additional fees to pay.
What are the repercussions of not checking an auction legal pack?
As mentioned earlier, a comprehensive auction legal pack isn’t a legal requirement for sellers. Without one, however, you should think twice before bidding on a property. Likewise, if the documents provided in the legal pack are sparse, you should be wary about placing a bid. Being able to check and fully understand the contents of a legal pack before an auction ensures that you are aware of all legal aspects relating to the property and any potential issues that may have to be dealt with.
All types of properties are sold at auctions, including many that can’t be sold on the open market. Some, for example, may be difficult to mortgage due to anything from planning issues, a short lease, punitive service charges and no formal property registration to restrictive covenants or the presence of Japanese knotweed. Others may be tenanted properties, which can be hard to sell on the open market. Inherited properties and repossessions are also commonly sold at auctions.
If you fail to carry out your due diligence when it comes to the legal pack, there could be serious financial consequences. Once the hammer falls, you either immediately exchange contracts or sign a reservation agreement, depending on the type of auction sale. This makes it imperative to check the legal pack before the auction so that you don’t face any nasty – and expensive – surprises further down the line.
Prepare for your auction purchase
Auctions are a great way to find properties at cheaper prices as well as those that wouldn’t usually be advertised by estate agents. As long as you’ve done your due diligence, including checking the auction legal pack, you can buy a property with confidence and reap the rewards.
To arrange your auction finance, give us a call on 01322 907 000. Quick to arrange and with flexible eligibility criteria, you can rest assured that the funds you need will be in place before the auction. That way, you won’t have to worry about missing out on a potential opportunity.