I agreed to purchase a flat at auction and paid the 10 per cent deposit and the 1.5 per cent buyer’s fee as agreed.
The purchase has taken roughly 8 weeks up to now because the seller’s solicitors would not provide all the necessary documents to my solicitor.
We finally received a completion date for last Friday, only to receive an email last-minute stating I owe an extra £2,790 for the seller’s fees, and that the purchase cannot be completed if I don’t pay.
The estate agent then said that there was a clause detailing this fee in the legal pack – but in my copy, the fee amount has been left blank and no one corrected me when I signed it.
I refuse to pay this fee as I wasn’t aware of it before. Where do I stand legally?
A buyer bought a property at auction and was later asked to pay fees – but he refuses to do so
Grace Gausden, This is Money, replies: Buying a property at auction can be a minefield, and there are many things you need to take into consideration before committing.
However, it was your first time purchasing a property at auction so there were several rules you weren’t aware of, including that it is common for the buyer to pay the seller’s fees.
You also had not received any legal advice or sought help from a solicitor before committing to buy the flat.
The purchase price for the home was £33,500 and you paid £1,500 in buyer’s fees. You have now been asked to pay £2,790 to cover the seller’s fees, inclusive of VAT.
In your contract, there is a line saying ‘the buyer shall on completion/exchange date pay the auctioneer’s fee of £…’
As it was left blank, you assumed there was nothing to pay and signed the contract.
However, the auctioneer says there is actually nearly £3,000 to pay and has sent over a copy of their version of the contract where the sum was written in in pen.
You spoke to your solicitor at this point to find out what your rights were, and were told this fee was also not in the documents they received.
Unfortunately, the documents are no longer available to download online.
It came as quite a shock to hear you owed so much money, and you say you would not have agreed to this.
You have now told the auctioneer you will not be paying this fee, and you believe it is a breach of contract to add fees on without consent.
However, the firm is refusing to remove the fee. As a result, you asked to cancel the purchase – but they are also refusing to refund your deposit and buyer’s fee.
This is Money asked a specialist lawyer where you stand.
A buyer at auction was confused after he was asked to pay thousands of pounds in seller fees
Sarah Dwight, solicitor, replies: The difficulty is the buyer did not get legal advice before going to the auction. Therefore what we, as solicitors, know about the intricacies of an auction, would not have been made clear to him.
I would always want any client, experienced or otherwise, to speak to a solicitor before putting a bid in at auction.
This is because there is usually, although not always, a reason why a property is in an auction.
It tends to be because the property would not sell on the open market, perhaps because there is a short lease or a missing freeholder, for example.
In this situation, the buyer could claim the contracts were not identical when they were exchanged, meaning that exchange did not take place correctly. Both parts of the contract have to be identical.
The buyer relied on the fact that no costs were inserted and assumed that none were payable.
Grace Gausden, This is Money, adds: Unfortunately, it seems there is no easy solution as it appears, legally, no one is either in the right or wrong.
Whilst you do have grounds for argument, the sellers do as well.
Either you or the sellers will have to reach a conclusion and in the event this doesn’t happen, which seems likely, you may have to take the decision to court.
However, this will be costly for both parties and may even cost you more than the seller’s fee, which seems counterproductive.
Ultimately, you will have to decide how to proceed, and whether you stick with your guns or pay the fee and get the keys to your new property.
It is a lesson for others though – always seek legal advice before buying a property at auction and hopefully you can avoid situations like this.
What to know about buying a property at auction
There are several things consumers should be aware of before buying a property at auction, according to the professional body Propertymark.
Get a copy of the auction particulars: The particulars will contain key information, but you may need to request a separate legal pack to get the full picture.
Legal documents can vary from one property to another, so consider asking a solicitor to look over the legal pack for any hidden covenants or loopholes that could end up costing you more than you bargained for.
Property searches are often included in the legal documents, but if not, ask your solicitor to do them before the auction.
Be prepared to act quickly: Whilst it’s important to take your time considering any property, there are usually only four weeks between publication of the auction catalogue and the auction itself, so you will have to act fast.
Set your budget: Think about the maximum price you are willing to pay for the property. Whilst auction properties may be cheaper than market value, renovations are usually needed.
Unless you’re a cash buyer, you will need finance in place before bidding. Make sure you know how much the deposit will be and check which method of payment is required so you can arrange for sufficient funds to be available.
Check the small print: Don’t forget to check the terms and conditions of the auction house you choose to use. By entering a bid, you are agreeing to them. Make sure to familiarise yourself with the conditions of sale, what needs to be paid and when – you don’t want any surprises on the day.
You commit to buying as soon as the gavel falls: If your bid is successful, you will be required to sign the contract and pay the deposit there and then.
At the fall of the auctioneer’s gavel, you will be bound by the terms and conditions of the sale and liable for the insurance of the property from that moment. Pulling out of the sale after this could result in huge costs.
Be prepared for the deposit and payment terms: Most auctions require a ten per cent deposit on the day, and will need to see two forms of ID. You usually have between 14 days six weeks to complete and pay the remaining balance of the purchase price. Any outstanding costs and completion details will be clearly stated in the conditions of sale.
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