Have you thought about what makes these auctions different – apart from an expectation that prices will be lower?
There are certain key differences that must be clearly understood if you are to avoid significant problems for yourself when buying in this kind of environment.
Who is the Seller?
One of the key issues is who in fact will act as seller. Is it the Bank that holds the mortgage or is it a receiver?
If it is a receiver then that person acts as agent of the legal owner. The receiver, as agent of the legal owner has more limited powers than the bank acting under it’s mortgage.
For instance, if there is a judgement against the property apart from the mortgage held by the bank who appointed the receiver, the receiver has no power to avoid the effect of that other judgement. In those circumstances, you run the risk of buying a property that is still affected by another judgement.
On the other hand, if the bank that holds the mortgage acts as seller, then that bank under statutory powers, can effectively prevent the sale of property being affected by any other judgement.
Risks – the Contract
The standard Contract for Sale which is recommended for use by the Law Society of Ireland will be very substantially changed to render it more favourable to the seller. In particular, the usual warranties that a seller is required to give to a buyer are likely to be be deleted. This is because most Receivers don’t have any detailed knowledge of the property involved and will not incur the cost of obtaining it.
As you can imagine, the Law Society and its member solicitors, over many years,developed a standard Contract for Sale in a format that tried to provide fairness to both sides. To substantially change the standard Contract by deleting clauses that are designed to achieve that fairness means that you as a buyer are far more exposed to risk.
Because very few standard warranties are being given, the old adage of “Buyer beware” becomes very important. The burden falls to you as the buyer to make a very full enquiry about the property – planning, access, drainage, condition, relations with neighbours etc.
Risks – early commitment
The very fact of buying at auction means that you must ,if successful , sign a Contract and pay a deposit there and then. That gives you no opportunity to have your solicitor investigate the title or the conditions of sale with a view to giving you clear advice as to the risk involved.
Quite often, solicitors will be consulted by clients after such an auction when the client feels he has achieved a bargain price. However it can off become apparent very quickly that if it looked to good to be true, it is in fact too good to be true! You as buyer can find yourself with some serious problems.
Hopefully you can now see how important it is that you choose the correct solicitor to handle this type of transaction for you. Previous experience and knowledge of debt management, enforcement and the technical rules about buying from receivers or banks, is an essential skill. We at Neil J. Butler & Co. have been doing this type of work for approximately 30 years and have developed the expertise to protect you.
There are bargains but they need to be well managed.
Help yourself to bag that bargain by having us on your side !
Contact us on
0504-24173 ; firstname.lastname@example.org ; www.njbutler.ie