Buying or selling property using an auction is an exciting time! However, if it is your first time doing so it can be a daunting and nerve-wracking experience with a lot to take in.
However, not to worry! Here at Property Press Online we have created a handy guide to all things auction property conveyancing.
In our auction property conveyancing guide, we will be looking at the conveyancing process as well as looking at what’s included in a legal pack for auction and some of the property auction law UK.
Looking for a quick answer? Check out our interactive menu below
- How Does A Property Auction Work?
- What Is A Solicitors Role In Property Auction Conveyancing
- What Is An Auction Pack?
- What Is Included in the Legal Pack For Auction?
- How Long Is The Auction Pack Valid For?
- What Is Included In The Sellers Pack?
Subscribe To Our Newsletter
How Does A Property Auction Work?
Before we can understand the auction conveyancing process and everything that it entails, we must first look at what a property auction involves. A property auction works with prospective buyers bidding on a property. In order to purchase they must meet the ‘reserve price’ that has been set for the property.
On the day of the auction, a bidder can go above the ‘reserve price’ but they cannot go below it. The highest bid is legally binding, and the buyer must purchase the property.
To make sure the buyer keeps this commitment, a 10% deposit for the property is required on the day and the buyer and seller exchange contracts on the same day.
The buyer and seller are given 28 days to complete the purchase and if the buyer pulls out of an auction or completion does not happen then the deposit is lost, and penalty fees may be applied.
What Is A Solicitors Role In Property Auction Conveyancing
There are many similarities between selling a property through an estate agent and selling it at auction.
In fact, the main difference between the two selling options is the legal work behind the sale. When you purchase a property at auction, it is not confirmed until the end of the sale. Because of this, the majority of auction property conveyancing is done prior to the auction so that people can bid on your property.
Whilst it is completely down to the individual, we would recommend that you instruct an auction conveyancing solicitor or a solicitor to prepare the legal documents for your property. This will allow the bidder to have as much information as possible about the legal side of the transaction which will then help to boost your chance of a sale.
The first step of the auction property conveyancing process is to instruct an auction conveyancer to produce a legal pack for the sale. The work that your auction conveyancing solicitor will need to undertake will include completing the property information forms, completing any searches and drafting any special Conditions of Sale.
After the winning bid is in place, your solicitor will undertake the next part of the property auction process. Included in the post auction conveyancing process is:
- Receiving the sales memorandum
- Approving the Transfer Deed and requisitions on title
- Posting the Transfer Deed for you to sign
- Forwarding replies to requisitions to the buyer’s conveyancer
- Drafting the completion statement and forward it to the buyer’s solicitor
- Requesting the title deeds and the final redemption statement from both your secured charge lender and your lender
- Redeeming any mortgages/secured loans held over the property
- Handling the completion of the transaction
- Forwarding the new Title Deeds to the buyer’s conveyancer
- Transfer any proceeds of sale to your bank account
What Is An Auction Pack?
One of the biggest steps in the auction property conveyancing services is to create a legal pack for auction ahead of the auction.
This legal pack will be made publicly available as the property will be marketed alongside any photos of the property, the floorplan, Energy Performance Certificate (EPC) and any other relevant documentation prior to the auction day. It will provide anyone attending the auction with information about the property.
The responsibility to look through the documentation provided is down to the buyer.
Do I Need An Auction pack?
It is not a legal requirement to have an auction pack, however it is strongly recommended that you prepare one before heading to the auction house.
As a auction pack is one of the main ways that potential bidders will find out about your property, by not preparing one it will ring alarm bells. By going to auction without a legal pack, bidders may think that there is something wrong with the property and can result in low bids as buyers will be trying to factor in buying risks.
By having a auction legal pack you will be painting your property in the best possible light.
How Much Does An Auction Pack Cost?
There is no fixed fee for how much a legal pack will cost. The cost of an auction pack will come down to the type of property and the workload it is expected to produce but as a rule of thumb you can expect to pay around £500-£700 (+VAT) for the legal pack. Once the sale is complete you will also be required to pay a similar amount (for example £1,000 and £1,400 + VAT).
What Is Included in the Legal Pack For Auction?
Included in the legal pack for auction are the following documents:
Title Register
Whilst you may already have a copy of this document, the majority of conveyancers will get an up-to-date version from the HM Land Registry (this is usually around £3).
This document will confirm that you own the property as well as the amount you originally paid and any mortgages, secured loans and extra charges there may be.
The title register may also include specific information that is related to restrictive covenants, negative easements, third party consents and ransom strips. If this is the case, then your solicitor will highlight and explain any of the issues that you are unaware of.
Title Plan
The Title plan is a graphical representation of the land surrounding the property and the boundaries included. It will complement the details in the Title Register and can also be downloaded from the HM Land Registry (this is usually around £3).
Property Searches
The conveyancing searches are often undertaken by the seller’s solicitors before the auction sale and contain a variety of information concerning the surrounding area. They are a key part of the legal pack, and your solicitor will contact local authorities and public bodies in order to conduct the searches.
Energy Performance Certificate
When it comes to selling a property, it is a legal requirement to have an up-to-date Energy performance Certificate (EPC) in place.
If within the last 10 years your property has been on the market, then chances are it will already be on the EPC register.
Special Conditions Of Sale
This is a separate document that clearly lays out any contractual variations on the transaction that the buyer should be aware of. These can include any of the following:
- Issues on the Title that can only be resolved once the sale has gone through.
- Any extra sales commissions that will be payable to property dealers or asset management companies.
- Land Registry restrictions (RX1s) that are still in place (these will need to be cancelled prior to the exchange of contracts)
- Sellers fees or commissions being covered by the winning buyer
- Extensions to the period between payment of the reservation fee and the exchange of contracts
- Any payable additional sales commissions
- Any financial conditions that could affect the buyer post completion, such as the house being inherited and still going through probate
How Long Is The Auction Pack Valid For?
Whilst certain documents within the auction pack would be valid for longer, search requests would have to be reissued after 6 months however properties put on auction are usually sold before this timeframe runs out.
What Is Included In The Sellers Pack?
If you are selling a property at auction, then you will need to fill out a seller’s pack. A seller’s pack is a collection of documents that you will be sent to fill out to the best of your knowledge. This pack will then be sent out to the buyer.
Property Information Form (TA6)
A Property Information Form is a form that will ask you a series of questions about the property. It focuses on boundaries, disputes, parking, notices, proposals, building controls, guarantees, warranties, insurance, other charges and many other areas.
Fixtures And Contents Form (TA10)
Another form you will need to complete will be the TA10. This form will identify what will and will not be included as part of the sale. The form covers basic fittings, appliances across the property, blinds, light fittings, fitted units, outdoor items, television receivers, carpets, and other items.
Leasehold Information Form (TA7)
If the property you are wishing to sell at auction is a leasehold, then you will need to supply specific details. The questions you will have to answer are to confirm what is contained within the lease documentation.
Alongside this document, you will need to supply copies of the lease as well as supplemental deeds, contact details of the landlord, invoices, service charge confirmations, notices, history of complaints, consents, audited statements, enfranchisement applications and documentation on alterations.
Leasehold Property Enquiries (LPE1)
The freehold managing agent or the landlord will complete this form. It will contain all the key information surrounding the property. This includes ground rents, registration, transfer, service charges, building insurance, fire safety certificates, maintenance agreements, any deeds of covenant, certificates of compliance, licenses to assign, restrictions, permissions, disputes/enfranchisement issues as well as other finer details.
Buyers Leasehold Information Summary (LPE2)
This is a shorter one-page document that summarises what is contained within the LPE1 form and the management pack. These will be forwarded to the seller’s conveyancer.
Any ground rent, insurance premium costs and service charges will be stated clearly alongside the details of the sinking or reserve fund. The management company may also provide bank statements.
What Is Included In The Leasehold Management Pack?
You only need a leasehold management pack if you are selling a leasehold flat. A leasehold management pack is sent along with the LPE1 form and typically contain the following:
You only need a leasehold management pack if you are selling a leasehold flat. A leasehold management pack is sent along with the LPE1 form and typically contain the following:
- Health and safety documents
- Insurance policy details
- Fire risk assessments
- Service charge estimates and accounts
- Asbestos surveys
- Deeds of Variation
- Deed of Covenant
- Certificates of Compliance
- License to assign
- Any permissions to alter the property
- Notice served on the lessee
This covers everything you need to know about Auction Property Conveyancing. If you have any questions, queries or insight into the subject, please feel free to get in touch!
Subscribe To Our Newsletter
Alexandra is a junior content producer who enjoys writing articles and finding out more about the property market. Read more about Alexandra here.
Be the first to comment