Essential Information Group’s recent figures show that commercial auction volumes are back at 2007 levels.
This recovery is partly based on experienced auction players getting back in the game in a big way, but it is also about new bidders seeking sound investments or exciting redevelopment opportunities. Some are taking advantage of April’s pension reforms that give individuals more flexible access to their pension pots, while overseas investors are seeking to invest in a stable and growing economy. All this in a fast-moving but well-regulated forum that accepts no gazumping, gazundering or renegotiation.
The upturn is bringing solicitors to today’s auctions who perhaps have not been involved in auctions for a while. With new clients and new bidders at many auctions –sometimes with new solicitors – this is the time for teamwork. Putting this into practice, I called up some leading auctioneers to get some tips about collaborative working.
Allsop’s joint head of residential auctions, Gary Murphy, feels solicitors should try to present the full picture as soon as possible. On a scorching day over the summer – when we both should have been on the beach – he explained: “Last-minute delivery of legal information disturbs many bidders. Reading out an addendum about detailed legal issues just before a lot is put up for sale really deadens the mood in the room.”
Ian Mann of Strettons agreed, telling me: “Leaving production of special conditions to the last moment creates a vast amount of additional and unnecessary work for auctioneers and disrupts the marketing process.” He stressed the role of the auction timetable, or “cycle” to use the industry jargon, and the need to have all legal information available on auctioneers’ websites. Mann’s colleague Philip Waterfield advised solicitors to follow auctioneers’ suggestions as to how legal information is to be provided. The issue is particularly pressing on residential sales as they commonly run on tighter cycles.
Take a bidder attracted by a lot: he or she needs to find out quickly and easily whether VAT is payable, when the completion date is, whether there are arrears. With minimum energy efficiency standards starting to bite in just a few years’ time, he or she will also want to know the lot’s EPC rating.
There may be bad news about a lot but, thanks to the consumer and business protection regulations, the days of sweeping it under the carpet are gone – it needs to be addressed from the outset. This gives you the advantage of starting the process, rather than having to be probed for answers.
The RICS common auction conditions were designed to make life simpler for solicitors.
I got involved with the RICS team back in 2004 because I found the old system maddening: general conditions based often on an out-of-date and hard-to-get version of the national conditions of sale; special conditions based on another version; and various other terms no doubt intended to have legal effect in various places in the catalogue and on notices around the room.
Solicitor Gail Courtney, who works in the Allsop team, emphasised to me that it was up to the seller’s solicitor to draft the special conditions of sale. “Some solicitors like to use the template attached to the common auction conditions. Others like to go their own way,” she said. She stressed that solicitors have a free hand here, but also pointed out that bringing in a whole new set of general conditions is likely to take a good deal longer than the use of the RICS product and, moreover, leaves bidders’ solicitors with a complicated and unnecessary task. Remember that part of the RICS common auction conditions, the auction conduct conditions, is inviolate: it cannot be disapplied or overwritten except by the auctioneer. Waterfield advised sellers’ solicitors against trying to be clever by slipping unfair or onerous terms into special conditions.
My advice to solicitors who are relatively new to auctions: don’t dust off your old precedents, but first try to work with the common auction conditions.
Nicholas Redman, senior professional support lawyer, DLA Piper
