Auctions - limited title guarantee

jakub85

Hi,

Currently looking at some property auctions and came across seemingly cheap properties with 'limited title guarantee'. By now I have realised that they tend to be cheap because they have some charge/mortgage attached to them, which the buyer will be responsible for (or in some cases the seller has just limited knowledge of the property that is being listed).

Question: is there a way to find out what is the amount of the charge/mortgage if this is not clearly provided in the legal pack? Is it customary to ask this question to the vendor's solicitor or do people really buy 'in the dark'?

Thanks!

G_M

This is a question to ask your solicitor to advise you on when he does his pre-auction investigation of Title.

No point involving a solicitor after the auction!

jakub85

Thanks. I was at a rather early stage and to be fair had an agreement with a solicitor to review each legal pack for £500 per lot.

But clearly I want to do some own work before so I don't have to pay £500 to just find out that the value of the charge/mortgage makes the lot uninvesteable.

I would prefer to pay £500/engage solicitor only when I know there appears to be an investment potential.

Saying it differently... If I pay £500 for each limited title guarantee lot to only find out the value of the mortgage then I will quickly run out of funds and won't necessary even find anything investable (not to mention that there is still the auction afterwards).

jakub85

To add real numbers...

House is auctioned at £550,000
Similar houses nearby cost ~£800,000
Limited title guarantee with RBS charge on title guarantee unspecified

If the charge is ~£100,000 I can pay £500 to investigate everything else. If the charge is £300,000 then what's the point?

davidmcn

Are you certain these are being sold with the charge still in place? As opposed to being sold by the chargeholder, or otherwise in a fashion which means the charge will no longer be there after completion?

jakub85

Pretty certain.

The documents state that the seller will make all attempts to achieve a discharge over the charge made back in 2003.. If the discharge from the charge holder (RBS) is not received within 5 months however, the sale is void.

Makes me think:
1) The charge is there
2) Sale is only possible if the seller has no further liability to the charge holder
3) If 2 is not possible then makes sense that the sale would be void.

davidmcn

jakub85 wrote: »

Pretty certain.

The documents state that the seller will make all attempts to achieve a discharge over the charge made back in 2003.. If the discharge from the charge holder (RBS) is not received within 5 months however, the sale is void.

Makes me think:
1) The charge is there
2) Sale is only possible if the seller has no further liability to the charge holder
3) If 2 is not possible then makes sense that the sale would be void.

Bit odd. Sounds like even the seller can't find out how much money is involved. Think I'd pass.

jakub85

Thanks. I will attempt to reach out to the solicitor and see what they will come back with - most likely will stay away but I am at a learning stage anyway.

Will update the thread when/if I receive a response.