Auction Legal Pack
Auction Legal Pack
Call us on 0800 862 0206 for help selling your property at auction
Selling a property at auction is very straightforward, but there is some preparation required to ensure you achieve the best sale price. The auction company will take care of preparing the marketing and organising viewings, but there’s one thing that’s considered outside of their remit, and that’s the auction legal pack.
This article explains what an auction legal pack is, who’s responsible for preparing it as well as providing estimates for the costs and timescales involved. This article is designed for property sellers but if you’re considering buying at auction you might find it useful too.
Last updated by Mark Grantham on 10th March 2017
1. What is an auction legal pack?
2. Who prepares the auction legal pack?
3. What’s included in the auction legal pack?
4. Cost of the auction legal pack
5. How long does it take to prepare an auction legal pack?
6. What if the auction legal pack is not ready in time for the auction?
7. How long is the auction legal pack valid for?
8. Example of an auction legal pack
9. Next steps – request an auction sale estimate
Instead, when selling at auction your solicitor will be instructed by the auctioneer to prepare an auction legal pack which will be available to the public (on the auctioneers’ website and in paper form) before the auction.
The timely creation of the auction legal pack can make the difference between your property selling on auction day or remaining as unsold stock – failure to provide a comprehensive auction pack may deter any prospective buyers from making a bid due to the uncertain nature of what may affect the property.
If your solicitor’s preparing the legal pack it’s still worthwhile being familiar with what’s involved, because you (as the seller) will be responsible for completing some of the forms that are included in the legal pack and responding to your solicitor’s enquiries. It’s also useful to know what sort of costs you should be expected to pay.
The only form filling required by the seller will be for the property information questionnaire and fixtures and fittings form. These forms will be sent to you by your solicitor and they shouldn’t take much longer than 20 to 30 minutes to complete. You can see an example of the completed forms in the sample legal pack below. It can sometimes be the case that vendors are unable to complete these forms because they don’t know anything about the property! For example, in the case of an inherited property the executors might not know about things like who supplies the electricity, gas or water to the property, or exactly where the property boundaries are. So rather than completing these forms it’s quite okay to state that the property is “sold as seen” and it can be helpful to explain why the forms are missing, in the case of an inherited/probate sale this can be done by including the grant of probate in the legal pack.
Standard Legal Pack Contents for a Freehold House
- Title Document
- Title Plan
- Property Information Questionnaire
- Local Authority Search
- Water & Drainage Search
- Environment Search
- Energy Performance Certificate (EPC)
- Standard Auction Conditions
- Special Conditions
There are several other searches that can be included in the legal pack. Another that’s commonly included is the drainage and water search. One of the reasons the search is considered to be so important is because it shows the flood risk to the property, which again is particularly important for provincial or rural properties, more so than London.
Another essential part of the auction legal pack is the Energy Performance Certificate (EPC). It’s a legal requirement to have an EPC whenever a property is advertised for sale or rent. For an averaged sized house or flat an EPC doesn’t cost much more than about £50 and can be obtained very quickly, usually within several days. EPC’s are valid for 10 years, so it may well be that you have a valid EPC for your property already – if you bought or have tried to sell the property within the last 10 years. You can check for yourself by visiting the EPC Register website at www.epcregister.com
All property auctions are governed by a standard set of conditions, known as the general conditions of sale, or the standard auction contract. These conditions are available from the auctioneers website and published in the auction catalogue too. The conditions state the auctioneers role and the conduct of the auction, and they also layout the terms of the transactions, for example the deposit will be 10% of the purchase price and that completion will be 28 days after auction day. In addition to the standard conditions your solicitor will need to include a document known as the special conditions.
The special conditions state the lot number, the address of the property and the seller’s solicitors contact details. The special conditions also state variations to the common conditions, for example if you wanted to change the completion date from 28 days to 36 days, then a clause in the special conditions will allow for that. It’s also become quite common for regular auction sellers (e.g. property dealers and asset management companies) to recover some of their auction and legal costs by adding a clause to state that the buyer is will pay an additional 1% towards the sellers fees.
There are other documents that need to be included in the auction legal pack, depending on the type of property you are selling.
For tenanted properties, prospective buyers will want to see a copy of the tenancy agreement and as many associated landlord & tenant documents as possible e.g. gas safety certificate, deposit statement etc. If you are unable to include a tenancy agreement in the legal pack, either because you can’t find it or you didn’t have one in the first place, you will still be able to sell at auction, but the absence of a tenancy agreement will usually result in fewer prospective buyers and a lower sale price because of the risk that the tenant might be a regulated tenant. In the absence of a tenancy agreement it can be useful to include rent/bank statements or a copy of a rent book to show that rental income is being received.
If you’re selling a leasehold property you will need to include a management information pack. Whether you sell your property through an estate agent, at auction or direct, it’s the sellers responsibility to apply for the management information pack. These are obtained from the management company who work on behalf of the freeholder. The management information pack includes financial statements to show if service charges are all up-to-date, insurance policy documents, fire safety certificates and other compliance documents to show the property is being properly managed.
The management pack can take a few weeks to arrive, so it’s important to request as soon as possible. Most solicitors will ask the seller to request these directly from the management company themselves. Contact details for the management company can usually be found on your service charge or ground rent statement. The cost of the management pack is usually in the region of £200.
In the event of any problems or delay in obtaining the management information pack, a useful resource is the Lease Advisory Service.
For properties with a shorter lease (typically 80 years or less) then it can be a good idea to serve a Section 42 notice to the freeholder. Serving notice to extend the lease gives the next buyer the option to extend the lease soon after purchase. If notice isn’t served by the current owner then the new owner will have to wait 2 years before they can extend the lease, by which time the property value may have increased and the number of years remaining on the lease will have decreased – both factors will result in an increased cost for the lease extension. As a seller, you will only be able to serve notice if you have owned the property for 2 years or in certain cases for probate properties.
Properties with potential, including those with planning permission sell particularly well at auction. If you have current or even lapsed planning permission, then it’s important to include all related documentation in the legal pack.
In terms of what should not be included in the legal pack, as the name suggests the pack is for legal documents and nothing else. There is no need to include surveys or marketing materials in the auction legal pack.
For leasehold properties, the delaying factor is usually the management information pack (obtained from the managing agents or the freeholder) which often takes longer than it should, just because many freeholders aren’t used to preparing. It’s worth chasing your freeholder (or their managing agent) to make sure they’re dealing with your request.
If there are one or two searches missing from the legal pack then it’s usually okay to let the property go to auction, but if any of the key documents are missing e.g. the title documents or lease then it’s better to withdraw from auction and enter in to a subsequent auction once the legal pack is ready.
A legal pack is valid for 6 months from the date the documents are produced. So if for whatever reason you need to withdraw the property from auction and enter into a later auction a month or so later, the auction pack will still be valid.
Need more help? Call us on 0800 862 0206 or send us an enquiry online.
If you’re considering selling your property at auction and need help preparing the auction legal pack, please contact us on 0800 862 0206.