When purchasing a property at auction, there are several important legal facts that need to be considered.
Cooling Off Period
When buying at auction, there is no cooling off period. If you are the successful bidder, you will have to settle the contract. This applies even if:
- The house does not pass inspection.
- You change your mind.
- You cannot afford the property.
This means that before the auction, you need to make sure you:
- Arrange building and pest inspections
- Ensure your finances are in order and you can purchase the property.
- Obtain a valuation of the property.
- Obtain a copy of the contract.
- Obtain legal advice about the terms and conditions if you are unsure about them to ensure you have all the information necessary in the event you are the successful bidder.
Contact the agent about:
- How much deposit the seller will ask for, and;
- In what form payment will need to be made.
Terms of Sale
The terms of the sale usually require you to bid on an unconditional basis. This means that you cannot have any conditions, such as:
- Subject to finance.
- Subject to the completion of another sale.
Registering to Bid
If you want to bid on a property, you need to register to bid. Only registered bidders can bid on the day. When you register to bid, the auctioneer will give you a unique identifier.
On The Day
Ask the auctioneer if there have been late changes to the contract. The auctioneer must announce the terms at the start of the auction.
Ask any questions you have about the property.
If You Are The Successful Bidder
If you are the successful bidder, you must sign a contract immediately.
- There are negative legal consequences if you cannot settle the sale on time, including being forced to pay the amount of your winning bid, the cost of re-auctioning the property or any shortfall between your offer and the winning bid at the next auction. It is very important you are able to purchase a property you win at auction.
Written by
Kayleigh Whittaker, Associate
NB Lawyers – Lawyers for Employers [email protected]
About the author
Kayleigh Whittaker is a senior lawyer on our Commercial and Property team who assists with Employment Law matters. With a high level of experience in commercial and retail leasing, voluntary and involuntary purchase and sale acquisitions property development and employee relations, Kayleigh provides practical advice to ensure smooth business transactions.