Unfair terms in buying a house at auction?

InquisitiveMind

Hi all, I've been looking into buying a house at auction (first house) and have spent many hours looking online at properties and reading the legal packs that go with the house.

One thing that strikes me is that in the contract, the seller ask the buyer to pay what appear to be "unfair terms", that is the buyer is expected to pay in addition to the auction house fee (£800ish) certain charges to the buyer which the seller incurred in selling the house:

- the sellers auction fee (approx £1500 + £900) + VAT
- land title / registration search and other fees (approx £250 - £300),
- seller legal fees (£500 - £1000) + VAT,
- other "administrative" fees incurred in selling the house (£1000-2000) + VAT

This adds a hefty amount onto a purchase. Surely the buyer can reject these fees as unfair because:

a) they were not agreed by both parties (though does bidding show acceptance of the contract?),
b) the reality of not paying the sellers fees does not put the seller at that great a loss, and
c) the owner of the house has the unfair advantage to say "pay the fees or (despite paying x - 4ish thousand) you don't get the house and you lose your deposit of 10% of auction price." putting the buyer at great disadvantage.

I would also hazard a guess that the buyer has the right to see invoices that justify the charges?

I don't know of other places where the buyer is responsible for seller fees?

Any ideas / advice (other than see a solicitor!)?

mrginge

Seem perfectly fair to me.

DaftyDuck

Ideas or advice?

If you don't like the terms, look elsewhere.

InquisitiveMind

Not every term in a contract is enforceable though.

jjlandlord

InquisitiveMind wrote: »

a) they were not agreed by both parties (though does bidding show acceptance of the contract?),

They are agreed since they tell you about them before you bid: If you bid you accept the terms.

InquisitiveMind wrote: »

b) the reality of not paying the sellers fees does not put the seller at that great a loss, and

Irrelevant.

InquisitiveMind wrote: »

c) the owner of the house has the unfair advantage to say "pay the fees or (despite paying x - 4ish thousand) you don't get the house and you lose your deposit of 10% of auction price." putting the buyer at great disadvantage.

No. You are told about the terms before you bid.

InquisitiveMind wrote: »

I don't know of other places where the buyer is responsible for seller fees?

Any place where the buyer agrees to...

davidmcn

InquisitiveMind wrote: »

a) they were not agreed by both parties (though does bidding show acceptance of the contract?)

Yes, both parties are bound by the contract. If you don't like the conditions, don't bid. You don't have an opportunity to quibble about the conditions afterwards.

b) the reality of not paying the sellers fees does not put the seller at that great a loss

Whether or not it's "not that great a loss", it's a loss which the seller would be entitled to recover from you.

c) the owner of the house has the unfair advantage to say "pay the fees or (despite paying x - 4ish thousand) you don't get the house and you lose your deposit of 10% of auction price." putting the buyer at great disadvantage.

If it's there in black and white, and you've seen and understood it without even having to consult a solicitor, I'm not sure that it is inherently unfair. Bidders will be taking account of those costs when deciding how much to bid for, so if the fees are excessive they're only going to depress the price achieved.

I would also hazard a guess that the buyer has the right to see invoices that justify the charges?

Only if the contract says so (which it almost certainly won't).

I don't know of other places where the buyer is responsible for seller fees?

It's fairly common in auctions in general that the buyer pays fees on top of the price. And in many other property deals too.

Any ideas / advice (other than see a solicitor!)?

You should of course be consulting a solicitor anyway before bidding.

Bear in mind that unfair contract terms protection is restricted in property purchases, on the basis that it's the sort of thing where you have an opportunity to seek legal advice about the contract, and in the vast majority of cases will be doing so.

G_M

as others have said:

InquisitiveMind wrote: »

Surely the buyer can reject these fees yes. By no biddig as unfair because:

a) they were not agreed by both parties (though does bidding show acceptance of the contract?), yes. It is up to the buyer to do due diigence before bidding including reading the legal pack. Bidding constitutes acceptance of the terms.
b) the reality of not paying the sellers fees does not put the seller at that great a loss, and If the amount involved is 'not great', why quibble about it?
c) the owner of the house has the unfair advantage to say "pay the fees or (despite paying x - 4ish thousand) you don't get the house and you lose your deposit of 10% of auction price." putting the buyer at great disadvantage.
No because when you bid you add these costs into your calculations and stop bidding at the point where you don'e wish to pay that amount.
The buyer has the advantage as he can decline to bid and leave the seller with an unsold property (or with a sale at a reduced price)

I would also hazard a guess that the buyer has the right to see invoices that justify the charges?
if the carges are clearly laid out in the legal pack and/or auction House T&Cs, the buyer knows what he'll hve to pay.

Any ideas / advice (other than see a solicitor!)?

Don't waste your money consulting a solicitor over the validity of the fees.

Do pay a solicitor to go through and explain the legal pack of any property you are considering bidding on.

theartfullodger

If you really think these fees are "unfair" (you could have a point..) but want the property, bid but when paying write (I think..) "paid under protest" on the paperwork then later sue the auctioneer through the small-claims process.

I think you may have a point: I doubt very much you would win.

To research better if you have a case contact Mssrs CMA who regulate the unfair terms stuff since OFT was cancelled.
https://www.gov.uk/government/organisations/competition-and-markets-authority

PasturesNew

Auction properties are not for the faint-hearted. There are all sorts of fees and problems to be found.

Before you even go into the auction room you need to have your finances FULLY in place - if you need a mortgage you'd have needed to have the mortgage arranged and have had a survey done, even if the first bid on the day goes straight over your top bid.

Auction properties, as a sweeping statement, are not for FTBs.

thorsoak

As they say on the programme "Homes under the Hammer" - always read the legal pack first before putting your hand up.

getmore4less

the bottom line

There is the total cost to the buyer

The net proceeds to the seller.

Where and how the difference is taken out is not that relevant.

The buyer decides how much they want to spend,
That sets max bid based on the stuff they have to pay for.

The seller decides how much they want and set their reserve based on what they need to pay.


If there is a +ve gap between the buyers bid and the sellers reserve everyone is happy.