Don’t stint on paperwork
THE auction season is in full swing. The large multi-unit auctions taking place in various locations around the country are as popular now as they were when they first arrived to these shores. Success rates are between 80 and 90pc and this trend looks set to continue for the next couple of years as banks, receivers and property funds dispose of their assets.
Even after the bulk of their assets are sold, I predict there will be a niche role for this type of auction because of the transparency and efficiency of the process and the value that is on offer. Galway-based Donnellan Joyce has established a very successful platform on the western seaboard and their next auction takes place on June 17, while Allsop, which provides the largest national offering, holds its next auction in Dublin on June 30.
I have advised clients at a number of these auctions and am always amazed at the number of purchasers prepared to bid without having had the contracts for sale assessed by their legal advisor before the auction. You wouldn’t buy a house by private treaty without having all the legal paperwork carefully examined by a solicitor, so why would a buyer neglect to do so at auction? By their nature, some of these assets may have issues relating to title, boundary, planning and compliance, management company or tenancies.
The onus is on the purchaser to familiarise and satisfy themselves with the contracts for sale. When the hammer falls, the purchaser is legally bound and if the purchaser does not complete within the usual 28 days, the vendor can confiscate the 10pc deposit and sue the purchaser for any loss incurred.
In a high percentage of cases, a copy of the contract for sale is available online prior to the auction. The cost of having these assessed for your typical residential dwelling is around €200-€300. A solicitor will query any issues with the vendor’s solicitor and will make sure that the paperwork you receive will allow you to sell or mortgage the property in the future.
This is something that a purchaser can neglect in their enthusiasm to buy. The likelihood is that they will sell on the property again, therefore it will need to prove attractive to future potential purchasers.
The next time you are in the heat of battle of an auction room, pause and ask yourself: have I carried out sufficient due diligence? As the old saying goes, let the buyer beware.