Help re auction property purchase

Sambradh

Inow deleted

Thrugelmir

Sorry to hear your tale. Your attempt to purchase cheaply may cost you dearly I'm afraid to say.

Auctions are historically the preserve for cash transactions for good reason.

If you are the successful bidder then you will be contractually bound to complete on the completion date and the seller will be entitled to damages if you do not. On the day of completion you will be obliged to complete, that is get the money to the seller’s solicitor, by the completion time stated in the contract. In the standard conditions that time is 2pm though it may be varied by a special condition. It will rarely be later than 2pm. Once the completion time has passed the seller may serve a “notice to complete” on you or your solicitor. To be valid on that day it must be served no later than 4pm, otherwise it is treated as being served on the next working day.
From service of the notice to complete you will then have 10 working days (or such other period as is specified in the special conditions – this is often reduced to 5 working days) in which to complete. You will be liable to the seller for interest at the “contract rate”.
This should be specified on the face of the contract and is usually 4% above the Bank of England base rate. This accrues daily and is calculated as follows: (((purchase price – deposit already paid) / 100) * (base rate + 4)) / 365
In addition the contract will usually include a clause obliging you to pay the seller’s solicitor’s additional fee for serving the notice, calculating the interest etc. This will typically be £100 – £200 plus VAT.
These amounts will need to be paid before completion can take place. You will also be liable to the seller for any losses suffered as a result of the delay, for example additional mortgage interest, wasted removal costs etc. These amounts may be agreed on or before completion but the seller cannot refuse to complete if they have not been paid – he will need to sue you for them after. If you are threatened with this you should immediately take legal advice.
If the notice to complete expires then the seller has the option to rescind the contract (i.e. bring it to an end). He does not have to rescind immediately and if he chooses to delay he still retains his right to rescind at any time. Until he does, interest will continue to accrue and you will continue to be liable for his losses. If he does rescind, he will be entitled to keep your deposit (incidentally, regardless of the amount of deposit actually paid, you will be liable for 10% of the purchase price, though in an auction you will usually have paid the full 10% in any case) and sell the property again. If the eventual sale price of the property is less than the price you had contracted to pay the seller will be entitled to sue you for the difference, as well as additional costs of sale such as legal fees and estate agent fees, together with any number of other losses, for example if the seller was in a chain then all the other buyers’ and sellers’ losses will ultimately fall on you. If you are sued successfully then, assuming the seller’s claim is greater than £5,000, you will also be liable for his legal costs.
Clearly the damages could run to many thousands of pounds and if you were still thinking about not obtaining the legal pack or surveying the property beforehand, hopefully reading this section will have made you think twice.

Conrad

Thruglemire is right. Yet again this is a case where an experienced mortgage broker would have pointed out the extreme risks of trying to raise a mortgage on auction property. I've mentioned these risks many times on here.

I wonder if you might consider a comcplaint - no lender or broker should have even attempted this, or at the very least should have sought the facts up front which should have then lead to them warning against proceeding with a mortgage application.

For example if someone mentioned AUCTION property - the broker / lender should have then questioned nwhether the property was habitable. No normal mortgage lender will lend on an unhinhabitable property (no working kictchen or heating for example).

TMW do lend on these subject to a big deposit (30%) and various conditions being satisfied, but it would take at least 4 weeks to sort - try a broker in your area.

Sambradh

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