Due diligence before buying at auction

M.Johnson_2

I am after some advice on how to do due diligence on a property before buying at auction.

I have been getting some quote from different legal firms, I have bought the legal pack and just want a professional to go over it and advise me.

Any good suggestions or tips what to look for?

tim123456789

those things that you feel unable to check for yourself.

How can we possibly know what they are?

tim

M.Johnson_2

tim123456789 wrote: »

those things that you feel unable to check for yourself.

How can we possibly know what they are?

tim

Thanks its a good point. If I cant see any clauses or anything major in the legal pack, then there is no point hiring a legal firm to look through it?

I just feel better to be on the safe side.

I do not have anything I doubt in the legal pack that I can ask about specifically.

The point is, are there any major things that I missed?

martinsurrey

M.Johnson wrote: »

The point is, are there any major things that I missed?

the point is that without knowing whats in the pack, and the flat, how can we possibly know if there is something missing!

M.Johnson_2

martinsurrey wrote: »

the point is that without knowing whats in the pack, and the flat, how can we possibly know if there is something missing!

Its not a flat its a derelict property. But I am only interested in the land.

I dont think there is any thing missing I have the entire pack and its all relatively straightforward.

What I am worried about it if there is a major clause in there somewhere like a right of passage or some big thing that I missed.

I will go though it all again. What is hard is when it refers to section 7 or something then you have to look that up again and its easy to get mixed up. I am pleased I did not go to law school, this is no way to live.

Mr_Moo_2

Are there any restrictions on the use of the land? The pack should confirm existence of any leases, covenants etc. Will you want to demolish the current property and rebuild? In which case you'll need planning permission - will this be granted? Some local research and a chat with your local planning office might be in order.

Basically if you're planning on spending a lot of money and there are things you don't understand, then maybe its worth shelling out for some professional advice. Obviously the risk is you don't win the auction. But hey, that's auctions!

BitterAndTwisted

No, he's buying purely to demolish the adjoining fire-damaged property himself by hand and use it as an expensive allotment. Digging out the foundations by hand should be a laugh.


He'll be asking about the £35 per annum ground-rent in a minute.

tim123456789

Let me try again

(Realistically) you cannot approach this problem from the pov of asking "are there any nasties in the lease". There could be hundreds that are all irrelevant because they don't affect what it is that you want to do.

You have to approach it from the other end and say "I want to do X, does the lease allow me to do so?"

And my answer is.

You need to ask the solicitor that question for all values of X, that you can't do for yourself

TBH if you want to knock down and rebuild a leasehold house your only solution is to buy out the lease, at which point the terms in the lease are irrelevant and the only question that you need an answer to is "does this lease qualify for statutory purchase under the act?"

tim

tim123456789

BitterAndTwisted wrote: »

No, he's buying purely to demolish the adjoining fire-damaged property himself by hand and use it as an expensive allotment. Digging out the foundations by hand should be a laugh.


He'll be asking about the £35 per annum ground-rent in a minute.

when most people say "by hand" they don't mean it literally (they just mean "do it myself")

tim

M.Johnson_2

I am getting legal advice about the lease if it is inflation adjusted. Or is it £35 per year for the duration of the lease? Also what does the premium mean? It says "In consideration of the Premium of £150K and the annual rent of £35"

So could the lease be bought out for that premium at any time?

I would never be interested in buying out the lease, unless that amount is also going to go to almost nothing over time with inflation eating away at it. As far as I understand these leases that are not inflation linked will over time be insignificant? If inflation keeps going up the way it is, then what's the point of having a fixed rent each year. It will eventually be insignificant over a 1000year lease. Or can they put the rent up over time?

What I am concerned about is the lease holder objecting to future plans. Is there any way to find out about what they will allow and what they may object to regarding planning things on the land?

tim123456789

Once again

The premium does not buy out the lease

The premium is the costs of buying the initial lease at an advantageous rent.

In the case of residential property the "premium" is the initial cost of the (leasehold) house