Your property questions answered
Are time limits on closing deals binding?
Q Twelve years ago, when I bought my house the paper work took, as far as I remember, over two months. There were no particular reasons for the delay. Instead I was told we were moving in “legal time” not real time. I am interested in bidding in the upcoming Allsop auction of “distressed properties” but I see that in the terms and conditions the sale has to be completed within five weeks. Surely this is a UK stipulation where sellers must provide a great deal more information to speed up the process. What happens if I bid and for legal reasons the completion is delayed?
A The absolute key thing to remember when buying at auction is that once you agree to buy the property on the day and hand over your 10 per cent deposit, then you are legally obliged to go through with the contract – and if that contract stipulates a time limit, then so be it. Auctions nearly always operate to a different, speedier time frame to private treaty sales because so much of the legal leg work – checking title, leases, boundaries, management fees – is already done before the auction. In a private treaty sale, the sale is agreed and then the paper work is tackled and issues can arise that take longer to resolve than anyone could have expected. There is rarely, if ever, room to change the terms of the contract after you sign on the day of the auction. So if you find you can’t raise the finance or the house has an unauthorised extension or the flat has a tenant who is refusing to move or your solicitor hasn’t done the pre-auction paperwork and advised you that the time frame is possible, then you could be in deep, expensive trouble. Once you have earmarked a property and had its legal status checked by your solicitor, then the five-week time limit between deposit and completion shouldn’t be a problem.
What’s more helpful – reserve price or AMV?
Q What is the difference between AMV – advised minimum value – and reserve price? Irish auctioneers appear to favour AMV – there’s a Gunnes auction on July 1st and AMVs are the prices, yet UK firm Allsop gives a reserve price.
A A publicly-declared reserve price is the most transparent and helpful one from a buyer’s point of view. The reserve is the lowest price the seller is willing to accept on the day of the auction. If no one bids on or above the reserve then the seller does not have to sell. If the reserve is reached then the property is sold to the person who then bids highest. An AMV is fairly useless from a buyer’s point of view. It is what the estate agent considers the minimum value. (But minimum to who? A buyer should only spend what the property is worth to them.) During the boom, many a frustrated buyer sat in an auction room having spent a considerable amount on surveyor and legal fees in preparation, watching while the bidding well exceeded the AMV and only to see the house withdrawn because it hadn’t gone high enough for the seller. Clearly in these cases the seller had a reserve price (which was kept secret) but which was far in excess of the AMV.
Your questions
Send your queries to Property questions, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2, or e-mail propertyquestions@irishtimes.com. This column is a readers’ service and is not intended to replace professional advice.
