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NSW House Purchase at Auction - Walk Away from Contract?

Discussion in 'Property Law Forum' started by roger263, 9 November 2014.

  1. roger263

    roger263 Member

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    I was involved in an auction to purchase a house and was the winning and only bidder. I felt the auction had been unfair and refused to sign the contract. The real estate agents for the vendor threatened breach of contract but my view was that there was no signed contract. The agent said the auctioneer could sign on my behalf against my wishes.

    Can I simply walk away from this situation. I based my claim of unfairness because the vendor's agent was bidding on my behalf on the understanding I had given him authority to do so which was incorrect. Where do I go from here? I didn't want to buy the house in any case.
     
  2. Sarah J

    Sarah J Well-Known Member

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    Generally, no, you cannot walk away from the contract. You accept the contract by making the bid and seeing that bid through. You do not need to sign the contract for the agreement to be final. Generally, the auctioneer is able to sign on behalf of the bidder because the bidder has already accepted the bid. You may be sued for breach of contract.
     
  3. Sophea

    Sophea Well-Known Member

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    Hi roger263,

    As Sarah points out, there are serious legal consequences if you refuse to settle the contract. You may be forced to pay:
    • your winning bid price, regardless of whether you have the funds
    • the cost of re-auctioning the house
    • shortfall between your offer and the winning bid at next auction.
    regarding your below quote which alleges that the vendor's agent bid on your behalf on the understanding that you had given him authority...
    My questions are:
    Who made the winning bid at the action? You or the vendor's agent (on your behalf)?
    Why did the vendor's agent understand that he had authority to do this on your behalf? It would appear to be quite a conflict of interest if the Real Estate Agent was working for the vendor but also for you???

    An agent or buyer's advocate must have actual authority to enter into a contract on your behalf. If they do not then you will not be bound by the contract.
     
  4. roger263

    roger263 Member

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    Thank you for replying. In the auction I was the only bidder but I actually never bid. The estate agent selling the property (there was no buyer's advocate) said he thought seeing I was nervous and didn't like auctions he would help by bidding on my behalf provided I gave hime that authority. So the agent made the winning bid. In fact it was the only bid. Afterwards I told him he did not have my authority. In fact the bid was increased 3 times when the agent told me the vendor wouldn't accept that price. At the fall of the hammer I was unclear as to what actually happened until the agent rushed over to shake my hand but his mood changed very quickly when I refused to sign the contract. There was no CCTV footage of the auction. What can I do. I steadfastly refuse to sign the contract and no money has changed hands.
     
  5. Tim W

    Tim W Lawyer

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    Going only what you have told us so far
    (missing facts missing, and unstated ifs, buts, and variables not allowed for),
    I think the question of whether or not there was a sale, and at what price,
    may turn on two things:
    1. whether or not the selling agent did genuinely have your authority
      to bid on your behalf at all; and/or
    2. whether or not the selling agent genuinely had your authority to bid up to the eventual hammer price.
    Showing either of those things as proof of agency will be a matter for the selling agent.
    Given the amount of money involved, and your (self stated) relative lack of understanding
    of what is going on, I suggest speaking to a lawyer who works in the field of property law
    without delay.
     
    Sophea likes this.
  6. roger263

    roger263 Member

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    thank you for your advice. The amount was $2.1 million and I didn't discuss authority to the vendors' agents, only how the auction worked and whether he could explain it to me which he did and asked whether he could help me further. I said, "of course" and that was all that was said. It wasn't my intention to buy anything. I was just observing and getting a feel for the market. I will seek legal help> I don't have any available funds to engage a layer let alone buy a house. I thought you had to register before you could bid anyway and I also thought that contracts were only contracts if you signed them. How is it different with buying houses where due consideration has to be even more meticulous in reading contract conditions. Does the buyer get any help from anyone as it seems at an auction you are left on your own.
    thanks very much for your advice. I never thought I would ever get caught like this
     
  7. Sophea

    Sophea Well-Known Member

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    Dear Roger,

    yes there is a legislative requirement in NSW for bidders to register. Its section 67 of the Property, Stock and Business Agents Act 2002 which says that an Auctioneer at a sale by auction of a residential property cannot tkae a bid from a person unless their details have been entered before the bid has taken in a Bidders Record, the person must be identified during the auction by an identifying number allocated the person for the purposes of the auction.

    I would also suggest seeing a property lawyer about this, they will be able to go through what occurred and tell you with some certainty where you stand legally and what your options are with respect to the purchase.
     
    Tim W likes this.
  8. roger263

    roger263 Member

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    Many thanks for your advice. I never registered so I obviously wasn't part of the auction but perhaps the estate agent for the vendor was registered. I don't know about that. I haven't been contacted for over a week now by anyone. I actually didnt give anyone my phone number or address so considering I don't want to spend money on a lawyer if it unnecessary I won't worry about it and see what happens. I have no funds to buy anything anyway at the moment although I am saving up. Thanks again. The issue about registration has put my mind at rest
    Roger
     

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