Property transactions rarely follow exactly the same path. Auction purchases can involve tight contractual deadlines, refinancing may raise title or lender-related issues, and more complex investment structures, such as multi-unit acquisitions and title splits, require careful planning from the outset. Consultant Solicitor Pedro Camilos answers some of the questions commonly raised by buyers, investors, developers, landlords and property owners across commercial and residential property transactions.

What Should I Know Before Buying a Property at Auction? 

The important difference with an auction purchase is that the legal work should ideally begin before you bid. The legal pack needs to be reviewed carefully to establish exactly what is being sold and whether there are any issues that could affect the property's use, value, finance or future sale. Particular attention should be given to the title, searches, lease terms where applicable, occupational interests and the special conditions of sale.

The special conditions are particularly important as they can contain obligations or costs specific to that lot which may not be obvious from the auction particulars. I therefore encourage clients to have the legal pack reviewed before committing to a bid, rather than discovering an issue once the contractual timetable has already started.

How Quickly Can a Property Purchase be Completed at Auction?

The timescale depends on the auction method and the terms applying to the particular property. Under a traditional auction, the buyer will normally become contractually committed when the auction concludes, with completion required within the period specified in the auction conditions.

A modern or conditional auction generally provides a longer period in which to progress the transaction before exchange and completion. Whichever method applies, the legal pack and completion timetable should be considered carefully at the outset, particularly where the purchase is being financed, as failure to complete in accordance with the contract can have significant financial consequences.

What Happens if There's an Issue with The Title After I've Exchanged?

Once contracts have exchanged, the buyer will normally be contractually committed to complete on the agreed date. If a title issue is identified afterwards, the appropriate solution will depend on the nature of the problem. Some matters may be resolved by obtaining an outstanding consent, certificate or other document, while certain title risks may, where appropriate, be addressed through indemnity insurance.

In other cases, additional time may need to be agreed with the seller. The important point is to identify precisely what the issue is and determine the most appropriate way of dealing with it without unnecessarily delaying completion.

What Can Affect the Timescale of a Property Refinance?

There is no fixed timescale for a refinance, as this will depend largely on the title and the lender's requirements. A straightforward refinance can progress relatively quickly where the title is in order, the valuation has been completed, and the existing lender has provided a redemption statement.

More complicated transactions can take longer, particularly where there are title defects or outstanding Land Registry applications. This can arise where a property has recently been purchased using bridging finance and the registration of that purchase has not yet completed. In those circumstances, it may be necessary to consider options such as requesting expedition of the outstanding application or establishing whether the incoming lender can proceed notwithstanding the pending registration.

How do Commercial Loans Differ from a Standard Residential Mortgage?

Commercial finance can involve a wider range of considerations than a standard residential mortgage. Depending on the transaction, the lender may consider matters such as the property's rental income, the financial position and structure of the borrowing company, the investment strategy and the proposed exit from the loan.

The security package can also be more extensive. In addition to a legal charge over the property, a lender may require a debenture over the company's assets, personal guarantees from directors or shareholders, or security over other property. It is therefore important to review both the lending terms and the wider security package rather than considering the property charge in isolation.

What do I Need to Know Before Buying into a Multi-Unit or Leasehold Block?

When buying into a multi-unit or leasehold block, it is important to understand both the title structure and the obligations attaching to the property. The lease should be reviewed carefully to establish matters such as service charge contributions, insurance arrangements, repairing obligations, rights over common areas and any restrictions affecting the use or letting of the property.

The management arrangements are also important, particularly where the building is controlled by a freeholder or management company. Where the freehold of the entire building is being acquired, there may be greater control over the management structure, but the existing leases and obligations affecting the building will still need to be considered carefully.

What is a Title Split and When Might One be Used?

A title split can be used where an owner wishes to separate different parts of a property into distinct legal titles. A common example is a freehold building containing several flats, where separate long leases are created for the individual units. This can allow the units to be financed, sold or retained separately rather than dealing with the building as a single asset. The process requires careful drafting because the new leases need to deal properly with rights of access, services, repairs, insurance, service charges and the use of common parts.

The new interests must also be correctly documented and registered at the Land Registry so that the resulting title structure works effectively in practice.

Speak to a Commercial & Residential Property Solicitor

Whether you are considering an auction purchase, refinancing a property, acquiring a leasehold or multi-unit investment, or exploring a title split, understanding the legal position at an early stage can help identify potential issues and keep the transaction progressing smoothly.

For advice on your property transaction, contact Pedro Camilos at Woodstock Legal Services

p.camilos@woodstocklegalservices.co.uk or by completing the form below.