Why Legal Packs Matter More Than the Guide Price

At auction, many buyers obsess over the guide price. But it’s the legal pack that makes or breaks the deal. A property may look like a bargain until the legal review uncovers restrictive covenants, service charge disputes, or a lease that’s too short to mortgage. These are the details that cause lenders to hesitate, solicitors to delay, and buyers to miss the 28-day deadline.

The challenge is that legal packs are often incomplete or released late. Some may not include all searches, others might omit critical documents such as planning permissions, warranties, or landlord notices. The responsibility falls on the buyer to investigate—and quickly.

At Willow Private Finance, we don’t replace your solicitor, but we help clients triage legal packs before bidding. Our role is to highlight the issues that lenders routinely treat as red flags, and to structure finance options that still work if those issues can be managed.

Common Red Flags in Auction Legal Packs

Short Leases

If a lease has fewer than 70–75 years remaining, many mainstream lenders will not finance it. Some specialist lenders will, but terms are less favourable and exits must be carefully planned. Buyers who overlook this risk may find themselves unable to refinance after bridging.

Restrictive Covenants and Easements

Clauses that prevent certain uses of a property, rights of way across land, or obligations to contribute to third-party costs can all impact valuation. Lenders want clarity that the property’s intended use is viable and uncontested.

Service Charge and Section 20 Notices

For leasehold properties, outstanding service charge arrears or planned major works can add thousands to a buyer’s costs. If a Section 20 notice has been served, lenders may insist on retention of funds or even decline the case.

Defective Titles

Missing rights of access, unresolved boundary issues, or gaps in registration can all prevent lenders from releasing funds. While indemnity insurance can sometimes resolve these problems, insurers may refuse if defects are recent or already flagged.

Planning and Building Regulation Issues

Conversions without certificates, extensions without approval, or works that do not comply with regulations can make a property unmortgageable. Bridging lenders may still proceed if works are planned, but only with evidence of a viable exit once compliance is restored.

Cladding and Fire Safety

Especially relevant for flats, cladding and EWS1 requirements remain a major concern. Some lenders refuse to lend without clear certification, regardless of value.

The Impact on Lenders

From a lender’s perspective, legal pack issues create two problems: uncertainty of title and reduced marketability. Lenders are not just financing your purchase; they are securing against an asset they may need to sell in a worst-case scenario. Anything that reduces that security—short leases, defective titles, unresolved disputes—directly impacts their willingness to lend.

This is why lenders often request solicitor’s reports summarising the legal pack. If defects are present, they want to know how they will be mitigated—through indemnity insurance, lease extensions, or remedial works. Where risks are unmanageable in the short term, funding may not be available.

How Willow Helps Clients Prepare

Early Triage

We encourage clients to share legal packs with us before bidding. Our team flags issues that typically concern lenders and sets expectations about what can and cannot be financed. This does not replace a solicitor’s advice, but it ensures buyers don’t enter the auction room blind to funding risks.

Matching Lenders to Risk Profiles

Different lenders tolerate different risks. Some are comfortable with short leases if a Section 42 notice is in place. Others accept indemnities for certain title issues but not for planning breaches. By understanding lender criteria, we can steer buyers toward the institutions most likely to support their transaction.

Structuring the Exit

If a property is unmortgageable in its current state, bridging finance may be possible—provided there is a credible plan to resolve the issue and refinance. For example, securing a bridge on a flat with a 62-year lease is possible if the buyer initiates an extension immediately. Our role is to line up the refinance path so the bridge isn’t left hanging.

Coordination with Solicitors

Solicitors are essential for legal due diligence, but in auction cases they often face extreme time pressure. We work alongside them to ensure their findings are summarised in a lender-friendly way, avoiding unnecessary delays in communication.

Scenarios

• Lease Extension Case: A buyer secured a flat at auction with only 59 years on the lease. By working with a specialist lender and initiating the statutory extension process, we were able to secure bridging finance and prepare a buy-to-let refinance once the lease was extended.

• Title Defect: Another client purchased a house where rights of way were not properly recorded. While a solicitor negotiated indemnity insurance, we structured the finance through a lender prepared to proceed on that basis, protecting the buyer’s deposit.

• Service Charge Exposure: A leasehold property came with a Section 20 notice for major works. We advised the buyer upfront that lender appetite would be limited. They proceeded with cash instead, avoiding a failed bridging application and saving unnecessary costs.

Why Buyers Shouldn’t Ignore Red Flags

Legal pack issues rarely disappear on their own. Hoping they won’t matter is the fastest way to lose a deposit. The smarter approach is to acknowledge the risks, decide whether they can be managed, and only bid if the numbers still stack up after realistic finance assumptions.

Willow’s role is to make those risks visible and show clients the finance options available—so the decision to bid is informed, not speculative.

How Willow Can Help

• Pre-auction pack triage to highlight issues most likely to affect funding.
• Access to specialist lenders with appetite for short leases, indemnities, and refurbishment risk.
• Exit structuring that aligns bridging finance with long-term refinancing or sale.
• Ongoing support alongside solicitors to keep all parties aligned under pressure.

Frequently Asked Questions

What are the biggest “red flags” in auction legal packs that jeopardise finance?
Issues like ultra-short leases (< 70–75 years), restrictive covenants, unresolved title defects (e.g. missing access or boundary rights), Section 20 notices for major works, omitted searches, or onerous special conditions can all prompt lenders to refuse or discount your facility. Willow Private Finance

Can missing or incomplete searches derail an auction purchase?
Yes — if critical searches (local authority, environmental, drainage, planning) are missing or “pending,” it creates legal uncertainty. Lenders often require full searches to underwrite, so gaps may kill financing or force you to bid with a discount. Property Auctions+1

How do service charge arrears or Section 20 notices impact lender appetite?
If a property has outstanding service charge arrears or a Section 20 notice (i.e. impending major works), lenders may insist on retention of funds, refuse the case altogether, or demand heavier discounting. Willow Private Finance

Is it possible to proceed with bridging finance even with legal pack defects?
Yes — sometimes a bridge can be arranged if there’s a credible plan to resolve the defect (e.g. lease extension, indemnity policy, negotiation) and a clear exit to term finance. But it’s riskier, more expensive, and requires careful structuring. Willow Private Finance

How should buyers use legal packs before bidding to reduce risk?
Share the pack early with your financing adviser and solicitor, have them triage lender-relevant issues, match to lenders with particular appetites for risk, and stress-test your bid assuming realistic discounts for defects. Willow Private Finance



When should you walk away rather than bid on a lot?
If the defects are unfixable or the cost & delay risk is too high given your exit plan—or no lender will tolerate the risk even with mitigants—it’s better to skip that lot than lose your deposit or end up stranded with an inconvertible facility. Willow Private Finance

📞 Planning to bid at auction?

Book a free strategy call with Willow Private Finance. We’ll review the legal pack with you, highlight lender concerns, and map out funding options that protect your position.