What is an Auction Legal Pack?

The seller’s conveyancer will download an up-to-date copy from the HM Land Registry.

The Title Register will confirm ownership, the amount originally paid, any charges (such as mortgages and/or other types of secured loan) amongst other details on the property’s history.

There may also be specific information related to restrictive covenants, negative easements, third-party consents and ransom strips. A solicitor can highlight and explain any issues that you may not be aware of.

This document is a graphical representation of the boundaries of the land surrounding the property and complements the details in the Title Register. The seller’s solicitor will also download this from the HM Land Registry.

Normally undertaken by the seller’s solicitor before the auction sale, conveyancing searches contain a range of information related to the property’s immediate and surrounding vicinity.

They form an essential part of the auction legal pack and your conveyancer will make a series of requests to the local authority and other public bodies.

The main searches include Local Authority (which takes the longest), Environmental, Flood Risk, Water, Drainage, Boundaries, Commons Registration, Land Charges, Chancel Repair, Canal and River, Mining and Solar Panel approvals.

Buyers will look at these documents to make sure there is nothing out of the ordinary.

However, some will take out specific “no search” indemnity insurance policies to protect against any risks, particularly as it’s common to hear of delays for searches to arrive prior to the auction.

Having an up-to-date Energy Performance Certificate (EPC) in place is a legal requirement when selling a property.

If the property has been put on the sale or rental market in the last 10 years, it’s likely that it appears on the EPC register.

Most reputable auctioneers (including ourselves) follow the Royal Institute of Chartered Surveyors (RICS) 4th edition Common Auction Conditions.

It’s important to understand how the auctioneer manages the process alongside the roles and legal responsibilities of all parties involved.

For example, if we run a conditional (56-day) auction, the buyer must pay a non-refundable reservation once the electronic hammer falls and the bid is won. The buyer then has 28 days to exchange contracts and a further 28 days to complete on the sale.

With our unconditional (28-day) auction, we limit the overall timeframe to 4 weeks. This means that the buyer and seller effectively exchange contracts at the fall of the electronic hammer and pay 10% of the property’s value (i.e. a deposit) into our client account. The sale must then complete within 28 days.

See Property Solvers Auctions’ own conditional and unconditional documents for England and Wales.

The Special Conditions of Sale is a separate document that clearly states any contractual variations on the transaction that the buyer should be aware of.

These may include:

• Any extensions to the period between payment of the reservation fee and exchange of contracts and/or completion (often the case with commercial property and land sales);
• Additional sales commissions payable to property dealers or asset management companies;
• Issues on the Title that can only be resolved post-completion;
• If the property has been inherited and is still going through probate, any associated financial conditions that could affect the buyer post-completion are highlighted;
• Any Land Registry restrictions (RX1s) that are still in place (these will need to be cancelled prior to exchange of contracts, unless agreed otherwise);
• Agreement that the buyer will reimburse the seller’s conveyancing search costs (on completion);
• Any unusual charges against the property or surrounding land that will remain against the property post-completion;
• Any sellers fees or commissions being covered by the winning buyer (due on completion).

These forms are completed by the seller as part of the initial stages of the conveyancing process.

This contains a range of information regarding boundaries, disputes / complaints, notices / proposals, alterations / planning / building control, guarantees / warranties, insurance, environmental matters, rights / informal arrangements, parking, other charges, occupiers and services.

Another Law Society form completed by the seller that identifies what physical items will be included as part of the sale.

This includes basic fittings, appliances across the property (particularly in the kitchen and bathroom), carpets, curtains / curtain rails / blinds, light fittings / switches, fitted units, outdoor items and television receivers.  There’s also a question regarding fuel supply.

If the seller does not have all the information – say it’s an inherited or tenanted property – the form may not state anything apart from “sold as seen”.

Completed when selling a leasehold property.  The questions essentially confirm what’s contained in the lease documentation.

To complement this, the seller should also supply copies of the lease, supplemental deeds, contact details / correspondence from the landlord / management company, service charge / ground rent confirmations, invoices, audited statements, payment (receipt) confirmation, notices, consents, history of any complaints, documentation on alterations, details on any enfranchisement applications.

This form is completed by the landlord, freeholder or management company.

It contains specifics related to maintenance agreements, fire safety certificates, any deeds of covenant / certificates of compliance, licences to assign, restrictions, permissions, disputes / enfranchisement issues amongst other finer details.

This one-page document summarises what’s contained in the LPE1 form and management pack (that will be forwarded to the seller’s conveyancer).

The costs ground rent, service charges and insurance premium costs will all be stated alongside details of the sinking or reserve fund.  The management company may also include bank statements.

Only necessary if you’re selling a leasehold flat (although some houses are leasehold too), the leasehold management pack will be sent with the LPE1 form and typically contain the following:

• Insurance policy documents
• Health and safety policies
• Service charge estimates and accounts
• Fire risk assessment(s)
• Asbestos survey(s) (or confirmation of no presence of asbestos)
• Forfeiture documentation (if applicable)
• Deed(s) of Variation (if applicable)
• Deed(s) of Covenant (if applicable)
• Certificate(s) of Compliance (if applicable)
• Licence(s) to Assign (if applicable)
• Any permission(s) to alter the property
• Notices served on the lessee (if applicable)

If you’re selling a tenanted property (with tenants in situ), auction bidders will often want to see all the necessary information.

This would typically include:

• The current Assured Shorthold Tenancy (AST) agreement or licences in place;
• Individual room tenancies for Houses of Multiple Occupation (HMO);
• Any HMO licence agreements where applicable (issued by the local authority);
• Information about the occupants at the property.  This can include who pays the rent and if there is a head tenant or specific family / household member that takes financial responsibility;
• Any evidence of voids and/or arrears (alongside any resolutions);
• Confirmation of any Section 8 and/or Section 21 notices served in the past;
• Proof of correct deposit transfer into the appropriate custodial scheme (Deposit Protection Service, Tenancy Deposit Scheme or MyDeposits).  In most cases, the conveyancer will transfer these funds directly to the buyer (who will need to place them back into one of these schemes);
• An up-to-date Energy Performance Certificate (EPC);
• Evidence of the mandatory completion of the annual gas checks (CP12);
• A minimum ‘satisfactory’ Electrical Installation Condition Report (EICR);
• Evidence of a working smoke / carbon monoxide alarm;
• Proof of Right to Rent checks;
• Evidence that the tenant has received a copy of the Department for Communities and Local Government (DCLG) ‘How to Rent’ Guide;

Preferable but not essential…

• Confirmation that any furniture sold with the property is fire retardant;
• Confirmation that there are no other health and/or safety hazards;
• Credit referencing reports (Experian, Equifax, Call Credit);
• Character references from employers and/or previous landlords;
• There is no evidence of outstanding works or tenant complaints;
• A detailed inventory report from when the tenant first moved into the property;
• Evidence of a Legionnaire’s disease risk assessment.

Please note that the above is an exhaustive list.  In reality, most auctioneers struggle to provide this information.

As a seller, we would recommend focusing on gathering as much as you can (the last 7 ticks above, for example, are not completely necessary). If you do not (or cannot) supply the majority of the above, buyers may make cautious bids due to the perceived risk that could be involved when buying the rental property.

Auctions have long been a well-recognised way to sell commercial property. The often complex nature of these types of transactions tends to limit the buyer market to professional investors and developers.

Indeed, you’ll often find that commercial property buyers regularly check out the auction portals for opportunities. By and large, they tend to adopt a more technical approach and will often request detailed information.

Much of what is necessary to provide can be supplied through conveyancers in the legal pack.  You may also need to consult with an accountant in relation to any tax-related issues.

In terms of what you should supply, the following is a good starting point:

• Commercial property leases, rental receivables, proof of income stream stability and other associated documentation;
• Information on termination dates, break clauses, rent reviews, transfer or charging restrictions, service charges, ground rents, business license / rates schedules, no evidence of criminal activity on premises, insurance provisions, forfeiture (termination) rights;
• Good covenant strength – including financial status (solvency) and creditworthiness of occupational tenants (through independently audited accounts / financial assessments / payment records / net cash flow breakdowns);
• Guarantor information – including Authorised Guaranteed Agreements (AGAs) and any confirmation of sureties;
• Proof of compliance with covenants / consents / permits / easements / rights of way;
• Title checks (ownership, boundaries, 1st/2nd/3rd charges, encumbrances);
• Confirmation of no defects on title;

Remember, commercial property buyers are going to want more information relative to residential buyers…

• Confirmation of type of lease – such as full repairing and insuring (FRI);
• Maintenance / defect resolution costs and any major works undertaken
• Current ownership structure (personal, company or trust);
• Profit and loss of any existing companies or special purpose vehicles (via balance sheet provision);
• Any evidence of comparable commercial rents at other similar properties in the local area;
• Demand for the specific type of commercial property.  For example, retail property is currently witnessing decreasing popularity relative to industrial and warehouse space.  At the same time, there are many buyers who are exploring opportunities to convert commercial properties into residential under Permitted Development Rights (PDRs);
• Vacancy rates for the last 5 to 10 years;
• Any evidence of local cap rates / local commercial property valuations;
• Local planning and redevelopment proposals – particularly transport, schools, hospitals and other core infrastructure;
• Conveyancing enquiry responses;
• Condition of the property (we will take photos and floorplans but most buyers will want a closer look);
• Planning and building regulation documentation (including any lapsed permissions / change of use applications);
• Evidence of enforcement notices / actions;
• Surveys (building, structural, site, mechanical, electrical, measurement, environmental / ground / rights of light);
• Insurance policies in place (+ payment confirmations / any claims made in recent years);
• Current or pending legislation that could affect the property (including the Land and Tenant Act, Law of Property Act, Climate Change Act, Energy Act amongst others);
• Current or pending regulation that could affect the property (health & safety, fire / asbestos risk);
• Tax liabilities – particularly related to VAT;
• Whether the sale will be a transfer of ongoing concern;
• Potential capital allowances.

Similar to commercial property, land buyers usually request to see a range of details.  Indeed, many of the due diligence processes overlap.

Information to provide includes (but is not limited to):

• Size of plot, boundaries and details regarding any existing buildings;
• Any evidence of hazardous land use;
• Previous planning consent details (recent or lapsed);
• Proof of compliance with covenants / consents / permits / easements / rights of way;
• Title checks (ownership, boundaries, 1st/2nd/3rd charges, encumbrances);
• Confirmation that ground conditions are favourable for development / redevelopment;
• Related to the above, confirmation that there’s no evidence of mining or contamination;
• Drainage and flood surveys;
• Any archaeological or ecological surveys;
• Connection to utilities – gas, electricity, water, sewage disposal (typically via a service consultancy report);
• Any reviews of mineral, oil and gas rights;
• Access – i.e that there are no landlocks or other related issues;
• Cross-reference acreage of the plot against HM Land Registry data;
• Insurance-related documents.