Here at ORJ Solicitors, we often deal with the purchase of repossessed properties. While buying a repossessed property can often mean a saving of up to 30% of a property’s market value, it is important to do your homework before making an offer. Time is also of the essence and you must act quickly to avoid being gazumped.
A repossessed property is a home that has been seized by a mortgage lender, often due to the previous owner falling behind on their mortgage payments.
If a lender has taken ownership of a property, they are then legally obliged to sell the property for the best possible price in the shortest possible time and will rarely do anything to prepare the property for sale. If you are considering purchasing a repossessed property, it is likely that refurbishment will be required. It may be the case that previous occupants have stripped out all fixtures and fittings before handing over the keys.
Once you have had an offer accepted on a repossessed property, this is where we come in. You must ensure your solicitor is instructed as soon as possible, since the lender will continue marketing the property even if your offer has been accepted. Nothing is legally binding until contracts have been exchanged and so there is always the chance that a higher offer will be accepted and you will be put in the unfortunate position of being gazumped. Lenders will always pose a deadline for exchange of contracts and so time really is of the essence.
Although it is crucial to act fast, repossession does not always mean bargain and the relevant checks should always be carried out before you take the final plunge. The property will be sold as seen, due to the fact that the lender will have no personal knowledge of the property. As solicitors we are limited in the enquiries we can raise because of the mortgagee’s lack of knowledge about the property.
You should ensure that the following points have been complied with:
- You should visit the property several times. We recommend that you have a survey carried out to reveal any hidden defects.
- Remember that the electricity, gas and water are likely to have been disconnected.
- You will need to place your solicitor in funds to carry out the relevant searches against the property. If you are a cash buyer, searches are not a legal requirement. However, we always strongly recommend having the searches carried out to prevent any nasty surprises further down the line.
- If you are having a mortgage, you will need to arrange for the mortgage offer to be sent to your solicitor as soon as possible. As with any property purchase, it is best to ensure mortgage arrangements are in place before making an offer on a property.
Once these points have been dealt with and you have confirmed you are happy to proceed, your solicitor will be able to exchange contracts on your behalf and the sale will then be legally binding.
ORJ is a Legal 500 Top Tier firm and is a leading Staffordshire law firm for conveyancing services. Contact Whitney Tully (firstname.lastname@example.org )