29 May 2018 By WengYee Loke
When buying a property at auction, you will notice that having a legal pack available is key! After all, with a countdown in place, there is often only time for you as a prospective buyer to review necessary legal information. With many people interested in the same property, this will also save each of their solicitor’s from carrying out the same searches. Auctions are all about efficiency right?
Yes of course you should get your solicitor to look over the legal pack, they are the expert. But it may also be useful for you to have a base understanding of the documents provided by the seller.
Below is the list of documents you would find in a legal pack.
This is the Official Copy of Register of Title for the property put up for auction. It will set out who the legal owners of the property are and whether there are any restrictions on it.
The land title plan comes under this and goes hand in hand with the title register. The title plan will show exactly the boundaries of the property. You don’t want to find out at the last minute that the beautiful green space you thought came with the property actually doesn’t.
While the property that you have an interest in has ticked all your boxes, there may be external circumstances that could affect it. Local authority searches will bring up such situations; such as the building of a new highway or contaminated land nearby.
Read this carefully! Especially when buying at auction, as there is no room for negotiation once you have exchanged. This could include having a short completion date or additional payments such as seller compensation for legal pack.
If there is a lease on the property, be sure to watch out for things like the length of lease. Many auction properties with a short lease can be a good buy. You just need to have good negotiating skills to secure a lease extension with the freeholder for a good price.
For property investors wanting a property with tenants in situ, auctions are a popular avenue. You don’t get any void periods and the property is yield generating from day 1. You may not be able to make any changes to the tenancy agreement, until it expires, so be aware of what your obligations are.
A must have for every property sale. As a buyer you will read this document which covers vital facts such as boundaries, disputes and complaints, guarantees and warranties etc. Buying at auction means no turning back once the timer hits zero. So make sure that you are happy with all the information here.
Other than the main structure of the property, the seller may include some fixtures and fittings as part of the sale. Don’t expect anything not detailed here. Not even if it’s the shelving for a nice walk-in wardrobe!
If you are buying at auction to make a profit, you might be looking for development opportunities. The auction lot might have the potential for 4 houses but if the planning permission is only for 2 then you will have to apply for further permission.
And that’s it! Of course this is not an exhaustive list and your solicitor will be the best person to advice on the legal pack. But we hope that this helped you understand it all a little better.
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