A few months ago, Jay wrote an article about the consequences of not completing an auction purchase. Last week we had an even more tricky situation with the buyer not paying the deposit following a successful exchange of contract at auction. This case study will cover what happens in situations like this and how we handled this for our client.

Starting from the beginning, we were instructed to sell a large commercial unit with development potential in Croydon. The property was inherited by the sellers who had no interest in realising its development potential and would rather go for a swift sale at auction.

The property had a reasonable interest and sold for £550,000 to a partnership of three people, all appearing on the contract. However, they had not paid the required 10% deposit for over two days after the auction, quoting all kinds of excuses relating to banks etc. We had our suspicions that they might try to wriggle out of the contract, and we ensured that we spelled out consequences of not providing the deposit i.e. being in breach of contract, and being on the hook for the sellers consequential losses etc. The buyers were also personally named on the contract, they owned properties in the UK, so they were asset backed unlike companies set up purely for the purpose of an auction purchase.