Do I have to pay the seller’s legal fees on my auction apartment?
I agreed to buy an apartment at auction and paid the 10 percent deposit and the 1.5 percent purchase fee as agreed.
The purchase has taken about 8 weeks so far as the seller’s attorneys have not provided all the necessary documents to my attorney.
We were finally given a completion date for last Friday, only to receive a last minute email stating that I owe an additional £ 2,790 for sales charges and that the purchase cannot be finalized if I does not pay.
The real estate agent then said there was a clause detailing these fees in the legal file – but in my copy the fee amount was left blank and no one corrected me when I signed it.
I refuse to pay these fees because I did not know it before. Where am I legally?
A buyer bought a property at auction and then was asked to pay a fee – but he refuses to do so
Grace Gausden, This is Money, responds: Buying property at auction can be a minefield, and there are a lot of things you need to consider before committing.
However, this was your first time buying a property at auction, so there were several rules you weren’t aware of, including that it’s common for the buyer to pay the seller’s fees.
You also did not receive legal advice or seek the help of a lawyer before committing to buy the apartment.
The purchase price for the house was £ 33,500 and you paid £ 1,500 in purchase costs. You have now been asked to pay £ 2,790 to cover the seller’s fees including VAT.
In your contract there is a line stating “the buyer must at the date of completion / exchange pay the auctioneer’s fee of £…”
Since it was left blank, you assumed there was nothing to pay and signed the contract.
However, the auctioneer says there is in fact almost £ 3,000 to pay and sent a copy of his version of the contract where the sum was written in pen.
You spoke to your lawyer at this point to find out what your rights were, and you were told that these fees were also not included in the documents they received.
Unfortunately, the documents are no longer available for download online.
It was a shock to hear that you owed so much money, and you say you wouldn’t have accepted that.
You have now informed the auctioneer that you will not pay these fees and you believe that adding fees without consent constitutes a breach of contract.
However, the company refuses to waive the fees. As a result, you have asked to cancel the purchase – but they also refuse to refund your deposit and purchase costs.
That’s Money asked a specialist lawyer where you stand.
Auction buyer was confused after being asked to pay thousands of pounds in selling fees
Sarah Dwight, notary, replies: The difficulty is that the buyer did not get legal advice before going to auction. Therefore, what we as lawyers know about the intricacies of an auction would not have been made clear to him.
I would always like any client, experienced or not, to speak to a lawyer before bidding on auction.
This is because there is usually, but not always, a reason a property is up for auction.
This is usually because the property would not sell on the open market, perhaps because there is a short term lease or a missing freehold, for example.
In this situation, the buyer could claim that the contracts were not the same when they were exchanged, meaning that the exchange did not take place correctly. The two parts of the contract must be identical.
The buyer relied on the fact that no charge was inserted and assumed that none was payable.
Grace Gausden, This is Money, adds: Unfortunately, it seems that there are no easy fixes because it seems, legally, that no one is right or wrong.
While you have reason to argue, so do salespeople.
Either you or the sellers will have to come to a conclusion and in the event that this does not happen which seems likely, you may need to take the decision to court.
However, this will be costly for both parties and may even cost you more than the seller’s fees, which seems counterproductive.
Ultimately, you’ll have to decide how to proceed and whether to stick to your guns or pay the fees and get the keys to your new property.
This is a lesson for others, however – always seek legal advice before buying a property at auction and hopefully you can avoid such situations.
What to know about buying a property at auction
There are several things consumers should know before buying a property at auction, according to the professional organization Propertymark.
Get a copy of the auction details: The details will contain key information, but you may need to request a separate legal file to get a full picture.
Legal documents can vary from property to property, so consider having a lawyer search the legal file for any hidden clauses or loopholes that could cost you more than you expected.
Property searches are often included in legal documents, but if not, have your lawyer do them before the auction.
Be ready to act quickly: While it is important to take your time to study a property, it usually only takes four weeks between the publication of the auction catalog and the auction itself, so you will need to act quickly.
Define your budget: Think about the maximum price you are willing to pay for the property. While properties at auction can be cheaper than market value, renovations are usually required.
Unless you are a cash buyer, you will need financing before you bid. Make sure you know the deposit amount and check what payment method is required so that you have sufficient funds.
Check the fine print: Be sure to check the terms and conditions of the auction house you choose to use. By entering an offer, you accept them. Make sure you familiarize yourself with the terms of sale, what needs to be paid and when – you don’t want any surprises that day.
You agree to buy as soon as the hammer falls: If your offer is successful, you will need to sign the contract and pay the deposit immediately.
When the auctioneer’s hammer falls, you will be bound by the general conditions of sale and responsible for insuring the property from that point on. Withdrawing from the sale after that could result in huge costs.
Be prepared for deposit and payment terms: Most auctions require a ten percent same day deposit and require two pieces of ID. You typically have between 14 days and six weeks to complete and pay the balance of the purchase price. All outstanding costs and completion details will be clearly stated in the terms of sale.
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