Author: numan
Can I use a company or SPV to buy the property?
Yes, you can buy an auction property using a limited company or Special Purpose Vehicle (SPV) — and this is a common approach for investors, especially in the buy-to-let or commercial market. However, it comes with additional legal, administrative, and financial requirements that you need to understand from the outset.
What is an SPV?
An SPV is a limited company set up solely to hold property assets. It is typically:
- Registered with Companies House
- Often structured as a property investment vehicle (e.g., SIC code 68209)
- Used for tax efficiency, portfolio separation, or mortgage purposes
Some lenders will only lend to SPVs with a specific trading purpose and no other activity.
What documents will you need?
If you’re buying via a company, we will need to verify:
- Certificate of Incorporation
- Articles of Association
- Latest Confirmation Statement from Companies House
- Company accounts (if available)
- Proof of identity and address for all directors and significant shareholders
- Board resolution authorising the purchase
We are also required to carry out AML checks on the company and its owners under UK money laundering regulations.
What about funding?
- Most high street lenders will not lend to new SPVs — so you may need a specialist lender or broker.
- If using bridging finance, ensure your lender is aware you are buying via a company.
- Company purchases are not eligible for first-time buyer SDLT relief, and may be subject to the 15% SDLT flat rate for high-value residential properties if you do not qualify for an exemption (e.g. buy-to-let businesses).
Key considerations
Once the auction has ended, the buyer named on the memorandum of sale is bound by the contract.
- Check the auction pack carefully — some contracts forbid buyer substitutions, especially in repossession or probate sales.
- If you’re planning to buy through a company, decide this in advance and bid in the company’s name.
You cannot switch to a company buyer after the auction unless the contract allows it (known as “nomination” or assignment).
Summary
Buying through a company or SPV can offer flexibility and tax benefits, but it comes with added complexity. You’ll need to provide extra documents, ensure your lender is aligned, and check the auction contract for any restrictions. At Versus Law, we regularly act for corporate buyers and SPVs — and can guide you through the process smoothly and legally.
What is a memorandum of sale?
A memorandum of sale is a document issued after the auction that records the basic terms of the sale — including the buyer’s and seller’s details, the agreed purchase price, and any relevant special conditions.
In an auction context, it is typically signed immediately after the hammer falls and forms part of the legally binding contract.
Is it the same as the contract?
No — but it forms part of the contract in auction sales.
In a normal sale, the contract is negotiated and exchanged later. In an auction, the contract is exchanged at the fall of the hammer, and the memorandum of sale is the written record of that exchange.
It is usually accompanied or followed by the Special Conditions of Sale and the Common Auction Conditions, which together form the full contract.
What does it include?
- The property address.
- The buyer’s and seller’s names and solicitors.
- The auction sale price.
- Confirmation of the deposit paid (usually 10%).
- The completion date (often 14 or 28 days from auction).
- Any special conditions or additional fees noted in the auction pack.
Although it may look simple, signing the memorandum is not a formality — it is confirmation that a binding contract has been entered into.
It proves that a binding sale has taken place.It is used by both solicitors to progress the legal transfer of ownership. It is sometimes required by lenders, bridging companies, or insurance providers to confirm that a purchase is underway.
If you are buying at auction, you’ll need to sign the memorandum immediately and ensure that the buyer details (individual or company) are correct and final — as you cannot change them later without risk.
Summary
The memorandum of sale is the document that confirms and records your auction purchase. It is a legally significant part of the contract and should be signed carefully. At Versus Law, we use the memorandum to begin post-auction work immediately — ensuring you meet all contractual deadlines.
What it means to be a successful bidder at auction
At a property auction, the legal process is very different from buying through an estate agent. As soon as your bid is accepted — when the auctioneer’s hammer falls — you are legally bound to buy the property.
This moment counts as exchange of contracts. There is no cooling-off period and no chance to change your mind or renegotiate terms. You are committed to completing the purchase in accordance with the contract and auction conditions.
What you’re agreeing to
When you successfully bid at auction, you are agreeing to:
- Exchange contracts immediately.
- Pay a deposit on the day – usually 10% of the purchase price.
- Complete the purchase within a fixed period, typically 14 or 28 days, as specified in the special conditions of the auction contract.
- Accept the property in its current condition and subject to all matters in the legal pack, whether you’ve reviewed them or not.
Before you bid
Before bidding at auction, it is essential that you:
- Review the auction legal pack (ideally with legal advice).
- Inspect the property or arrange a survey (where possible).
- Understand all contractual obligations, including any extra fees or search costs.
- Ensure that your finances are in place — whether you are using cash, a mortgage, or bridging finance — and that funds will be available in time for completion.
Summary
The auction contract is final. Once the hammer falls, you cannot withdraw without consequences. If you later decide not to go ahead, you risk:
- Losing your deposit.
- Being liable for the seller’s legal and resale costs.
- Facing court proceedings and a County Court Judgment (CCJ).
Why is the property being sold at auction – should I be worried?
Many clients ask why a property is being sold at auction, and whether that means something is wrong with it. While auctions can attract distressed or problematic properties, that is not always the case.
There are many perfectly valid reasons a property ends up at auction — and some of them have nothing to do with the condition or title. However, auction purchases carry fewer protections than normal transactions, so it’s always important to approach with informed caution.
Common reasons properties are sold at auction
- Repossession: The lender has taken possession and is seeking a quick sale. Often sold “as is” and with no warranties.
- Probate sale: The seller is acting under a will or grant of probate. They may have limited knowledge of the property’s history.
- Investment disposal: A landlord is selling part of their portfolio, often tenanted properties or HMOs.
- Development opportunity: The property has planning potential, structural issues, or may be unmortgageable in current form.
- Unusual or niche properties: Properties with quirks (e.g. flying freeholds, commercial elements, short leases) often don’t sell well on the open market.
- Quick timeline required: The seller may need a guaranteed sale within a fixed timeframe and is willing to accept a lower price.
- Legal issues or missing paperwork: The seller cannot resolve a defect before sale (e.g. no building control certificate or missing easement), so they opt for an “as seen” disposal via auction.
Should I be concerned?
Not necessarily — but you should be realistic and cautious.
Auction sales are often “no comeback” transactions, meaning:
- You are responsible for all due diligence
- You take the property as it stands, physically and legally
- There is no obligation on the seller to improve or clarify anything
That’s why it’s essential to instruct a solicitor before bidding, review the legal pack thoroughly, and make sure any hidden or missing information is assessed.
Summary
Just because a property is at auction doesn’t mean it’s problematic — but it does mean the seller is not offering any guarantees. At Versus Law, we help you understand what you’re really buying, identify any legal or financial risks, and guide you on whether to proceed with confidence or caution.
What should I expect when contacting my solicitor?
Why we may not always answer immediately
Auction files are time-critical and often involve urgent deadlines, simultaneous completions, and direct dealings with mortgage lenders, auctioneers, and opposing solicitors.
During peak periods or while handling another completion:
- Your solicitor may be on a call, in a meeting, or signing off on legal documents.
- Work may be prioritised by deadline or risk, rather than on a first-come basis.
- Your file may be progressing behind the scenes, even if you haven’t had a message yet.
We understand this can be frustrating — but please know that we aim to respond as quickly as possible, and no file is ever left unattended.
How we manage your matter efficiently
- All key tasks are completed within the required timescales.
- You receive regular updates, especially before and after critical stages like exchange, searches, and completion.
- Emails are read and actioned promptly, even if we cannot respond immediately.
- Our support team is available to help with general updates or non-technical queries.
If something is urgent, please clearly state this in your message or call and we will prioritise accordingly.
At Versus Law, we pride ourselves on providing a responsive, professional service to all our clients. However, it’s important to understand how communication works during a busy and time-sensitive transaction like an auction purchase.
You may not always get an instant response, but rest assured — your matter is being handled carefully, and we are working to protect your interests at all times.
Working together
You can help us stay on track by:
- Sending documents and ID information as early as possible.
- Responding promptly to any requests for clarification.
- Avoiding unnecessary repeat emails or calls — we promise, we haven’t forgotten you.
We’re here to support you — and by working together, we can complete your transaction successfully and smoothly.
Summary
We may not always be available the moment you call or email — but behind the scenes, your matter is progressing. At Versus Law, we take your auction transaction seriously and ensure that all legal work is done accurately, thoroughly, and on time. You can trust us to deliver — even when we’re not immediately visible.
What is ‘source of funds’ and why is it important?
What does ‘source of funds’ mean?
‘Source of funds’ refers to the actual origin of the money being used to buy the property. This includes:
- The 10% deposit paid on the day of the auction
- The balance of the purchase price payable on completion
- Any costs, including legal fees and stamp duty
Acceptable sources of funds
Examples of legitimate, verifiable sources include:
- Savings from employment (supported by payslips, bank statements, or P60s)
- Sale of another property (with evidence of completion)
- Inheritance (copy of the will or solicitor’s confirmation)
- Dividends or investment income
- Release of equity or remortgage proceeds
- Loan from a regulated lender (with a copy of the mortgage offer)
- Gift from a family member (with a signed gift letter and ID for the donor)
We will usually ask for bank statements showing the movement of funds and any documents that explain how they were built up over time.
As part of our legal and regulatory obligations, we must confirm not just who you are, but also where your money is coming from. This process is known as verifying the source of funds, and it is required under UK anti-money laundering (AML) laws.
If you are buying a property — particularly at auction where large deposits and quick completions are involved — you should be prepared to demonstrate and document the origin of your money before we can proceed.
Why it matters — especially for auction buyers
- We are legally prohibited from continuing with the transaction
- Your file may be reported as suspicious activity, even if unintentionally
- You may be delayed or unable to complete on time, risking loss of your 10% deposit
This is particularly critical in auction transactions, where deadlines are fixed and inflexible.
Why are we asking so many questions?
We understand that our questions can sometimes feel intrusive or repetitive. You may be asked for the same information more than once, or for detailed explanations of financial transactions that seem obvious to you.
Please understand:
- We are not being difficult — we are legally obliged to ask these questions under anti-money laundering rules.
- Solicitors who fail to investigate source of funds can face fines, sanctions, or regulatory action.
Every client — whether a first-time buyer or seasoned investor — must go through this process.
Confidential but mandatory
We treat all personal financial information with the utmost confidentiality. Nothing is shared beyond our legal team and regulators if required. However, we must complete these checks in full before we can act on your behalf or hold client money.
Summary
Verifying the source of funds is a legal requirement for every property transaction — especially auction purchases, where timing is critical. It’s not about suspicion or judgement — it’s about compliance. At Versus Law, we’ll guide you through this process clearly and respectfully, and we thank you in advance for your cooperation.
What is an ID check and why is it necessary?
When you instruct a solicitor to act on your behalf in a property transaction — especially one as time-sensitive as an auction purchase — you’ll be asked to provide proof of identity and address. This process, often called client due diligence (CDD) or ID verification, is a legal requirement and must be completed before any legal work can begin.
Why do solicitors need to verify your identity?
Under the Money Laundering Regulations 2017 and other regulatory frameworks, solicitors must confirm:
- Who you are — to ensure you’re not impersonating someone else or using a false identity.
- Where your money is coming from — to ensure it is not the proceeds of crime.
- That you are legally capable of entering into the transaction.
This helps prevent fraud, money laundering, terrorist financing, and identity theft. It also protects you and the law firm against scams or unlawful dealings.
What documents will you need to provide?
Photo ID
- Passport
- UK Driving Licence
- EEA national ID card (if applicable)
Proof of address (dated within the last 3 months)
- Utility bill
- Bank statement
- Council tax bill
- Tenancy agreement (in some cases)
For companies
- Certificate of incorporation
- ID and proof of address for directors and shareholders
- Share register or confirmation statement
For trusts or overseas buyers
Additional due diligence may be required depending on the risk profile.
Why it’s urgent for auction purchases
We may also ask questions about the source of funds, especially for cash buyers, and we will carry out electronic verification checks to confirm authenticity.
In auction transactions, there is no time to delay. The legal deadline is fixed (usually 14 or 28 days), and we must be fully compliant with ID checks before we can handle your funds, communicate with the seller’s solicitor, or submit legal forms.
Any delay in completing this step can hold up the entire transaction — and risks you breaching the auction contract if completion is missed.
Summary
ID checks are a legal requirement that protect everyone involved in the transaction. At Versus Law, we make this process quick and convenient using secure electronic verification — but we must complete it before we can act. Please ensure you provide accurate documents promptly so that we can progress your purchase without delay.
What documents do I need to provide you with?
To proceed efficiently with your auction purchase, we need to collect a number of documents and details from you. These are essential for us to comply with legal requirements, satisfy your lender (if applicable), and complete the transaction on time — especially given the strict 14 or 28-day completion windows typically imposed in auction sales.
Identity and Anti-Money Laundering Documents
To comply with legal and regulatory standards (including anti-money laundering laws), we will ask for:
- Photo ID: e.g. valid passport or UK driving licence
- Proof of address (dated within the last 3 months): e.g. utility bill, bank statement, or council tax letter
- For companies: Certificate of Incorporation, recent confirmation statement, and details of beneficial owners
We may also carry out electronic verification checks or request source of funds information, particularly if the transaction involves a high-risk jurisdiction or large cash deposits.
Auction Documentation
- A copy of the memorandum of sale (you will usually be given this immediately after the auction).
- A copy of the auction legal pack, if available (some auctioneers allow this to be downloaded).
- Any special conditions of sale or buyer notices issued by the auctioneer.
These documents form part of the binding contract and are crucial for our review and advice.
Purchase Details
- The name(s) in which the property is to be registered (this must match the auction purchase name unless the contract allows a change).
- Whether you are buying alone or jointly, or through a company.
- Whether the property will be your main residence, investment, or company asset.
Financial Information
If you are using mortgage or bridging finance:
- Let us know the lender’s details.
- Provide a copy of the mortgage offer (or decision in principle, if available).
- Give us the contact details for your broker or lender’s solicitor, if known.
This ensures we can liaise with them early and avoid last-minute delays in drawdown or registration.
Summary
Providing complete and accurate documents from the outset enables us to act swiftly, meet auction deadlines, and prevent unnecessary legal or financial delays. At Versus Law, we guide clients through this process every day — ensuring you are fully prepared from day one.
How quickly should I instruct my solicitor after winning?
Immediately. Once you win a property at auction, contracts are exchanged on the spot, and the countdown to completion begins — typically 14 or 28 days, depending on the terms set out in the Special Conditions of Sale.
This means you must instruct your solicitor on the same day or as soon as possible thereafter. Any delay can lead to serious consequences, including breach of contract, financial penalties, and even loss of your deposit.
Why the urgency?
Unlike traditional purchases — where contract exchange happens weeks after an offer is accepted — auction purchases are legally binding from the moment the hammer falls. From that point, your solicitor needs to:
- Confirm the completion deadline.
- Request and review memorandum of sale and auction paperwork.
- Liaise with the seller’s solicitor to obtain the final contract and transfer.
- Order final searches, if applicable.
- Handle mortgage drawdown or liaise with bridging lenders.
- Ensure funds are ready and transferred in time.
- Arrange for registration at HM Land Registry post-completion.
Every day counts. Many completion periods are just 14 days — which leaves no room for administrative delays.
Risks of delay
- You may miss the completion date, which is a breach of contract.
- The seller can charge you daily interest or refuse to grant extensions.
- You risk losing your 10% deposit and being sued for losses or resale shortfall.
- Your finance provider (if applicable) may refuse to lend in time, leaving you without funds.
How Versus Law helps
At Versus Law, we understand the time-sensitive nature of auction purchases. When instructed promptly, we:
- Begin the post-auction process within hours.
- Coordinate with lenders, agents, and search providers efficiently.
- Identify any outstanding legal issues from the auction pack.
- Work to tight deadlines to protect your interests and avoid costly delays.
Summary
Instructing your solicitor immediately after winning is not optional — it’s essential. The clock starts ticking the moment the gavel falls, and delay could cost you thousands. Let Versus Law handle the process quickly and professionally to ensure a smooth completion.
How to instruct us and what happens next
Instructing a solicitor promptly is essential when buying at auction. At Versus Law, we specialise in auction transactions and offer a streamlined process to get things moving quickly — often on the same day as the auction.
Here’s what to expect when you instruct us:
Step 1: Initial Contact
Get in touch by phone, email or through our website at www.versuslaw.co.uk.
- If you haven’t yet bid, we can review the legal pack in advance and provide risk-based advice.
- If you have won, we’ll prioritise your file immediately to meet the 14- or 28-day completion deadline.
- Let us know the property address, the auction house, and whether you’ve already won or are considering bidding.
Step 2: Onboarding and Identity Checks
- Proof of your identity and address (e.g. passport and utility bill)
- Details of your lender or bridging finance (if applicable)
- Signed terms of engagement confirming our instructions and fees
- Corporate documents if buying as a company
Step 3: Legal Work Begins
- We’ll review the memorandum of sale, special conditions of sale, and TR1 transfer deed
- We’ll order priority searches or use indemnity policies if time is limited
- We’ll liaise with seller’s solicitor and your lender or broker
- You’ll receive regular updates and a completion checklist
Step 4: Completion and Registration
- We’ll arrange transfer of funds on time
- Submit SDLT return and register with HM Land Registry
- You will receive confirmation of ownership and final paperwork
Summary: Instructing us is simple — and acting quickly helps protect your investment. We manage auction purchases every day and understand the urgency involved.










