Property At Auction - Be Careful

Sidney77 · 14-02-2020 1:35pm #1

I purchased a property on BidX1 in September 2019. As per the agreement i paid a 10% deposit within 48 hours. The amount was 140,000 so i have paid 14,000 total so far.

I had already recieved the loan approval for this property from PTSB so they just asked me to have the paperwork done by my solicitor to release the balance.

My solicitor informed me that the title was "horrendous" as there was only a 70 year lease and due to other conditions the legal queries couldnt be answered on it so the bank wouldnt be able to release the funds as it wasn't sellable. She advised me to pull out of the sale and request my deposit back. This was in October.

I accepted this and the sellers legal team have come back to me in January offering only 50% of the deposit back and they want to keep the other 7000 euro themselves.I dont know who is selling the property, just the legal team and that it was sold by online auction by BIDX1.

There was no information about the poor condition of the title at the time of purchase.

mloc123 · 14-02-2020 1:37pm

I thought with any auction, it was up to the buyer to do their due diligence beforehand?

gmisk · 14-02-2020 1:39pm

mloc123 wrote: »

I thought with any auction, it was up to the buyer to do their due diligence beforehand?

Yes pretty sure that is the case, it is kind of like "sold as seen"

Dolbhad · 14-02-2020 1:41pm

That is the risk with auction. It’s not a private sale where you go sale agreed first and then review the legal title and have an engineer look at property and decide it you want to buy it.

The minute your offer is accepted at an auction binding contracts are in place. All legal and engineer work needs to be carried out beforehand.

Rule of thumb is if it’s being sold by auction is because there is something wrong with title.

Tbh I think you’ve done very well getting half deposit back. Under the contract you signed when offer was accepted they could take the full deposit and sue to complete the sale.

It’s not well advertised the difference between and auction and private sale.

wench · 14-02-2020 1:41pm

If all they keep is 7000, you're getting away light.
Contracts at auction are binding, and they could hold you to the full purchase price.
Your issues securing a mortgage on it isn't their problem.

Graham · 14-02-2020 1:45pm

I think this highlights the risks associated with buying property at auction rather than a risk associated with any particular auction house.

As a purchaser at auction it is pretty much down to you to satisfy yourself as to the state of the property and associated title.

To be honest, I am almost surprised the vendor is considering even a 50% refund. I would have expected the vendors to be quite within their rights to compel the completion of the sale.

djan · 14-02-2020 1:46pm

As annoying as it is, I would say that getting half of your deposit is a pretty fantastic outcome given it was a auction sale where AFAIK there's no obligation for them to do so.

Out of interest what happens once the 70 years are up? Who does the property then go to?

banie01 · 14-02-2020 1:50pm

How is your not checking clear title or requesting and inspecting the legal pack before bidding?
The fault of BidX1?

If one cannot verify title and condition prior to an auction, one doesnt bid.

Buying at auction carries risk and if one doesnt mitigate that risk its noones fault but their own.

IMHO you are quite lucky that BidX1 have made any offer of a return of funds at all, they ae perfectly within their rights to seek specific performance of completion of sale.

emeldc · 14-02-2020 1:57pm

Surely even at auction you're entitled to know what you are buying. Like, was it freehold or leasehold or just 'house for sale'. If you knew it was just a lease you might still buy it but you just wouldn't pay as much.
Do you get a chance to do any legal searches or to inspect the title deeds before you make a bid because if you don't it sounds like you'd be on a hiding to nothing.

Graham · 14-02-2020 1:59pm

Mod Note

Thread title updated for clarity/accuracy.

Graham · 14-02-2020 2:08pm

OP, did you consult with your solicitor before the sale day?

I can't imagine any solicitor giving any advice other than "Proceed with extreme caution and at your own peril. Complete all searches etc BEFORE bidding."

Graham · 14-02-2020 2:10pm

emeldc wrote: »

Surely even at auction you're entitled to know what you are buying. Like, was it freehold or leasehold or just 'house for sale'. If you knew it was just a lease you might still buy it but you just wouldn't pay as much.
Do you get a chance to do any legal searches or to inspect the title deeds before you make a bid because if you don't it sounds like you'd be on a hiding to nothing.

It is almost completely up to the purchaser to satisfy themselves as to any/all of the above before bidding.

That may well include asking your legal professional to complete any necessary searches etc before you decide whether to proceed.

It's not unusual for half the property pack to consist of

Not known
Unknown
We don't warrant
We can't confirm
We don't guarantee....

emeldc · 14-02-2020 2:33pm

Graham wrote: »

OP, did you consult with your solicitor before the sale day?

I can't imagine any solicitor giving any advice other than "Proceed with extreme caution and at your own peril. Complete all searches etc BEFORE bidding."

Should this include a survey. Even if everything else is ok, you might find out after 'buying' that it needs a new roof or something. It all seems like very expensive prep work just to make a bid on a property while all the while trying to safeguard your deposit should you be successful with your bid.

14-02-2020 3:18pm

emeldc wrote: »

Should this include a survey. Even if everything else is ok, you might find out after 'buying' that it needs a new roof or something. It all seems like very expensive prep work just to make a bid on a property while all the while trying to safeguard your deposit should you be successful with your bid.

That is the trade off when buying at auction. You may get a bargain, but you need to have checked out the property before you bid. As the op has found, bidding without checking can be an expensive mistake. I am surprised though that the op is getting half deposit back.

emeldc · 14-02-2020 3:31pm

Dav010 wrote: »

That is the trade off when buying at auction. You may get a bargain, but you need to have checked out the property before you bid. As the op has found, bidding without checking can be an expensive mistake. I am surprised though that the op is getting half deposit back.

I agree you can get a bargain but then you need to pay your solicitor and surveyor even if you're outbid. You might end up doing this multiple times on multiple properties before you have a successful bid.
Certainly a school day for me today

dubrov · 14-02-2020 3:39pm

I think bidx1 specialise in selling properties with title issues. So every property in that auction would have had some issue

Graham · 14-02-2020 3:52pm

Most auction houses tend to attract properties that would be harder to sell through more conventional methods.

emeldc · 14-02-2020 3:56pm

I had a look at their website. It seems fairly clear alright.

Due Diligence

The BidX1 platform is fully transparent. All relevant legal documentation relating to a property is provided by the seller’s solicitor and available on our website along with the other information relating to the property. You’ll need an account to view these legal documents; it only takes a minute to create one.

Examining the legal documents is an important part of the process because our digital sales are unconditional – once a property is sold on the BidX1 platform, a legal contract has been formed and the successful bidder is legally obliged to complete the purchase.

Sleepy · 14-02-2020 4:04pm

When there's a problem with title, is the bank refusing to secure a mortgage on it the main issue? I presume there's a legal means of "repairing" the title somehow?

Sidney77 · 14-02-2020 5:05pm

I did have a survey done beforehand and it ensured the building was sound. Just a but of upgrading needed. I saw a property for sale as was (and still is ) advertised and made an offer.

Bank had approved the mortgage for this property. Solicitor advised that the legal paperwork couldnt be done (and the mortgage funds couldnt be released without it) but there are solicitors who could do it but it takes time and is expensive.

The 70 year lease wasnt the only problem. One thing the title mentioned was that they didnt know who owned the building or land that its built on. Nothing like that was transparent when i made an offer.

wench · 14-02-2020 5:19pm

Sidney77 wrote: »

I did have a survey done beforehand and it ensured the building was sound. Just a but of upgrading needed. I saw a property for sale as was (and still is ) advertised and made an offer.

Bank had approved the mortgage for this property. Solicitor advised that the legal paperwork couldnt be done (and the mortgage funds couldnt be released without it) but there are solicitors who could do it but it takes time and is expensive.

The 70 year lease wasnt the only problem. One thing the title mentioned was that they didnt know who owned the building or land that its built on. Nothing like that was transparent when i made an offer.

Did you have your solicitor review the available legal documents before you made your bid? Or did you only involve them afterwards?

Ray Palmer · 14-02-2020 5:19pm

Sleepy wrote: »

When there's a problem with title, is the bank refusing to secure a mortgage on it the main issue? I presume there's a legal means of "repairing" the title somehow?

There is always a solution of some sort but that doesn't tell you anything about costs or how long it will take. Some disputes have already gone on for decades and just because there is a new owner things won't change. They are likely to get worse in some cases as the new purchase will be insisting what they bought is legal as that was what the believed they bought.

Went to buy a house and found the bathroom was actually in the neighbours garden. When we asked the vendor to sort ut out they just refused. Thinking it would be simple I approached the neighbour. They wanted €20k and had already told the vendor this. The vendor told us they didn't even notice there was an issue. We walked away. The house didn't sell for another 5 years for a lot less but the property crash had happened so not sure what was the real cause.

0lddog · 14-02-2020 5:50pm

Graham wrote: »

Most auction houses tend to attract properties that would be harder to sell through more conventional methods.

For most of my life the vast majority of secondhand house sales were done by auction.

The idea that sales by auction 'tend to attract properties that would be harder to sell through more conventional methods.' is very recent.

Ray Palmer · 14-02-2020 5:54pm

0lddog wrote: »

For most of my life the vast majority of secondhand house sales were done by auction.

The idea that sales by auction 'tend to attract properties that would be harder to sell through more conventional methods.' is very recent.

That's news to me and my family have been buying houses for 60 years. The only property ever for auction was extremely dilapidated properties and those with other legal issues.

Mad_maxx · 14-02-2020 5:55pm

0lddog wrote: »

For most of my life the vast majority of secondhand house sales were done by auction.

The idea that sales by auction 'tend to attract properties that would be harder to sell through more conventional methods.' is very recent.

that doesnt sound right , id have thought only a small minority of dwelling houses are = were always sold by auction ?

0lddog · 14-02-2020 6:15pm

Mad_maxx wrote: »

that doesnt sound right , id have thought only a small minority of dwelling houses are = were always sold by auction ?

Have a look through The Irish Times archive to see what used to happen

C3PO · 14-02-2020 6:49pm

I thought that it was generally accepted that any property on these property auction sites were there because the there were title or other issues attached to them and really only suited to brave cash buyers?

14-02-2020 7:17pm

C3PO wrote: »

I thought that it was generally accepted that any property on these property auction sites were there because the there were title or other issues attached to them and really only suited to brave cash buyers?

Properties are sometimes auctioned by liquidators and vendors who want to sell quickly. It isn’t just brave cash buyers who bid at auction, but it does tend to be bidders who fully understand the difference between an auction sale and a standard sale. Auctions are not for the uninitiated or those who don’t fully appreciate the implications of a bid being accepted. It is a harsh lesson to learn, but one eminently avoidable with some research of the process. There are a lot of sites with advice on auctions, in addition to the auction site itself.

Dolbhad · 14-02-2020 8:02pm

djan wrote: »

As annoying as it is, I would say that getting half of your deposit is a pretty fantastic outcome given it was a auction sale where AFAIK there's no obligation for them to do so.

Out of interest what happens once the 70 years are up? Who does the property then go to?

70 years or more is needed to have good marketable title and for a bank to lend on it. You generally have a right to buy out the freehold interest when you have a leasehold condition - are some conditions to meet.

However the less time left on the lease, the more expensive it is to buy it out as the freeholder owner knows you have it buy it out and can name their price.

If they refuse to sell the freehold interest or you can’t find them, you have to make a court application to county registrar and that can rack up on the legal bills and may need barristers opinions. Basically you’d want to have a nice reduction in purchase price to entertain the idea.

Your other option is to see if your solicitor can convince the sellers solicitor to proceed by private sale and see if the issue can be sorted. I’d expected high legal fees though to sort out title and some big qualification to your bank to approve it.

Don’t think you can get around the ownership. How does the liquidator have the power to sell the property if they don’t know who owns it. How do they know their charge is secure?

Bigus · 15-02-2020 10:43am

Gdpr has also thrown a spanned in the works , for bidx1 process.

I had a solicitor check out a bidx1 property that was heavily discounted for not so obvious pyrite problems ( had great fun going to all the viewings talking loudly across the rooms about how to fix pyrite problems in earshot of, unsuspecting other buyers:) so the house had to be a cash purchase , hence cheap price. This same solicitor had previously completed previous bidx1 title sales before.

However even though this title wasn’t a disaster , the show stopper from my solicitors point of view was the vendors not being able to provide in this case a simple PPS number (despite request)to enable her complete the sale in the eyes of this state, so had to walk away.

15-02-2020 10:53am

Bigus wrote: »

Gdpr has also thrown a spanned in the works , for bidx1 process.

I had a solicitor check out a bidx1 property that was heavily discounted for not so obvious pyrite problems ( had great fun going to all the viewings talking loudly across the rooms about how to fix pyrite problems in earshot of, unsuspecting other buyers:) so the house had to be a cash purchase , hence cheap price. This same solicitor had previously completed previous bidx1 title sales before.

However even though this title wasn’t a disaster , the show stopper from my solicitors point of view was the vendors not being able to provide in this case a simple PPS number (despite request)to enable her complete the sale in the eyes of this state, so had to walk away.

What has GDPR got to do with the scenario you describe? Was your bid accepted at auction?

15-02-2020 10:59am

I had an interest in purchasing a property at Allsops auction which is now replaced by BidX1.
Paperwork was very sparse and the solicitor for the seller refused to provide additional information...information that it was reasonable to expect be provided and normally easy to provide.
I didn't bid.

If you are buying for cash and it is a small sum then Auction might still work as you can live with the poor title and just get the value of the property out of living in it without worrying about the saleability of it afterward.

The best you can hope for is that the house doesn't attract bids and then approach whomever is selling it afterward giving time to iron out the paperwork.

Marcusm · 15-02-2020 7:40pm

Ray Palmer wrote: »

That's news to me and my family have been buying houses for 60 years. The only property ever for auction was extremely dilapidated properties and those with other legal issues.

Dublin and other Irish cities (Galway and Donnellan Joyce for example) widely used auctions in 1995-2006 for desirable houses attracting much interest as it secured the best prices. Not just dilapidated jobs but well finished family homes.

chicorytip · 15-02-2020 11:23pm

mloc123 wrote: »

I thought with any auction, it was up to the buyer to do their due diligence beforehand?

The buyer in this particular instance should pursue the seller to have his full deposit returned. All this talk of "binding contracts" is just guff. The seller is the one in clear breach of contract here.

dubrov · 15-02-2020 11:29pm

chicorytip wrote:

The buyer in this particular instance should pursue the seller to have his full deposit returned. All this talk of "binding contracts" is just guff. The seller is the one in clear breach of contract here.

Have you seen the contract or even any auction contract? I doubt it

16-02-2020 8:36am

chicorytip wrote: »

The buyer in this particular instance should pursue the seller to have his full deposit returned. All this talk of "binding contracts" is just guff. The seller is the one in clear breach of contract here.

Do you know the difference between buying at auction and a conventional sale? They are two very, very different processes. The op is having trouble getting a mortgage, but finance would not be an issue for a cash buyer, that is the problem, not the sellers, and it would not be an issue at all if the op had checked out the title before bidding.

When your bid is accepted at auction and the hammer drops, a contract is formed and signed on the day of the auction by the bidder, that is the reality of property auctions. Which part of that well established and legally binding contract is “guff” in your opinion?

https://www.ebs.ie/blog/2014/12/beginners-guide-to-buying-at-auction

https://www.gibsonandassociates.ie/how-to-buy-auction-property-in-ireland/

Sleepy · 17-02-2020 3:35pm

Surely if title can't be proven, the vendor can't prove that they have the legal right to enter any contract that's dependent on their ownership of the asset being sold thus breaching that contract?

Marcusm · 17-02-2020 5:21pm

Sleepy wrote: »

Surely if title can't be proven, the vendor can't prove that they have the legal right to enter any contract that's dependent on their ownership of the asset being sold thus breaching that contract?

All of the proofs of title (however limited) are provided in the legal pack before the auction. This is why it is up to a bidder to have a solicitor check the title before the auction. Misrepresentation of title might allow it to be set aside but not a defective title which is adequately disclosed.

chicorytip · 17-02-2020 6:19pm

Dav010 wrote: »

Do you know the difference between buying at auction and a conventional sale? They are two very, very different processes. The op is having trouble getting a mortgage, but finance would not be an issue for a cash buyer, that is the problem, not the sellers, and it would not be an issue at all if the op had checked out the title before bidding.

When your bid is accepted at auction and the hammer drops, a contract is formed and signed on the day of the auction by the bidder, that is the reality of property auctions. Which part of that well established and legally binding contract is “guff” in your opinion?

https://www.ebs.ie/blog/2014/12/beginners-guide-to-buying-at-auction

https://www.gibsonandassociates.ie/how-to-buy-auction-property-in-ireland/

So, if the bidder in this instance had sufficient funding in place - either in cash or borrowings - and the sale was completed, the seller could just walk away with the money!! This seems plain daft. I think there ought to be a legal requirement on these auction houses to ensure all matters relating to ownership are fully established and which would prevent them from advertising these properties in the first place.

17-02-2020 6:43pm

chicorytip wrote: »

So, if the bidder in this instance had sufficient funding in place - either in cash or borrowings - and the sale was completed, the seller could just walk away with the money!! This seems plain daft. I think there ought to be a legal requirement on these auction houses to ensure all matters relating to ownership are fully established and which would prevent them from advertising these properties in the first place.

If the sale proceeds to completion, of course the seller keeps the money. Property purchases are not covered by consumer law because you have the benefit of both a survey and legal advice before you buy. The auction legal pack contains info about title and it is up to the buyer to get a Solicitor pre-auction report (SPAR) before buying. If you do not get that, then it is caveat emptor.

Claw Hammer · 18-02-2020 6:03pm

Sidney77 wrote: »

I did have a survey done beforehand and it ensured the building was sound. Just a but of upgrading needed. I saw a property for sale as was (and still is ) advertised and made an offer.

Bank had approved the mortgage for this property. Solicitor advised that the legal paperwork couldnt be done (and the mortgage funds couldnt be released without it) but there are solicitors who could do it but it takes time and is expensive.

The 70 year lease wasnt the only problem. One thing the title mentioned was that they didnt know who owned the building or land that its built on. Nothing like that was transparent when i made an offer.

Bidx1 have all of the legal documents for the property on-line before the auction.
You should have downloaded them and checked them before bidding. All of your issues would have come to light had you done so. What you did was like buying a second hand car based on a google maps view. You are lucky to be gattig half the deposit back.

Bigus · 18-02-2020 7:11pm

Dav010 wrote: »

What has GDPR got to do with the scenario you describe? Was your bid accepted at auction?

The solicitor felt that GDPR rules were going to stop her making a work around the unavailability of the PPS number as she had done previously, and couldn’t consequently register the title correctly according to today’s rules. perhaps she had some way previously of acquiring PPS number covertly regarding titles, and this Avenue was now closed off due to tightening of GDPR regs , I don’t know.

18-02-2020 7:55pm

Claw Hammer wrote: »

Bidx1 have all of the legal documents for the property on-line before the auction.
You should have downloaded them and checked them before bidding. All of your issues would have come to light had you done so. What you did was like buying a second hand car based on a google maps view. You are lucky to be gattig half the deposit back.

"All"? Not my experience of Allsop. Are you saying they have improved since the rebrand?

18-02-2020 9:38pm

Bigus wrote: »

The solicitor felt that GDPR rules were going to stop her making a work around the unavailability of the PPS number as she had done previously, and couldn’t consequently register the title correctly according to today’s rules. perhaps she had some way previously of acquiring PPS number covertly regarding titles, and this Avenue was now closed off due to tightening of GDPR regs , I don’t know.

That makes absolutely no sense. If your bid was accepted, GDPR would not apply as the seller would have instructed the auction house and provided that detail to them in order to sell the property.

What did the auction house say when you requested the sellers details after bid was accepted? The sellers details would be on the contract you signed at the auction, your story is a bit off.

Bigus · 19-02-2020 12:18am

Dav010 wrote: »

That makes absolutely no sense. If your bid was accepted, GDPR would not apply as the seller would have instructed the auction house and provided that detail to them in order to sell the property.

What did the auction house say when you requested the sellers details after bid was accepted? The sellers details would be on the contract you signed at the auction, your story is a bit off.

It was a receiver sale, so the seller couldn’t provide PPS number as requested, you have misinterpreted the info I’ve disclosed , hence why you think the story’s “ a bit off “ .

Marcusm · 19-02-2020 1:00am

Bigus wrote: »

It was a receiver sale, so the seller couldn’t provide PPS number as requested, you have misinterpreted the info I’ve disclosed , hence why you think the story’s “ a bit off “ .

The receiver on appointment should have obtained a new PPS number in its capacity as agent for the recalcitrant owner and utilised that for the sale (as it was the agent for the owner).

Blub123 · 19-02-2020 1:06am

[Deleted User] wrote: »

"All"? Not my experience of Allsop. Are you saying they have improved since the rebrand?

I've had an experience here with a property where my solicitor advised not to proceed.
They do put legal docs up before the sale. The prudent thing to do would be to have your solicitor examine same for completeness before proceeding with a bid.

johnnyskeleton · 19-02-2020 9:12am

chicorytip wrote: »

So, if the bidder in this instance had sufficient funding in place - either in cash or borrowings - and the sale was completed, the seller could just walk away with the money!! This seems plain daft. I think there ought to be a legal requirement on these auction houses to ensure all matters relating to ownership are fully established and which would prevent them from advertising these properties in the first place.

In an ideal world, reputable auction houses would commission a solicitors opinion and surveyors report prior to auction and make it available to all. Then the fees are paid by the purchaser on successful sale. A paranoid purchaser can always hire their own independent professionals just in case.

But we dont get to live in an ideal world and Irish people are sufficiently happy with the situation as it stands that there is no real desire for change

Claw Hammer · 19-02-2020 4:01pm

Deleted User wrote: »

"All"? Not my experience of Allsop. Are you saying they have improved since the rebrand?

They put all the documents they have up. If you think there are other documents necessary to make title, then don't proceed.

Bigus · 19-02-2020 7:14pm

Marcusm wrote: »

The receiver on appointment should have obtained a new PPS number in its capacity as agent for the recalcitrant owner and utilised that for the sale (as it was the agent for the owner).

Unfortunately, in this country, there seems to be no bar set for the quality or qualifications of a receiver and unless I’m mistaken, and any gombeen qualifies which is fundamentally wrong in relation to such serious matters and they seem to be answerable to no statutory body.

Claw Hammer · 20-02-2020 1:20pm

Bigus wrote: »

Unfortunately, in this country, there seems to be no bar set for the quality or qualifications of a receiver and unless I’m mistaken, and any gombeen qualifies which is fundamentally wrong in relation to such serious matters and they seem to be answerable to no statutory body.

This has nothing to do with the qualifications of the receiver. He will have instructed a solicitor to guide him in the conveyance.

Property At Auction - Be Careful

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