When you exchange contracts at commercial property auction, there are important factors that you should keep in mind. Find out how buying a commercial property at auction is significantly different from buying traditionally through an estate agent.
One of the most significant differences between buying a commercial property by private treaty and buying at auction is the exchange of contracts. When buying through an estate agent you may have sufficient time to change your mind before reaching this stage of the transaction.
If you are the successful bidder at auction, on the other hand, there is no going back once the hammer falls. At this point you are deemed to have entered into a binding contract, subject to the conditions of sale, and are legally obliged to complete the purchase of the property.
You will then be required to present the deposit stated in the auction conduct conditions (usually 10% of the price) and complete the memorandum of sale. If your deposit is not cleared, or you fail in any other way to honour your obligation, the seller is entitled to treat this as breach of contract and bring appropriate action against you. The deposit paid is certain to be lost in these circumstances. You may also be liable for any shortfall on the subsequent sale of the property.
You should also be aware that the deposit is non-refundable and that any interest earned on it between exchange and completion belongs to the seller unless otherwise stated. Likewise, the buyer is responsible for the cost of the insurance premiums relating to the property over the same period.
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Attending and Bidding at Commercial Property Auction
