A ‘change of mind’ is not an option
When the gavel falls, the parties have exchanged contracts.
In other words, the successful bidder has automatically entered into a binding contract for the purchase of the property from the seller (the auctioneer is authorised to complete the paperwork (Memorandum of Sale) on behalf of the seller.
Properties are not sold ‘subject to contract’, ‘subject to finance ’or ‘subject to survey’ when you buy at auction. They are sold unconditionally.
Before you bid, you must have satisfied yourself as to:
- The condition of the property, to include any survey
- Legal title and other legal factors, which should be addressed in the legal pack provided by the seller pre-action via the auctioneer
- Any third party funding required
Occasionally changes are made to the property (Lot) information or the Conditions of Sale. Before you bid it is essential that you check the printed addendum and listen for any announcements made by the auctioneer detailing any changes that may have occurred. This is important as these will form part of the Memorandum of Sale.
Completion will usually take place 20 working days after exchange of Memoranda (or as varied by the Special Conditions of Sale) under the supervision of your solicitor.
If you fail to comply with the auctioneer’s requirements following the making of a successful bid (to include the provision of identification documentation, payment of the 10% deposit and the signing of the Memorandum of Sale), then the auctioneer at his sole discretion can either sign the Memorandum of your behalf, (in which case you would be obligated to complete the purchase), or treat your failure as a repudiatory breach of the contract and offer the property for sale again at auction (in which case the seller has a claim against you for the difference between your bid and the eventual sale price and for all extra costs incurred).
If after the auction, you fail to complete the purchase on the agreed completion date, then following service on you of a notice to complete (making time of the essence) and your continued failure to complete on or before the expiry of 10 days, the seller may treat your failure as a repudiatory breach of the contract and offer the property for sale again, in which case the seller has a claim against you for the difference between your bid and the eventual sale price and for all extra costs incurred.
Anthony Best, Partner
PRINCE EVANS SOLICITORS LLP