News & Insights

Every now and then I am approached by a new or existing client considering purchasing a property at auction. Usually this approach takes the form of being asked to bid for a client at an auction the next day. However, the preparation for purchasing a property at auction should take place well in advance of the date the gavel falls.

In Ireland auctions traditionally were reserved for land sales or large country homes however with the influx of repossessions and distressed property sales over the last number of years and the emergence of international auction houses many normal residential houses, commercial retail units, commercial industrial units and lands now change hands in this manner.

So what preparation needs to take place before the auction?

1. View the property - always advisable no matter how cheap the price is, view it. Photographs may not tell the whole story. At the very least do a search on google maps and do a street view search and overhead satellite search. Look around the property, what is next door, across the street etc. It may be cheap to buy but it will either be the place you intend to live or an investment so its environs are vital to your living standards in the future as a resident or your investment return.

2. Seek the advice of an engineer / surveyor to look at the property for defects, boundary issues, services and rights of way/easements. You may not get the chance to do a full survey however at least have the engineer / surveyor take a quick look for obvious issues.

3. Well in advance of the auction contact your legal advisors to do a full due diligence on the title to the property. This cannot be underestimated in its importance. Yes, it will cost money however a property with a bad title can be worthless in the future. Also the property may have charges, liens or other encumbrances which, if not dealt with correctly in the contract, could follow the property and ultimately be your responsibility in the future. Your legal advisors will need to check for example the basic title to the property, contracts clauses, easements, boundaries, maps, services, possible disputes with neighbours and the old reliable - management companies to name but only a few. Your legal advisors can then raise any queries they have on these issues well in advance of the auction and hopefully resolve potential problems long before you raise your hand to bid.

In the last number of years, I have attended many auctions where there will be a room full of copy title deeds in brown envelopes with unqualified purchasers rummaging through title with less than an hour until the auction. Don't fall into this trap. Do your homework well in advance and attend the auction with full knowledge of what you are purchasing.

Remember when you sign the contract at auction there is no going back. The document you sign when the gavel falls is a fully legally enforceable contract in law.