Failing to Complete Purchase Property Auction

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I placed a Devon rental property up for auction, with the successful bidder/ potential buyer (Suffolk based) signing an agreement/contract to complete by 31 May 2014.

The potential buyer made a deposit of £22k, but has failed to complete by the above date, a further 5 days to complete was then accorded, and again the potential buyer failed to complete.

A Notice of 10 days to complete was then sent to the buyer, with a response today that the potential buyer is unable to raise the finance to complete, but knows a friend of a friend (Suffolk based) who will complete the purchase.

My thoughts are that we should insist that original sale contract should be enforced, and the retention of the Deposit, with the property going back to auction. What would you advise, and are there any legal issues I might have to face, by taking the stance I have decided to take?

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Thanks for all your replies. The solicitor has given me two obvious routes to take, with the auctioneers advising giving the potential purchaser up to when the 10 day working days expires.

The property whilst Devon location, is not coastal, and both the bidder/ potential purchaser and the possible new purchaser are Suffolk based, neither have viewed the property, other than the auctioneer's web site, so seems odd, and whether opting to the new buyer might create a scam or new legal issues.

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Breadvan72 said:

You have a solicitor, I gather. He or she is presumably competent and will be insured against being negligent. Be advised by your solicitor. If anyone here gives you wrong advice you would struggle to sue them if you rely on that advice to your detriment.

Yes, I have a solicitor, although first time i have commissioned this firm of solicitors to act for me.

The solicitor has offer me the two options, with no advice on possible issues by taking either one of the two options.

Of course I will follow any subsequent advice I receive from my solicitor, just wanted to throw the situation to the masses on PH, and receive the thoughts from posters such as your good self and JustinP1.

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Update;

I went for the original auction sale contract being enforced, with the retention of the Deposit £22k.

Today the 10 day Notice period expired, with the contract not being completed.

Again today my solicitor offered me two (2) options, giving the buyer more time, or rescind the contract and retain the deposit, with a possible claim for damages, being further agents, legal fees, difference in price between sale and re-auction price if sold for less etc. etc.

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My solicitors advice was to retain the Deposit and to enlist the property again at the next auction. Whilst there was a possibility of litigation to claim possible damages, the solicitor felt the current market suing the buyer for damages may not be worth it.

Rather odd that a person would neither view the property, attend the auction (phone bid), yet Deposit £22k against the purchase of the property, without first arranging finance to complete the purchase of the same.

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Jasandjules said:

Yes, I suspect the additional fees will cost more than the likely damages. You have 22k, take it. It may be set off against a lower purchase at the next auction if necessary, or you may do even better. Either way, the reason there is a deposit is for this situation and to my mind you are quite right to take it.

They may have believed that the finance would not be a problem, only to run into one. I've known someone to look to purchase a property for cash which was based on the fact that their inheritance would "come along now". Of course,
the process took rather longer....

Thanks for your posts and advice. I find it quite odd, scary, wondering if the introduction of the second possible purchaser was some form of scam. Whilst I will retain the Deposit, I am almost waiting for the purchaser's henchmen to come knocking at the door for the return of the Deposit, monies.