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Auctioning Real Property Richard M. Courtenay Lord ~ MACMillAN
Richard M. Courtenay Lord All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1 P 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 1998 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and l ondon Companies and representatives throughout the world ISBN 978-0-333-68180-0 ISBN 978-1-349-14331-3 (ebook) DOI 10.1007/978-1-349-14331-3 A catalogue record for this book is available from the British Library. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 10 9 8 7 6 5 4 3 2 1 07 06 05 04 03 02 01 00 99 98
Contents Preface 1 Introduction 2 The Property and the Vendor Client An overview of real property auctions today Selecting suitable real properties for auction Understanding your client's requirements Advantages of an auction Disadvantages of an auction 3 The Initial Steps The instructions Market research and the market place The initial inspection The initial discussion The report The auctioneer's terms of engagement 4 The Law Statute law The Auctioneers Act 1845 The Sale of Land by Auction Act 1867 The Auctions (Bidding Agreements) Act 1927 The Misrepresentation Act 1967 The Theft Act 1968 The Auctions (Bidding Agreements) Act 1969 The Unfair Contract Terms Act 1977 The Sale of Goods Act 1979 The Estate Agents Act 1979 The Landlord and Tenant Act 1987 and the Housing Act 1996 The Property Misdescriptions Act 1991 Money Laundering Regulations 1993 Unfair Terms in Consumer Contracts Regulations 1994 Case law 5 The File and Particulars The auction file The auction date and attendance by solicitors The auction particulars Disclaimer clauses v ix 1 8 8 10 16 18 21 23 23 23 24 25 26 27 30 31 31 33 34 34 34 35 35 35 36 37 39 40 40 40 44 44 45 45 50
vi Contents Types of auction particulars Auction Action Sheet 6 Ty11es of Auction The individual auction - Single lot sales Collective auctions Lotting of property for sale Order of sale London and regional centres Private auctions 7 Marketing Auctions The background Advertising in the press and journals Editorials in the press and journals Media contact list Television and radio Mailing lists and personal contacts For Sale boards and posters Catalogues/ Auction particulars Advertising 8 Events Prior to the Auction The timescale Matters occurring during this period The Price Guide Updated Press Releases The Addendum 9 Setting the Reserve Factors to take into account when advising on the Reserve Timescale for fixing and recording the Reserve Extraneous factors relating to the Reserve Recording the Reserve Types of reserve price The statute law relating to reserve price 111 The Auctioneer 's Colle of Conduct The authority to act as the auctioneer for a client The nature of the instructions The Conditions of Sale and Memorandum Misdescription and misrepresentation Non-disclosure Puffing 51 52 53 53 54 55 56 56 59 60 60 61 62 64 64 64 65 65 66 6g 68 70 75 77 77 78 78 80 81 82 83 85 89 90 91 92 94 94 04
Contents vii Fictitious bids 95 Right to withdraw lots and to sell privately before the auction date 95 Right to amalgamate lots 96 The order of sale 97 Price Guides 97 Handling of sold lots 97 Bidding on behalf of potential buyers 98 Sale and purchase on behalf of interested parties 98 Handling of unsold lots 98 11 Preparations for the Sale Day 100 The auction particulars 100 The pre-auction sale inspection 101 The General and Special Conditions of Sale 102 The Memorandum 102 The Searches and Enquiries 102 The Addendum 102 The Reserve Price 103 The sale venue 103 The solicitors 104 The auction case 104 The auctioneer's rostrum notes 105 The Auction Book 106 The Clerk 107 Auction seminars and information packs for buyers 107 12 Bidding for Buyers 110 Appointment of an agent to bid 110 Appointment of the auction house to bid Ill Relationship between the agent and the auctioneer Ill Bidding at the auction for the client 112 Relationship between vendor and auctioneer where bids are on the book 113 Implementing proxy bids 114 Typical Proxy Bid Authorisation form 115 Telephone Proxy Bidding form 116 Proxy Bid Authorisation 117 13 The Auction 118 The auctioneer 119 The auction case 120 The auction clerk 120 Spotters or runners 121 The auction sale 122 Questions from the floor 123
viii Contents The bidding How people bid and identifying them The bidding pattern and its regulation Concluding the bidding The authority of the auctioneer in the room Disputed bids The right to refuse bids Withdrawn lots 14 After the Auction The contracts Deposit cheques Cash deposits Insurance Value Added Tax Unsold lots Subsequent events Auctioneer's commission and expenses Post Auction Press Releases 15 Moving Forward The background Recent technological and information innovations The landed professions Looking forward Appendix A Guidance Notes for Auctioneers Appendiices B-E Extracts from Statute Law References and Further Reading Index 124 126 128 130 131 131 132 133 135 135 135 135 136 136 136 137 137 138 139 139 141 143 144 148 157 162 165
Preface A colleague, when hearing that I had been invited to write this book, commented 'It is one thing to be an auctioneer and quite another to write about it. ' How very true! The task has proved to be daunting, but I trust that I have faithfully attempted to record the 'best practice' of property auctioneers and, at the same time, not to have shied away from those contentious areas of our work. As one who gained my rostrum skill in the time honoured way through acting as an auctioneer's clerk and understudy to the senior partners in my practice, I am the first to recognise that there is no substitute for 'hands-on' experience coupled with kindly guidance. Quite how our landed profession will ensure the education and training of future generations of auctioneers remains to be seen, but on the face of it this is an area which has largely been overlooked. Potential auctioneers are only able to gain a limited level of understanding and ability from diligent study of the subject, but in order to progress beyond that stage they require careful training, tuition and confidence building before conducting their first auction. The book concentrates on the practical aspects of property auctioneering, and it is intended for students and those working in estate agency who are keen to gain an insight into the workings of this method of the transfer of property. In writing it I have drawn together all the threads of knowledge that have been passed down to me, together with my own experiences over 30 years on the rostrum, plus the considerable assistance and support of fellow auctioneers across the country. I have always believed that part of the benefit ofbelonging to a profession is the sharing of accumulated knowledge. In some small way I hope that this book is my remittance for the thoroughly enjoyable and satisfying working life which I have been privileged to enjoy as an auctioneer. I trust that others will be encouraged to follow! As I mentioned, many have contributed in a variety of ways to this book. Owen Bevan of The College of Estate Management was the instigator, as he planted the idea in my mind, which in turn led to the late Professor Ivor Seeley who acted as my mentor, initial reader and guide. Malcolm Stewart at Macmillan coped with me as an unorthodox and inexperienced author and, no doubt at times, despaired of the book being completed. Those who read the draft copies and made so many valuable criticisms and suggestions include Richard Auterac of Jones Lang Wootton, Simon Riggall of Conrad Ritblat, Duncan Moir and Gary Murphy of Allsop & Co. and Charles Smailes of Feather Smailes & Scales. To those and many others I am indebted for their support and wisdom in drawing the book into its final form; without them it would never have gone beyond the initial draft! ix