What rights do buyers have when they win an auction?
If a consumer (ie somebody not acting in the course of business) is buying brand new goods at auction, they have clear rights under the Consumer Rights Act 2015. However, as most auctions sell second hand goods, you should be aware that the same rules do not apply to second hand goods and you should instead refer to the Sale of Goods Act 1979.
The Sale of Goods Act 1979 requires that any item sold must match its description, be of satisfactory quality, and be fit for purpose. Any failure to meet these standards gives a purchaser the legal right to a repair, replacement, or refund. However, the remedies available in this situation are fairly limited.
You should also be aware that, usually, a consumer will have the right to cancel a contract formed to purchase an item within 14 days, but if they had the option to attend the auction, this does not apply.
When buying something brand new, a purchaser is covered by certain guarantees and regulations if the product does not meet certain standards. However, these rights are quite different when you buy something at auction.
Whilst a reputable auction house will do as much as possible to ensure that goods are in the described condition, a purchaser should make sure that they do as much homework as possible to check an item’s condition, as many items are ‘sold as seen’.
If they are purchasing goods, a purchaser should check them over thoroughly and test any moving or mechanical parts. Property (ie real estate) sales should give purchasers the opportunity to view the property in advance. For car sales, purchasers can look at the vehicle and hear it be started up before it is taken into the auction room.
Distance selling regulations
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 confer certain rights on consumers when they purchase something from a distance (eg online). For example, a seller should provide certain key information including a full description of the goods, the total price including delivery charges, how payments should be made, details of any rights to cancel, and how returns can be made.
It is important to be aware that these regulations do not apply to online auctions, so purchasers need to be sure that they understand the contracts they are entering into before they start. They should also remember that, if they are buying from an overseas seller, their UK consumer rights will not be applicable.
Is the seller or the auctioneer liable for any issues?
When a purchaser buys something at auction, the contract of sale that’s formed is with the seller themselves and not with the auction house or auctioneer, so any complaints should be directed to the seller.
However, the auction house may find itself liable for certain things. For example, if they are found to have misrepresented the item in the description, if there is fraud, or if the seller’s instructions have been ignored.
Buying property or land at auction is slightly different to buying other goods, as there should be a sales pack which will have been put together by the seller’s solicitor. This should include details on the condition of the property as well as any searches and plans. It can be a wise idea for a potential purchaser to instruct a solicitor of their own to check these materials in advance before they consider bidding on anything. This will help to make them aware of any restrictive covenants (ie prohibitions placed on the property and its use), rights of way (eg rights for others to travel across the land), or planning applications that might affect the property.
When buying a property at auction, there may also be certain sales conditions, such as a time frame for completing the sale or details of any fees that might need to be paid. Potential purchasers should make sure that they are aware of these before they bid, as they will be bound by the terms of the contract of sale once the auctioneer’s hammer falls.
A purchaser will also be required to pay a deposit, which is usually in the region of 10% of the purchase price, and often a buyer’s fee (or administration fee). Potential purchasers should make sure that they have this money available before they walk into a property auction.
If a purchaser then fails to meet any of the requirements, such as the completion date, they run the risk of losing their deposit. Therefore, it’s important for a purchaser to make sure that all finances are in order and mortgages have been arranged before they start the auction process, to avoid any potential hold ups.
What to know before the hammer falls
Whilst an auction can look like a lot of fun, a bidder needs to be aware that, the moment the hammer falls on their winning bid, they have entered into a legally binding contract to buy something. In many auction houses, they will be required to provide one or more forms of identification and to have the funds available for the purchase that they have made.
If you’re planning to bid at an auction, you should have a budget in mind that you must stick to and should not get carried away in the bidding process. In some auctions, it may be possible to submit a maximum bid to the auctioneer who will bid on your behalf until you reach that amount.
When buying at auction, it is important to make sure you are using a trusted auction house or online platform. These will be more likely to offer you good levels of customer service, transparency, and protection, so that you can be more confident in the purchases that you make through them.
It is important to understand your rights when buying at auction and how they can differ from other avenues, to ensure that you do not end up making any costly mistakes that you later live to regret.
Inspired and ready to buy or sell at auction? Look for an upcoming auction that meets your needs and make sure you’re legally aware and ready to go. You can use Rocket Lawyer’s Ask a lawyer service if you have any questions or concerns.