Selling a property at auction can be an attractive alternative to a traditional property sale, particularly if you are looking for a quicker transaction or have a property that may appeal to investors, developers or buyers looking for a renovation project.
However, selling at auction requires careful preparation. One of the most important steps is putting together the auction legal pack, which provides prospective buyers with the legal information they need before deciding whether to bid.
But what exactly goes into an auction legal pack, and why is it so important to have everything ready before the auction takes place?
What is an auction legal pack?
An auction legal pack is a collection of documents relating to the property being sold. It is usually prepared by the seller’s solicitor and made available to prospective buyers before the auction.
Unlike a traditional property sale, where much of the legal work takes place after an offer has been accepted, buyers at a traditional unconditional auction are expected to carry out their legal investigations before bidding.
This is because, when the hammer falls, the successful bidder will generally be legally committed to purchasing the property.
The legal pack therefore plays an important role in helping buyers understand exactly what they are purchasing, including any restrictions, obligations or potential issues affecting the property.
What documents are included in an auction legal pack?
The contents of an auction legal pack will vary depending on the property, whether it is freehold or leasehold, and the circumstances of the sale. However, there are several documents commonly included.
1. Title documents
The title documents establish who owns the property and provide details of any rights or restrictions affecting it.
For registered properties, these will usually include official copies of the title register and title plan obtained from HM Land Registry.
They may also reveal important matters such as rights of way, restrictive covenants or rights enjoyed by neighbouring properties.
If the property is unregistered, additional documentation may be needed to establish ownership.
2. Property searches
Searches provide information about the property and its surroundings that may not be apparent from a viewing.
Depending on the property, these may include:
- Local authority search: Provides information about matters such as planning permissions, building regulations and certain restrictions affecting the property.
- Drainage and water search: Identifies whether the property is connected to mains water and drainage and provides information about public sewers.
- Environmental search: Highlights potential environmental risks, such as flooding or contaminated land.
Not every auction legal pack will contain a full set of searches. The searches provided will depend on the property and the arrangements for the auction.
3. Property information forms
Where appropriate, the seller may be asked to complete property information forms, including the Property Information Form (TA6) and Fittings and Contents Form (TA10).
These can provide useful information about the property, including any disputes with neighbours, alterations carried out, boundary arrangements and which fixtures and fittings are included in the sale.
Although these forms are not always included in an auction pack, providing accurate and relevant information can help buyers make informed decisions.
4. Special Conditions of Sale
The Special Conditions of Sale are a particularly important part of the legal pack.
They set out the contractual terms that apply specifically to the property being sold and should be read alongside the general auction conditions.
These may include:
- The amount of the deposit payable.
- The deadline for completing the purchase.
- Any additional costs or fees the buyer is required to pay.
- Any specific arrangements or obligations relating to the property.
For example, the conditions may require the buyer to reimburse the seller for certain costs associated with the sale.
It is important that these conditions are carefully drafted so that both parties understand their obligations and the risk of disputes is reduced.
5. Energy Performance Certificate (EPC)
An Energy Performance Certificate provides information about a property’s energy efficiency.
An EPC will generally be required when selling a residential or commercial property, although certain exemptions apply.
Where required, a valid EPC should be available as part of the marketing arrangements for the property.
6. Additional documents for leasehold properties
If the property is leasehold, the legal pack will usually need to contain additional information.
This may include a copy of the lease, details of ground rent and service charges, and information about the landlord or management company.
The lease may also contain restrictions on how the property can be used or requirements to obtain consent before carrying out certain works.
For commercial properties, the pack may also need to include tenancy agreements or other documents relating to occupiers of the property.
Why is it important to prepare the auction legal pack early?
When selling a property at auction, timing is important.
Prospective buyers need sufficient opportunity to review the legal pack and, where necessary, ask their solicitor to investigate any issues before the auction.
If important documents are missing or only become available shortly before bidding, buyers may be reluctant to proceed or may reduce the amount they are prepared to offer.
Preparing the legal pack early also gives your solicitor time to identify and address potential problems.
For example, there may be missing title documents, an issue with access to the property or a restriction that needs to be explained.
Identifying these matters in advance can help avoid unnecessary complications and give buyers greater confidence in the property.
Ideally, you should instruct your solicitor as soon as you decide to sell at auction, rather than waiting until the auction date has been confirmed.
What happens if the auction legal pack is incomplete?
An incomplete legal pack does not necessarily mean that a property cannot be sold at auction, but it can create difficulties.
Buyers may be unwilling to bid if they cannot establish important details about the property or understand the obligations they will be taking on.
This could reduce interest in the property and potentially affect the final sale price.
There is also a risk of disputes if information provided about the property is inaccurate or misleading.
Having a solicitor prepare and review the legal pack can help ensure that the relevant documents are available and that any known legal issues are appropriately addressed.
What happens after the hammer falls?
At a traditional unconditional property auction, contracts are generally exchanged as soon as the successful bid is accepted.
The buyer will normally be required to pay a deposit, often 10% of the purchase price, with the balance payable on completion.
Completion commonly takes place around 20 working days after the auction, although the actual deadline will be set out in the contract.
Your solicitor will then deal with the remaining legal requirements, including arranging for the transfer of ownership and receiving the sale proceeds.
It is worth noting that some auctions operate under a conditional or ‘modern method of auction’ arrangement. These have different contractual commitments and timescales, so it is important to understand which type of auction you are using before proceeding.
Selling an inherited property at auction
Auction sales can also be an option for executors dealing with a property forming part of a deceased person’s estate.
This may be particularly relevant where a property requires substantial renovation or the executors are looking for a relatively straightforward sale process.
However, there may be additional legal considerations, including establishing that the personal representatives have the necessary authority to sell the property.
Taking legal advice at an early stage can help ensure the correct documentation is available and avoid delays.
How can Beers Solicitors help?
Selling a property at auction can be an efficient way to secure a buyer, but having the right legal documentation in place from the outset is essential.
At Beers Solicitors, our experienced property team can assist with preparing auction legal packs for residential and commercial properties, reviewing title documents, identifying potential issues and drafting the necessary contractual conditions.
We understand the importance of working to auction deadlines and providing clear, practical advice throughout the process.
If you are considering selling a property at auction, contact our property team at our Kingsbridge or Plymouth office to find out how we can help you prepare for a successful sale.
Kingsbridge office
📞 Tel: 01548 857000
Plymouth office
📞 Tel: 01752 246000