Auction - Contract Rescinded

Wrinkles_2

Not sure what steps I should take next...

In early September I bought a garage at auction. I paid the deposit and buyer's premium to the auctioneer (as per the conditions of sale), instructed my solicitor and waited for completion. Before completion it became apparent that the seller was not entitled to sell the garage separately from his flat. After many headaches the contract was mutually rescinded and I asked for my deposit back plus costs.

NOW... my solicitor has had alot of problems contacting the seller's solicitor. My solicitor has sent many faxes and letters and has had no satisfactory answer. The seller's solicitor has sent a letter to his client asking for our deposit and costs but we have not had any feedback. My solictor says that as far as he is concerned he can do nothing more and he has closed the file! He says that we can go to litigation but the cost may outweigh the amount of money we want back.

My problem now is who should I be chasing for the money - the auctioneer or the seller? AND Can my solicitor just close my file?

I contacted the auctioneer, as he was initially given the deposit, and asked him for the deposit back. He says that he took his fee from the deposit and passed the rest to the seller's solicitor (the fee is larger than the amount passed to the solicitor) so the seller's solicitor must return the deposit. The seller's solicitor has told the auctioneer that he cannot return money from a client account without the agreement of the client, and the client has not agreed. The conditions of sale say that the auctioneer acts as stakeholder and cannot pass the deposit to the seller until completion or failing completion until it has been decided who is entitled to the deposit. I believe that he has breached these conditions.

I think a big problem is that the seller has paid nobody and is using my deposit to pay his bills. His solicitor says that he has no money on account from the seller, so ultimately the money in the client account can pay his fees. The auctioneer has taken his fees from the deposit and is also not worried about getting paid. I have paid my solicitor and it looks like I am also paying all the other costs.

Some advice would be gratefully appreciated.

subjecttocontract

How much are we talking about ?

If its under £5K you can claim it back thru the small claims court.

If the guy doesn't have the money you will need to place a charge on his property.

silvercar

The conditions of sale say that the auctioneer acts as stakeholder and cannot pass the deposit to the seller until completion or failing completion until it has been decided who is entitled to the deposit

Then he is liable to return your money!

On a standard sale, the seller's solicitor holds the buyers deposit until completion. At auction, I would have thought the winner of the auction has effectively exchanged ie they have made a legal commitment to purchase and the deposit would therefore have been made on that basis. It would seem therefore that the deposit should not have been passed to the seller but held by the seller's solicitor.

The seller's solicitor has told the auctioneer that he cannot return money from a client account without the agreement of the client, and the client has not agreed.

This suggests that he has the money but is unwilling to pass it back.

Your auction conditions suggest that it shouldn't have been sent onwards at all.

As for your solicitor's behaviour. it sounds a bit shoddy. At the very least he should have informed you that there would be costs incured if you wanted him to pursue the matter further. Did you agree a fixed fee for "all work entailed"?

I would be tempted to write to the seller's solicitor informing him that you will be complaining to the Law Society if the matter isn't resolved. You cannot follow the seller's solicitor's in house complaints procedure as you are not a client of that solicitor.

Do you have legal insurance through your work or house insurance?

Wrinkles_2

Thanks for the quick replies.

Yes, the amount is less than £5K and I have considered the small claims court route. However, I'm not sure who I should be claiming from. I am currently out of pocket for DEPOSIT, BUYER'S FEE, SOLICITOR'S FEES and I have had lots of heartache. My initial reaction was to claim everything from the seller but as I re-read the documentation it seems that the auctioneer should not have passed any of the money to the seller and he definitely should not have taken his fees from my deposit.

SILVERCAR... Part of the deposit has been passed to the seller's solictor (after the auctioneer took his cut). Is it true that the seller's solicitor cannot pass the money back without his client's consent? I gather that his client has not paid him any money at all for the work so far.

My solicitor has said that I can talk to their litigation department but that the conveyancing department can do nothing else. Personally I believe that my solicitor has been doing a waiting game. If I prod him, he sends a fax to the seller's solictor, otherwise it's just wait and see.

Good question about legal insurance. I'll check. I have lost so much money so far that I am very worried about further legal fees.

Richard_Webster

but as I re-read the documentation it seems that the auctioneer should not have passed any of the money to the seller and he definitely should not have taken his fees from my deposit.

Is th auctioneer a chartered surveyor? if so he may be governed by professional rules and if he should have held the money as stakeholder than you might be able to make a complaint to his professional body...

The other point, which OP probably now realises, but I will say again for the benefit of others, is that should never buy at auction without getting the legal pack checked. if this was a garage with a flat then presumably there was a lease which contained clauses preventing sale of part only of the premises in the lease. A solicitor should have spotted that and saved OP all the trouble.

This garage should have never been in the auction and the seller's solicitors should have looked at the paperwork beforehand and told their client he couldn't sell it. However, it is often the case that properties in auctions are there because there is something wrong with them, this can be physical (like the house I heard an auctioneer describe as a "cracking property"...and he went on to say that was true as anyone who had looked at it would have seen the large cracks in the side walls(!).. and because of the honesty there it still sold for twice the guide price!) or legal like a lease with a landlord from hell or one that is so badly worded as to be unmortgageable.

Anyone going to an auction has to be on the lookout, and be asking himself why the property is in the auction. There could be a good reason, related to getting the best price, or the property is unusual and difficult to value, or there's something wrong with it...