Flat sold at auction,buyers threatening to void sale due to lack of form LPE1

Daniel54

Quick resume

Flat was recently sold at auction,deposit paid and documents signed by buyer

Their solicitor is now saying that the lack of the freeholders form LPE1 should enable them to potentially void the sale if not provided

I am a third party here as it is my son's flat.He tells me the legal pack pre auction made no mention of LPE1( the freeholder had not replied to the enquiry)

Is the onus on the buyer here,or on the seller.I am not deeply acquainted with the rules of auction,,but it seems to me this is the buyer's problem to deal with and they are committed to the purchase

I should add that there are ( to the best of our knowledge) no legal landmines for the freeholders to sign the form.The rent is peppercorn £1 per year and my son has proof of his annual  payments towards to property insurance.

Any feedback welcome.

user1977

What advice is your son's solicitor giving to him? Did the contract say anything about an LPE1? If not then I doubt there is any implied requirement to produce one.

Daniel54

Thank you for your reply

I have asked him him to provide me with the legal pack,but  from our conversations the legal pack was silent on LPE1

I have encouraged him to obtain clarity from  his solicitor,and also from the auctioneers on how to best to proceed.

But my understanding of the auction process is that the buyers are committed to proceed,,absent any clearly false statements  in the sale proposal.

eddddy

What type of auction was it?

• 1) Was it a traditional (unconditional) auction?

• 2) Or was it some kind of conditional auction - often called "the Modern Method of Auction"?

If it's option 1, contracts would have been exchanged when the "hammer dropped", so it's unlikely that the buyer can walk away (unless there was some serious misrepresentation).

If it's option 2, contracts are normally exchanged 4 to 6 weeks after the end of the auction - so the buyer may be able to walk away during those 4 to 6 weeks.

Daniel54

eddddy said:

What type of auction was it?

• 1) Was it a traditional (unconditional) auction?

• 2) Or was it some kind of conditional auction - often called "the Modern Method of Auction"?

If it's option 1, contracts would have been exchanged when the "hammer dropped", so it's unlikely that the buyer can walk away (unless there was some serious misrepresentation).

If it's option 2, contracts are normally exchanged 4 to 6 weeks after the end of the auction - so the buyer may be able to walk away during those 4 to 6 weeks.

Thank you for your reply

it was a traditional auction conducted  by a well known auction house for property sales,.The hammer went down and contracts were exchanged

Details were provided of the lease ( over 100 years remaining ) alongside the  peppercorn annual rent and payments for the buildings insurance to the freeholder.

Absent any serious misrepresentations, ,which I understand not to be the case ,then  I guess the buyer might still be able to walk away,sacrificing their deposit in the process ?

eddddy

Daniel54 said:

Absent any serious misrepresentations, ,which I understand not to be the case ,then  I guess the buyer might still be able to walk away,sacrificing their deposit in the process ?

Typically, the buyer would lose whichever is greater:

• The 10% deposit
• The losses suffered by the seller (your son)

The usual route in this situation is to put the flat into the next auction, and your son's losses would include:

• The second set of auction fees
• The second set of legal fees
• If the property sells for less - the difference between what it sold for first time, and what it sells for second time.

The 10% deposit should be safely held by solicitors - so it should be relatively easy for your son to get hold of that. If his losses are greater than that, and the buyer refuses to pay them, your son might have to take the buyer to court.



But I wouldn't be surprised if this is just "puff and bluster" by the buyer and the buyer's solicitor - and they know they have no case.

• And/or it could be a case of "buyer's remorse" - they regret the purchase, and are trying to find ways of getting out of the contract.

• And/or the buyer doesn't have the finance in place to pay (maybe they hoped to get a mortgage, and you need an LPE1 to get a mortgage) - so they are trying to find ways of getting out of the contract.

sheramber

But I wouldn't be surprised if this is just "puff and bluster" by the seller and the seller's solicitor - and they know they have no case.

I am confused. Is the seller not the OP'S son?

eddddy

sheramber said:

But I wouldn't be surprised if this is just "puff and bluster" by the seller and the seller's solicitor - and they know they have no case.

I am confused. Is the seller not the OP'S son?

Thanks for pointing that out - it was a typo. I've corrected my post. (I meant to say 'the buyer and the buyer's solicitor').

Daniel54

eddddy said:

Daniel54 said:

Absent any serious misrepresentations, ,which I understand not to be the case ,then  I guess the buyer might still be able to walk away,sacrificing their deposit in the process ?

Typically, the buyer would lose whichever is greater:

• The 10% deposit
• The losses suffered by the seller (your son)

The usual route in this situation is to put the flat into the next auction, and your son's losses would include:

• The second set of auction fees
• The second set of legal fees
• If the property sells for less - the difference between what it sold for first time, and what it sells for second time.

The 10% deposit should be safely held by solicitors - so it should be relatively easy for your son to get hold of that. If his losses are greater than that, and the buyer refuses to pay them, your son might have to take the buyer to court.



But I wouldn't be surprised if this is just "puff and bluster" by the buyer and the buyer's solicitor - and they know they have no case.

• And/or it could be a case of "buyer's remorse" - they regret the purchase, and are trying to find ways of getting out of the contract.

• And/or the buyer doesn't have the finance in place to pay (maybe they hoped to get a mortgage, and you need an LPE1 to get a mortgage) - so they are trying to find ways of getting out of the contract.

Many thanks for your comprehensive reply,which is much appreciated

The property is above commercial premises and potential buyers have been unable to obtain a mortgage,hence the decision to sell at auction.The sale price would otherwise have been significantly higher

I am hoping this is indeed puff and bluster,as the decision to sell at auction was driven by the certainty the process hopefully provides to the seller.

user1977

Has your son's solicitor just relayed this request and shrugged their shoulders rather than offer any advice (or immediately rebut it to their counterpart)?

Daniel54

user1977 said:

Has your son's solicitor just relayed this request and shrugged their shoulders rather than offer any advice (or immediately rebut it to their counterpart)?

That is a good question as I don’t think it should be my son’s responsibility to try to get the freeholder to fill in the form.I am minded to suggest he takes a second opinion from a solicitor more inclined to legally rebut the buyer’s solicitor.

There is a timescale of a few months within which he needs to sell the property and reclaim the 3% additional  SDLT paid when purchasing his current residence,which is over £12 k