Property bought at auction with seller who seemed to be dubious

Erin55

Hi - can I ask anyone's opinion as I have bought a property thru auction which has been advertised as tenanted property.  I admit that it's ny fault as I bid on the property thinking I will not win but for some unfortunate circumstances did win.  I did looked at the legal pack before bidding but I did not ask the solicitor to check the special conditions of sale pre-bidding and now is having headaches on it.

First, I noted that the seller is not the one registered in the property.  I was not able to check that pre-bid bacause the draft contract in the legal pack did not contain the name of seller.  Is this common on auction sales? Or this is a ground of misrepresentation?  I have bought the property thinking the seller is the one on the registry search as the person in the registry search is the same person who is signed in the tenancy agreement. 

It is only when the exchange has been signed by the auctioneer on my behalf and paying the 10% deposit did I learn the name of seller.  And then when I did my extensive research that I learned the same seller have bought the property only 3 months ago from another auction.

I had lost a lot of sleep on this one as I am wary that there are considerable issues on the property and withstanding that when I read verbatim the special conditions, it seems it was done as to protect the seller that anything it had disclosed and later found by the buyer to be incorrect will not lead to buyer not to complete the sale. So in general word, if he lied, then he can be absolved on it and the buyer will take all the risks afterwards.
There is even a clause verbatim - The buyer shall risk no requisition on the seller due to unavailability or loss of any keys on the property being sold".

I am asking my solicitor to check all the options on this sale and if it is better to abort and lost my deposit now and potentially pay some penalties rather than having very crucial issues in the future.

Any advise will be appreciated.

loubel

So the seller owns the property but the title register hasn't yet been updated to show this. This is not misrepresentation nor grounds to void the contract. Is your concern his short ownership and why is he selling it on so soon?

Only you can weigh up the cost of defaulting on the contract (which could be considerable) against the cost of going ahead with the purchase. Is there anything specific you are worried about?

user1977

Almost certainly a "back to back" deal i.e. B has bought the property from A, and is flipping on at auction to C for a profit. They don't need to register their title inbetween. Yes, it's common, no, it isn't misrepresentation.

RHemmings

user1977 said:

Almost certainly a "back to back" deal i.e. B has bought the property from A, and is flipping on at auction to C for a profit. They don't need to register their title inbetween. Yes, it's common, no, it isn't misrepresentation.

Interesting. I'm guessing that it wouldn't necessarily imply that there's anything wrong with the property causing the quick resale. Just that someone spotted an opportunity given the price that they obtained it for. 

user1977

RHemmings said:

user1977 said:

Almost certainly a "back to back" deal i.e. B has bought the property from A, and is flipping on at auction to C for a profit. They don't need to register their title inbetween. Yes, it's common, no, it isn't misrepresentation.

Interesting. I'm guessing that it wouldn't necessarily imply that there's anything wrong with the property causing the quick resale. Just that someone spotted an opportunity given the price that they obtained it for. 

No. Nothing the OP has said suggests there is anything "wrong" with it at all. But given that mortgage lenders don't like this sort of deal (plus here there's a tenant in occupation), they do tend to end up at auction.

lincroft1710

I would suggest complete the purchase and stick it in the next auction with a suitable reserve, but you may find auction fees prohibitive. Discuss with your solicitor how much you would stand to lose if you did not complete and see which option is best..


For the benefit of those reading this thread who may be tempted to bid at a property auction

1. DO NOT bid on a property you do not expect to purchase

2. DO your extensive research before exchange NOT after.

3. DO check the special conditions of sale before bidding

4. If in any doubt DO NOT BID. 

bobster2

Erin55 said:

Hi - can I ask anyone's opinion as I have bought a property thru auction which has been advertised as tenanted property.  I admit that it's ny fault as I bid on the property thinking I will not win but for some unfortunate circumstances did win.  I did looked at the legal pack before bidding but I did not ask the solicitor to check the special conditions of sale pre-bidding and now is having headaches on it.

  why???????????

RHemmings

user1977 said:

RHemmings said:

user1977 said:

Almost certainly a "back to back" deal i.e. B has bought the property from A, and is flipping on at auction to C for a profit. They don't need to register their title inbetween. Yes, it's common, no, it isn't misrepresentation.

Interesting. I'm guessing that it wouldn't necessarily imply that there's anything wrong with the property causing the quick resale. Just that someone spotted an opportunity given the price that they obtained it for. 

No. Nothing the OP has said suggests there is anything "wrong" with it at all. But given that mortgage lenders don't like this sort of deal (plus here there's a tenant in occupation), they do tend to end up at auction.

I was thinking that the OP thought there might be something wrong with the property due to this wording in the OP. 

I had lost a lot of sleep on this one as I am wary that there are considerable issues on the property and withstanding that when I read verbatim the special conditions, it seems it was done as to protect the seller that anything it had disclosed and later found by the buyer to be incorrect will not lead to buyer not to complete the sale.

(my emphasis)

bobster2 said:

  why???????????

I considered going to an auction and bidding a ridiculous low price about £100,000 less than my budget on it. Not expecting to win at all, but if it happened that I won then I would spend the £100,000 on doing the house up. But, it was at that time that my offer on a house was accepted and I forgot about it. 

This house.  https://www.google.com/maps/@52.655984,-1.139483,3a,37.5y,201.97h,96.03t/data=!3m6!1e1!3m4!1s4cnU9PB0gcJyAI-Clnh8Og!2e0!7i16384!8i8192?entry=ttu

I'm well aware of how people can get carried away in auctions and fail to keep to plans. Personally I think I'm not at too much of a risk for that. However, I didn't do it. 

NameUnavailable

RHemmings said:

user1977 said:

RHemmings said:

user1977 said:

Almost certainly a "back to back" deal i.e. B has bought the property from A, and is flipping on at auction to C for a profit. They don't need to register their title inbetween. Yes, it's common, no, it isn't misrepresentation.

Interesting. I'm guessing that it wouldn't necessarily imply that there's anything wrong with the property causing the quick resale. Just that someone spotted an opportunity given the price that they obtained it for. 

No. Nothing the OP has said suggests there is anything "wrong" with it at all. But given that mortgage lenders don't like this sort of deal (plus here there's a tenant in occupation), they do tend to end up at auction.

I was thinking that the OP thought there might be something wrong with the property due to this wording in the OP. 

I had lost a lot of sleep on this one as I am wary that there are considerable issues on the property and withstanding that when I read verbatim the special conditions, it seems it was done as to protect the seller that anything it had disclosed and later found by the buyer to be incorrect will not lead to buyer not to complete the sale.

(my emphasis)

bobster2 said:

  why???????????

I considered going to an auction and bidding a ridiculous low price about £100,000 less than my budget on it. Not expecting to win at all, but if it happened that I won then I would spend the £100,000 on doing the house up. But, it was at that time that my offer on a house was accepted and I forgot about it. 

This house.  https://www.google.com/maps/@52.655984,-1.139483,3a,37.5y,201.97h,96.03t/data=!3m6!1e1!3m4!1s4cnU9PB0gcJyAI-Clnh8Og!2e0!7i16384!8i8192?entry=ttu

I'm well aware of how people can get carried away in auctions and fail to keep to plans. Personally I think I'm not at too much of a risk for that. However, I didn't do it. 

It would help if the OP could give some insight into the 'considerable issues' and why they didn't spot those prior to bidding!

It's not like an ebay auction where you can claim your cat trod on the laptop and the bid was accidental.

OP - if you pull out now you will lose your deposit and a LOT more besides. If at the next auction the property sold for £50K less than your offer, for example, you would be liable to make that difference up. Plus all the associated legal fees and auction fees.