Auction Conveyancing — Why You Should Use a Conveyancer

Going…Going…Gone…

Buying property at auction is not for the fainthearted — this route is a far cry from traditional purchases and comes with its own set of challenges. Hence, to successfully navigate these intricacies, it’s highly advisable to engage an auction conveyancing specialist as early as possible in the process.

In NSW, when you buy a property at auction, it’s a legally binding agreement. If when the hammer falls for the final time you’re the highest bidder, you’re legally obligated to purchase the property — signing and exchanging the contracts that very same day. 

Although with a traditional sale, you will typically have a cooling-off period after the initial contract signing — during which a buyer can change their mind — at auction, there is no such luxury. 

In short — if you bid for it, you buy it…

The Auction Conveyancing Solicitor’s Role — Pre-Auction

Buying a house at auction can have many benefits, including the most obvious one — snapping up a property at a bargain price. Yet, with no backing out once your bid has been accepted, you must ensure you’re fully prepared to sign off on the deal before it happens.

However, using a conveyancer when buying at auction before the actual auction day, there’s no reason it should be any riskier than a traditional private sale. 

Before the big day, your conveyancer can assist with several crucial tasks, including:

Reviewing the Contract of Sale

Any property for auction will have a Contract of Sale prepared in advance by the vendor’s conveyancer/solicitor, which must in NSW also come with a series of documents, including but not limited to:

• Copies of all deeds and restrictions on the use of land.
• Details of any mortgage over the property.
• Any outgoings, such as rates, Owners Corporation fees (in the case of a strata property) and other charges.

In accordance with the rules of the NSW Office of Fair Trading, a Contract of Sale must also include a copy of the title documents, a drainage diagram and a current zoning certificate from the local council.

Although the documents are intended to inform a potential buyer of all the relevant information about the property, the Contract of Sale will also detail the rights and responsibilities of any purchaser of the property.

Written in legal terminology, it’s essential that you, as the buyer, understand what the terms and conditions of the contract are before auction day — and that you are happy with the finer details. Your conveyancer will conduct a full review, advising you of any areas of concern and put you fully in the picture. 

Contract of Sale Negotiations

Although the Contract of Sale will already be written, your conveyancer can negotiate for changes to the document or raise any questions you may have prior to auction. This may include things such as extending the settlement period, or a reduction in the deposit payable. 

Any agreements or amendments made before the day of auction can be incorporated into the Contract of Sale — to be exchanged on the day — if you’re the successful bidder.

It’s a good idea to take a copy of any correspondence between your conveyancer and the vendor’s legal team along to the auction. This allows you to present proof of changes before signing the contract.

What’s more, sometimes a vendor may agree to consider offers before going to auction. If you’re keen to try this route, your conveyancer can submit a pre-auction bid through the agent. Should the bid be accepted, the negotiation process would be the same as buying through a private sale.

Auction Property Conveyancing Due Diligence

If you’ve heard the term ‘caveat emptor,’ you will no doubt be aware it means ‘let the buyer beware.’ This is highly significant when you’re buying a house by auction, in that, the purchaser is responsible for checking the condition of the property before they buy it. 

Although there are some exceptions — where the vendor must make disclosures such as if the property is flood or bushfire-affected — generally, the purchaser must accept the property is sold as seen. Therefore, it’s highly recommended that you should conduct your own due diligence checks before you enter into any bidding.

Prior to auction, pest and building inspection reports should be sought. Often the vendor will have obtained independent reports for prospective bidders — you should check with the agent for a current report. Better still, organise your own, your conveyancer will be able to arrange for this to be carried out. And, in the event of a strata property, prepare a comprehensive strata report to ensure there are no issues affecting the sale.

Any issues that may be highlighted in these reports can be raised with the vendor’s agent prior to auction and may form part of the contract negotiations.

Finance Arrangements

Should your bid be the highest on auction day you will be expected to pay a deposit of between five and 10%, plus other expenses, such as auction conveyancing fees. 

Considering the unconditional nature of the exchange of contracts when that hammer falls, you must have your finances in order before attending an auction. It’s strongly recommended that you have an unconditional or pre-approved loan that’s capable of meeting the conditions in place before auction day.

Difficulties can arise when a bank issues a pre-approval loan to a buyer bidding at a property auction with conditions dependent on a valuation, certain guarantees being met or the provision of certain tax documents. 

To avoid complications with your finances and the risk of a delayed settlement, thereby losing your deposit, property and potentially becoming liable for other costs, your conveyancer can check over the terms of any loan agreements you may have made.

Post-Auction Conveyancing Key Points

If you’re the highest bidder, congratulations, you move on to the next phase of auction conveyancing. 

While the exchange of contracts for the sale of the property at auction is legally binding, the sale and transfer of the property is only complete once settlement has taken place. Typically in NSW, this is about six weeks from exchanging contracts.

Settlement will be completed by both legal and financial representatives of each party, including your auction conveyancing solicitor. In the majority of cases, settlements will be facilitated through the electronic lodgement service (PEXA).

On settlement day, your conveyancer will make final checks, ensuring all the banks involved are ready and confirming any caveats or dealings registered on the certificate of title have been removed.

They will also assist in ensuring all charges due on the property such as general rates and water rates are adjusted between the two parties. In that, the seller is responsible for any charges up to the date of settlement and the purchaser thereafter.

Once the full settlement balance has been paid, the title of the property will be transferred to you, as the purchaser, and your conveyancer will ensure it’s registered with the NSW Land Registry Services.

Don’t Leave It to Auction Day — Get in Touch With Smarter Conveyancing 

Buying a house by auction is all about preparation, preparation, preparation! 

And, at Smarter Conveyancing, we know that. 

From due diligence and negotiations through to post-auction settlement — our network of conveyancers and solicitors can make the process as stress-free as possible. We will ensure you understand and are happy with the finer details, so you can bid with confidence. 

If you’ve expressed interest in an auction property, don’t wait, get in touch with our auction conveyancing experts today.