Buying real property at auction is replete with pitfalls and should never be attempted without taking expert legal advice. In a case that proved the point, the buyer of a pub forfeited its £35,000 deposit after failing to complete the purchase on time.
After the pub was sold to the buyer at auction for £350,000, it paid the 10 per cent deposit. However, the purchase was not finalised when it should have been and the seller issued a notice to complete. The deadline for compliance with that notice came and went and the seller terminated the contract, retaining the deposit.
The buyer’s response was to enter a unilateral notice against the pub’s registered title on the basis that the sale contract was still live and that it remained ready, willing and able to complete. It was argued that the failure to complete arose because the seller had breached an agreement to transfer the premises licence to the buyer. In those circumstances, the buyer submitted that it had been unable to draw down the funds required to finalise the transaction.
In upholding the seller’s application to remove the notice from the pub’s title, the First-tier tribunal (FTT) noted that the auction particulars had made no mention of the sale being conditional on the transfer of the premises licence to the buyer. Without legal advice being taken on either side, the seller had orally agreed to transfer the licence to the buyer for £2,000, plus compensation for expenses arising from the delay. However, no such payment had been made and the FTT found that the agreement was in any event free-standing and did not impact on the seller’s strict contractual right to insist on the completion deadline.
