Is this scenario suitable for circuit court?

Donald Trump

Some property for sale by auction. Gets knocked down on the day to a bidder bidding on behalf of someone else. Deposit paid on the day. final price less than 500k.

Seller later finds out who the buyer is and refuses to complete the sale. The claim is that the auctioneer "made a mistake" and brought the hammer down before the reserve was reached. I assume that the seller should not have the right to do this.

I see that the circuit court is for claims less than 75k but it says that it can handle property up to 3million (although it seems to give examples in relation to will etc)

I'd imagine that the Circuit Court is much more affordable than the High Court should the "buyer" try to enforce their rights. I understand it would be a "how long is a piece of string" but what would be a typical amount for a case like this? I am not expecting an exact answer - just as a person who has no experience of the system, I would have no notion of whether you are talking thousands, tens of thousands or even millions to have it decided there.

Does this even sound like the type of case that the Circuit Court could adjudicate on? I'm not looking for legal advice - I would go to a solicitor for that if I needed it. Just a general chat about the scenario.

Irishphotodesk

My understanding is that the sale isn’t complete until contracts are signed and money is transferred, guessing this didn’t happen and seller has the right to withdraw at any stage.

(Might be different for auctions, check auction house rules on sale...if sale is final it would imply contract is binding)

Was there a reserve price on property? Was the buyer using a proxy bidder because they knew seller wouldn’t sell to them ?

hullaballoo

Contracts are signed at the auction along with the deposit payment in the normal course.

Seller would appear to be in a bit of a bind here. I am unsure the Circuit Court has jurisdiction though because although it has jurisdiction to deal with property up to 3m, the controversy here is not limited to property.

There is money and contracts also involved as well as potential third party issue with auctioneer. One for the High Court.

Donald Trump

What would happen in the case it was claimed that the auctioneer made a mistake? Suppose that they weren't actually authorized to bring down the hammer at that price? Would your dispute still be with the seller and it would be up to the seller to then deal with the auctioneer for any loss caused to them?


How would you know what Court to submit it to? I mean how would a solicitor know? If they made a wrong decision (for a borderline case) would it just be bumped up to High Court by the Circuit Court judge? So maybe you'd start a process in a Circuit Court, happy to take the risk of those Courts but suddenly you are bumped up to a whole different scale!

Irishphotodesk

Donald Trump wrote: »

What would happen in the case it was claimed that the auctioneer made a mistake? Suppose that they weren't actually authorized to bring down the hammer at that price? Would your dispute still be with the seller and it would be up to the seller to then deal with the auctioneer for any loss caused to them?


How would you know what Court to submit it to? I mean how would a solicitor know? If they made a wrong decision (for a borderline case) would it just be bumped up to High Court by the Circuit Court judge? So maybe you'd start a process in a Circuit Court, happy to take the risk of those Courts but suddenly you are bumped up to a whole different scale!

Your agreement is with the auction house, the sellers argument is with the auction house, it’s a tit-for-tat situation, as I understand it.

If you have an agreement and contract etc, as long as you fulfill your part of the agreement the property should in theory be transferred to the new owner, however, if the original seller has a disagreement with the auction house they could (in theory) initiate some sort of dispute with the auction house - which could nullify the sale (if there was a reserve in place and auction house sold under reserve, winning bid is cancelled)

Contact auction house - see if there is any issue, if not, then proceed with purchase, if there is ask for an explanation.

Auction house are taking money from both buyer and seller so they will be trying to have both parties happy or they will mitigate their loss against one party in favour of the other.

As regards court.... legals will know the best route to take and can advise as such, personally, If confident of success I would start civil court and hope the matter ends there.

Peregrinus

Donald Trump wrote: »

Some property for sale by auction. Gets knocked down on the day to a bidder bidding on behalf of someone else. Deposit paid on the day. final price less than 500k.

Seller later finds out who the buyer is and refuses to complete the sale. The claim is that the auctioneer "made a mistake" and brought the hammer down before the reserve was reached. I assume that the seller should not have the right to do this.

I see that the circuit court is for claims less than 75k but it says that it can handle property up to 3million (although it seems to give examples in relation to will etc)

I'd imagine that the Circuit Court is much more affordable than the High Court should the "buyer" try to enforce their rights. I understand it would be a "how long is a piece of string" but what would be a typical amount for a case like this? I am not expecting an exact answer - just as a person who has no experience of the system, I would have no notion of whether you are talking thousands, tens of thousands or even millions to have it decided there.

Does this even sound like the type of case that the Circuit Court could adjudicate on? I'm not looking for legal advice - I would go to a solicitor for that if I needed it. Just a general chat about the scenario.

The 3 million property value jurisdiction only applies to ejectment (i.e eviction) actions and to applications for tenancies. So this is basically for resolving trepsass and landlord/tenant disputes affecting properties worth up to 3 million. For an action to enforce a contract for sale of the property, you're in the High Court.

The property was knocked down to Buyer at auction by the auctioneer, acting as agent for Seller. Seller is generally bound by the acts of his agent. Contracts were signed and exchanged, and the deposit paid. Looks to me as if Buyer has a very strong case. Plus, in practical terms, once it becomes s known that a dispute of this kind exists, no other potential buyer will touch the property with a forty-foot bargepole.

Talk to a solicitor, and quickly - pressure to have the matter dealt with rapidly carries much less credibility if the Buyer dawdles about dealing with the matter himself. Buyer was going to have to instruct a solicitor round about now anyway, in order to proceed with the purchase.

Donald Trump

Suppose that no contracts were signed however the auction conditions were that a transfer was needed by the winning bidder of 10% of the winning bid on the day of auction as per conditions.

Now suppose that the 10% was transferred to auction house via bank transfer even though the seller was already trying to back out of the sale. I guess the thinking would be that if it wasn't paid on the day as per conditions, then it would give an excuse for the seller to back out.

Peregrinus

Signing contracts at the auction is standard. No (sane) bidder is going to pay over a deposit without getting a signed contract; no (sane) Seller is going to expect to get a deposit without delivering a signed contract.

Donald Trump

Not all auctions are auctions in a physical location. You can have online auctions too with similar conditions.

You participate in online auction. Receive notification that you are the winner. Pay over your deposit as instructed and then seller refuses to sell.


Regardless, in a physical auction, if the bidder refuses to sign after being the winning bidder- doesn't (s)he lose their deposit? Surely it has happened in the past that people have been in this scenario and said "it wasn't me"? What happens there?
What happens when the reverse happens? No contracts are signed after the winning bid because the seller refuses to sign?

Peregrinus

Donald Trump wrote: »

Not all auctions are auctions in a physical location. You can have online auctions too with similar conditions.

You participate in online auction. Receive notification that you are the winner. Pay over your deposit as instructed and then seller refuses to sell.


Regardless, in a physical auction, if the bidder refuses to sign after being the winning bidder- doesn't (s)he lose their deposit? Surely it has happened in the past that people have been in this scenario and said "it wasn't me"? What happens there?
What happens when the reverse happens? No contracts are signed after the winning bid because the seller refuses to sign?

I'm assuming we're talking about auctions of land here.

Someone whose knowledge is less rusty than mine can confirm, but I recall that there's a provision under which, if the successful bidder refuses to sign the contract, the auctioneer is constituted as the bidder's agent to sign it on his behalf. The question of whether he would or might lose his deposit in this scenario doesn't really arise; if he has refused to sign the contract he has presumably also refused to pay over the deposit. The risk is not that he gets sued to pay over the deposit, but that he gets sued to complete the purchase, or gets sued for damages for his failure to complete.

The seller refusing to sign seems like an improbable scenario. The seller wants to sell; otherwise the auction wouldn't happen in the first place. The norm, I think, is that the seller has signed the contracts before the auction happens and they are in the auctioneer's possession so they are there ready to be put in front of the buyer for him to sign as well.

If the seller changes his mind after the property has been knocked down, as in the OP, presumably he tells the auctioneer not to proceed, and in particular not to allow the successful bidder to sign the contract, or to give him a copy of the contract signed by the seller. Everyone heads off to the High Court until,. unless there are some highly unusual facts, the seller realises he is on a hiding to nothing and agrees to proceed with the sale.

Donald Trump

Peregrinus wrote: »

I'm assuming we're talking about auctions of land here.

Someone whose knowledge is less rusty than mine can confirm, but I recall that there's a provision under which, if the successful bidder refuses to sign the contract, the auctioneer is constituted as the bidder's agent to sign it on his behalf. The question of whether he would or might lose his deposit in this scenario doesn't really arise; if he has refused to sign the contract he has presumably also refused to pay over the deposit. The risk is not that he gets sued to pay over the deposit, but that he gets sued to complete the purchase, or gets sued for damages for his failure to complete.

The seller refusing to sign seems like an improbable scenario. The seller wants to sell; otherwise the auction wouldn't happen in the first place. The norm, I think, is that the seller has signed the contracts before the auction happens and they are in the auctioneer's possession so they are there ready to be put in front of the buyer for him to sign as well.

If the seller changes his mind after the property has been knocked down, as in the OP, presumably he tells the auctioneer not to proceed, and in particular not to allow the successful bidder to sign the contract, or to give him a copy of the contract signed by the seller. Everyone heads off to the High Court until,. unless there are some highly unusual facts, the seller realises he is on a hiding to nothing and agrees to proceed with the sale.

It can be required to pay a deposit to get a bidding number. So that would definitely be lost in the event that the bidder did not proceed. Plus, I reckon they could be sued for any difference between their bid and any resale bid, plus additional costs.

And yes, I think it is common for the terms to allow the auctioneer to sign on the bidder's behalf.

It just seems a little one-sided in terms of the seller/auctioneer! Seller will claim that auctioneer was not authorized to sell for price X. How can a seller be held to an auctioneer doing something they didn't have permission to do?

Peregrinus

Donald Trump wrote: »

. . . It just seems a little one-sided in terms of the seller/auctioneer! Seller will claim that auctioneer was not authorized to sell for price X. How can a seller be held to an auctioneer doing something they didn't have permission to do?

Because if you appoint an agent to act on your behalf, you are generally bound by the acts the agent performs on your behalf. If the agent exceeds his authority, you have a beef with the agent, but a third party dealing in good faith with the agent is not affected.

(Different if the agent exceeds his authority, and the third party knows or should know that he is acting in excess of his authority. But there is no suggestion here that bidders at the auction knew that the auctioneer had been told to apply a reserve; still less that they knew what the reserve price was.)

Claw Hammer

Irishphotodesk wrote: »

Your agreement is with the auction house, the sellers argument is with the auction house, it’s a tit-for-tat situation, as I understand it.

If you have an agreement and contract etc, as long as you fulfill your part of the agreement the property should in theory be transferred to the new owner, however, if the original seller has a disagreement with the auction house they could (in theory) initiate some sort of dispute with the auction house - which could nullify the sale (if there was a reserve in place and auction house sold under reserve, winning bid is cancelled)

Contact auction house - see if there is any issue, if not, then proceed with purchase, if there is ask for an explanation.

Auction house are taking money from both buyer and seller so they will be trying to have both parties happy or they will mitigate their loss against one party in favour of the other.

As regards court.... legals will know the best route to take and can advise as such, personally, If confident of success I would start civil court and hope the matter ends there.

The contract is with the seller not the auction house. The auctioneer is merely acting as agent and this will be in the terms and conditions of the auction.
The course of action would be to sue for specific performance in the Circuit Court. The mistake defence is only relevant if the buyer knew of the mistake and took advantage of an error. The most likely defence is that there is a cause on the terms and conditions of the auction that the bidder must bid as principal only and the seller is not bound by any assignment of the contract to a third party.

hullaballoo

Claw Hammer wrote: »

The contract is with the seller not the auction house. The auctioneer is merely acting as agent and this will be in the terms and conditions of the auction.
The course of action would be to sue for specific performance in the Circuit Court. The mistake defence is only relevant if the buyer knew of the mistake and took advantage of an error. The most likely defence is that there is a cause on the terms and conditions of the auction that the bidder must bid as principal only and the seller is not bound by any assignment of the contract to a third party.

I think it's been disposed of as a question in this thread already that the Circuit Court is deficient on jurisdiction to deal with the case as set out.

A case to seek to enforce a contract of this value ought only be brought in a court of competent jurisdiction so to speak.

Peregrinus

hullaballoo wrote: »

I think it's been disposed of as a question in this thread already that the Circuit Court is deficient on jurisdiction to deal with the case as set out.

A case to seek to enforce a contract of this value ought only be brought in a court of competent jurisdiction so to speak.

On reflection, Claw Hammer may be right (which means I was wrong earlier). The Circuit Court has jurisdiction in equity suits in relation to land with a value of up to 3 million euros. Specific performance is an equitable remedy, so you could seek specific performance of the contract of sale in the Circuit Court.

Victor

Claw Hammer wrote: »

The most likely defence is that there is a cause on the terms and conditions of the auction that the bidder must bid as principal only and the seller is not bound by any assignment of the contract to a third party.

That seems like a rather onerous condition. Surely bids at many auctions are done by an agent (solicitor, accountant, property professional) acting for the actual bidder, who is likely present, but not used to auctions.

Would such a condition fall foul of the Equal Status Acts?

Claw Hammer

Victor wrote: »

That seems like a rather onerous condition. Surely bids at many auctions are done by an agent (solicitor, accountant, property professional) acting for the actual bidder, who is likely present, but not used to auctions.

Would such a condition fall foul of the Equal Status Acts?

It is a common condition. The bid may be presented by an agent but the agent must disclose the identity of the party they are acting for from the start and the fact that they are bidding in a representative capacity.
I can't see any application to the Equal Status Acts. Anyone can bid or have bids placed on their behalf but they have to be open about it.
What the vendor wants each bidder to say is, "I am X bidding for the property" or "I am the agent of X bidding for the property".
What they don't wat is to sell the property to X and for Y to turn up at the closing and say "X or X's agent was biding for me all along" or "i have bought X's interest in the contract and I want you to close with me".

Claw Hammer

hullaballoo wrote: »

I think it's been disposed of as a question in this thread already that the Circuit Court is deficient on jurisdiction to deal with the case as set out.

A case to seek to enforce a contract of this value ought only be brought in a court of competent jurisdiction so to speak.

The Circuit court has jurisdiction to deal with specific performance cases where the land has a market value of less than €3 million.

Victor

Claw Hammer wrote: »

I can't see any application to the Equal Status Acts.

Someone might have a disability that impairs their ability to take part in an auction.

Peregrinus

Victor wrote: »

Someone might have a disability that impairs their ability to take part in an auction.

As long as they can bid through a disclosed agent, on the same terms as a bidder without a disability can, there is no discrimination.

Peregrinus

Claw Hammer wrote: »

It is a common condition. The bid may be presented by an agent but the agent must disclose the identity of the party they are acting for from the start and the fact that they are bidding in a representative capacity.

Is it common? It would have to be a special condition; the general conditions of sale do not include it, and in fact make express provision for the possiblity that a purchaser might sign "as agent" without disclosing the identity of his principal.

Claw Hammer wrote: »

What they don't wat is to sell the property to X and for Y to turn up at the closing and say "X or X's agent was biding for me all along" or "i have bought X's interest in the contract and I want you to close with me".

On the latter point, I don't see why the vendor should have a problem. If I have a contract to buy land from you, my interest in the contract is presumably something I can assign, absent any special condition in the contract. And what would be the point of such a special condition, since I can certainly complete the purchase from you and then immediately sell or trasnfer to a third party?

Claw Hammer

Peregrinus wrote: »

Is it common? It would have to be a special condition; the general conditions of sale do not include it, and in fact make express provision for the possiblity that a purchaser might sign "as agent" without disclosing the identity of his principal.

It is common in online auctions. I see it frequently in the draft contracts on the Bidx1 site. Some developers selling newly built property also iclude such a clause as they don't want people who are no genuine buyers pre-booking and then flipping.

Peregrinus wrote: »

On the latter point, I don't see why the vendor should have a problem. If I have a contract to buy land from you, my interest in the contract is presumably something I can assign, absent any special condition in the contract. And what would be the point of such a special condition, since I can certainly complete the purchase from you and then immediately sell or trasnfer to a third party?

If you buy a property and sell it after, stamp duty will hve to be paid on your purchase and again on the subsequent sale whereas selling off the contract means stamp duty is paid once. conveyancing fees are likely to be higher. furthermore if you buy a property an close, all of the money must move through your bank accounts. this may be problematic if you are just buying as an agent.
Some vendors, such as receivers don't want repossessed individuals buying back the property they have just been ousted from. It is much more difficult for a former owner to arrange it if they have to close twice.

Many of the receiver sales are also order by vulture funds who have an American approach and operate a kyc "know your client" system where they insist on knowing who they are dealing with.
Whether it is wise, makes any business sense or not, that is a matter for them as they are drafting the contract.

Victor

Also, NAMA isn't allowed sell to its debtors.