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Would you proceed with a purchase if the clause below was included in the special conditions?
“The seller shall not be required to be registered proprietor of the title being sold prior to completion and the buyer shall raise no requisitions in this regard”.
The above clause basically means whoever is selling doesn’t own the property!
I have recently dealt with auction purchases with glaring legal issues which could not be resolved because the auction conditions stated that the vendor’s solicitors were not required to deal with any such issues.
Vendors and auction houses usually protect themselves in the contract, leaving the buyer and their solicitors to navigate complex situations and legal issues.
Some of the clauses I have had to deal with recently including above are contained within the special conditions of sale and/or may be hidden within lots of other clauses.
Most purchasers are not aware of the legal implications or meaning of these special conditions. Their focus is usually on the purchase price, completion date, extra costs and deposit among others.
When I informed my clients that the above clause meant they were buying from someone who does not own the property, they were in shock. Luckily there was no lender involved.
Modern Properties Ltd (name changed) had exchanged a contract with Blackacre Trustees (name changed), the registered proprietor. However, before completion of this transfer, Modern Properties Ltd sold the property at auction to our clients. The matter was therefore proceeding by way of a purchase and subsequent sub-sale.
I explained to clients the implication of the above arrangement, including possible delay in registration of the property into their names and, the fact that the transfer from Blackacre Trustee to Modern properties Ltd had to be completed prior to the transfer to them proceeding. The risk is, if for some reason the first transfer fails (from Blackacre Trustees to Modern Properties Ltd), there is no guarantee that my clients would own the property for which they had already paid in full. In addition to this , the usual safeguards provided on a purchase , that the seller’s solicitors have fully checked the identity of the seller and their right to be the person receiving the purchase money, could not be obtained in this case . This applied both to the immediate seller (Modern Properties Ltd) and also to the original owner Blackacre Trustees.
Once your auction bid has been accepted in a classic auction , you are legally bound to complete the purchase on the published auction terms, even if they are disadvantageous to you, there is something wrong with the property and/or you cannot get the finance you need .
"The buyer beware" principle at property auctions, means purchasers must do their due diligence and ensure they have read and understood the legal pack before bidding on a property.
Issues our lawyers will investigate include:
- Marketability of legal title
- Restrictions on the title to ensure transfer of title is possible, and
- Whether the requirements of the restrictions can be met
- Are all supporting documents included in the legal pack?
- Is the Land clearly defined on the title deeds and plan?
- Does the proprietor / vendor have the legal right to transfer?
For expert legal advice on auction purchases, contact Leah Noyes in our Residential Property team on 01689 887872 or email leah.noyes@cwj.co.uk