Property Auction Legal Packs: Top 3 Red Flags to Look For

At Hammered we review thousands of auction properties each year, so you can bet we’ve seen it all when it comes to legal packs and addendums. Today, I’ll be sharing with you my top three red flags to look out for when you’re combing through those hefty documents.

 
 

First, let me emphasise that while the legal pack and the addendum are crucial tools for decision-making, they are just two parts of the picture. The property auction game is not for the faint-hearted. A successful purchase requires comprehensive due diligence, and relying solely on the information from the catalogue, website, legal pack or addendum is not enough.

 
 

Now, when do we typically expect the legal pack to be available? Well, ideally, it should be available on the day of the second viewing. However, this isn’t always the case. Depending on who the seller is, such as banks or local authorities, the legal pack can be available from the point of instruction or all the way up to the start of the auction.

 
 

So, without further ado, let’s jump right into the three red flags I always keep an eye out for.

 
 
 

Buying a Property at Auction? Look Out for These 3 Legal Pack Red Flags

 
 

1. Non-standard completion time

 
 

Our first flag is related to timing. Normally, a standard completion time is twenty working days, or twenty-eight if you include weekends. If the seller is a bank or an LPA receiver, or it’s a probate sale, I’d expect a shorter time, typically ten to fourteen days. Similarly, small land purchases should have a shorter completion time. If the timing deviates from these norms, I’d be inclined to dig deeper.

 
 
 

2. Non-standard deposit amount

 
 

Next up is the deposit amount. A standard auction deposit is 10 percent. If the required deposit is higher than this, that’s a red flag for me. In such cases, I’d recommend conducting additional research into the seller and assessing your risk exposure for the deposit.

 
 
 

3. Exclusion of the notice period

 
 

Lastly, an exclusion of the notice period is something I would find concerning. Under common auction conditions, a ten-day notice period is granted if the buyer fails to complete on time. Some sellers, however, may reduce this to between five to seven days, or even remove it entirely. While there may be valid reasons for this, I believe it’s essential to find out why. Usually, it’s linked to their motivation for selling.

 
 

These are clauses or stipulations that always make me think twice about proceeding. That doesn’t mean that I won’t proceed; it will just induce me to dig a little deeper before I do!

 
 

Bear in mind that a typical legal pack is released one to two weeks before the auction. Going through it can not only save you from potentially costly mistakes but also help you ask your solicitor the right questions, ensuring you make the most commercial sense of your purchase.

 
 

If you’re looking for advice on a legal pack, we recommend using a solicitor experienced in property auctions. Check out our list of the top auction property solicitors in the UK, or get in touch for our personal recommendations.

 
 

So, there you have it, my fellow auction adventurers! Arm yourselves with this knowledge, stay alert, and may you find great success on your auction journeys.

 
 

Until next time, happy bidding!