Buyer beware – top tips to avoid problems when purchasing property online

You can buy everything from books to boats, cars to cleaning services online, but what about buying and selling property at the click of a mouse?

In his article in the October issue of the Law Society Gazette, Joe Thomas (Vice Chair of the Law Society’s Conveyancing Committee) warns buyers to be very cautious before they purchase property online. See the full story in the October Gazette.

Joe offers the following observations:

  • Sellers and buyers are being offered the opportunity to buy and sell property online – a relatively new development,
  • Being able to buy at the ‘click of a mouse’ might seem like progress – but purchasers need to be fully aware of the potential traps,
  • A purchaser’s problems can tend to begin after they have bought a property online – and only then deciding to instruct their solicitor,
  • There are some advantages to buying online – but buyer beware!
  • The net effect for a buyer who pays an online deposit for a property is that the buyer can then be deemed to have ‘signed’ a binding contract – with all that this entails.

‘Top ten tips’ to avoid getting ‘click sick’

Joe offers his ‘top ten tips’ to avoid getting ‘click sick’. At a minimum, solicitors should advise their clients on matters such as:

  1. The importance of having a survey carried out by a suitably qualified professional,
  2. The obligations under the contract – for example, the closing date and the liability to pay interest if the closing date is missed by the buyer,
  3. The necessity of the buyer having loan finance in place, if required,
  4. Confirmation that there is proper and adequate access to the property and that it is serviced with water, sewerage and other essential services,
  5. The adequacy of the title, to include the planning title,
  6. Who will hold the contract deposit and whether it is being held as stakeholder (for the benefit of both the seller and the buyer) or as the agent of the seller only,
  7. The suitability of the property for the buyer’s purposes, for example, that there are no restrictive covenants affecting it,
  8. Whether there is an obligation on the buyer to pay VAT on the purchase price,
  9. Whether there is a tenancy in place and, if so, what the terms of the tenancy are,
  10. Whether the property is part of a managed structure. If so, have satisfactory replies to the Multi-Unit Developments Act 2011 pre-contract enquiries been obtained?

If these matters are not addressed and negotiated before the buyer clicks to purchase, it is usually too late to do so afterwards. If it comes to light that the contract is not in the buyer’s interest – having taken legal advice after committing to the purchase online – the buyer may be subject to a variety of legal liabilities in the event of deciding not to go ahead with the purchase. This includes, but is not limited to the purchaser:

  • Being liable to lose the deposit moneys paid online,
  • Being liable to be sued for specific performance and forced by a court to complete the contract,
  • Being liable to be sued for damages for breach of contract.

The various websites offering property for sale online do, in fairness, recommend that appropriate legal and other professional advice should be obtained. Some provide that “purchasers and bidders will be deemed to have received detailed legal advice relating to all documentation to be found in the data room”.

The problem is that the possible, very serious consequences of a failure to obtain legal and other professional advice, as appropriate, is not spelled out for a buyer who has no real idea of the complexities associated with purchasing property. Buyer beware!