How to Check an Auction Property Before Bidding

Buying a property at auction can save you thousands, but it comes with risks. Before you bid on a bank auction (lelong) property in Kuala Lumpur or Selangor, you must do your due diligence. Here is a step-by-step guide on how to check and verify an auction property.

1. Obtain and Review the Proclamation of Sale

The Proclamation of Sale (POS) is the most important document. It contains the property details, reserve price, auction date, and terms. Request it from the auctioneer or bank. Check:

• Property description: Land area, built-up, and type.
• Reserve price: The minimum bid.
• Tenure: Freehold or leasehold.
• Encumbrances: Any caveats or charges.
• Vacant possession: Is the property occupied? If occupied, you may need to evict.
• Defects: Any noted structural issues.

Read every clause carefully. The POS also states the deposit amount (usually 10% of reserve price) and the balance payment timeline.

2. Conduct a Title Search at the Land Office

Visit the relevant land office (Pejabat Tanah) or use an online service to get a copy of the title. Check:

• Owner’s name: Is the borrower the same as the owner?
• Encumbrances: Are there any other charges or liens besides the bank’s?
• Caveats: Any third-party claims.
• Restrictions in interest: e.g., Bumiputera lot, Malay reserve, or low-cost quota.

A clean title is crucial. If there are complications, consult a lawyer.

3. Check Outstanding Bills and Arrears

Contact the relevant authorities to check for unpaid:

• Assessment (cukai pintu) and quit rent (cukai tanah).
• Maintenance fees and sinking fund (for condos).
• Utility bills (water, electricity, Indah Water).

Outstanding bills can be deducted from the purchase price or become your responsibility. Some banks allow you to offset arrears, but not always.

4. Inspect the Property Physically

Visit the property at different times. Look for:

• Occupancy: Is it vacant or occupied? If occupied, find out if they are tenants or the owner.
• Condition: Structural damage, leaks, electrical issues.
• Access: Can you enter? Some properties are locked.

Take photos and videos. If tenants are present, ask about their tenancy agreement. A tenancy may continue after auction.

5. Verify Auction Legitimacy and Avoid Scams

Scams are common in the auction scene. Red flags include:

• Fake auctioneers: Only use registered auctioneers (check with LPPA or the Malaysian Bar).
• Too-good-to-be-true prices: Unrealistically low reserve prices may be bait.
• Requests for upfront fees: Legitimate auctions do not ask for money before bidding.
• Phishing websites: Ensure the auction platform is genuine.

Always confirm the auction details with the bank or a known auction house.

6. Engage a Professional

Hire a lawyer experienced in auction properties. They can review the POS, conduct title searches, and advise on risks. Also consider a property agent like Peter Tan at BidNest, who specialises in KL & Selangor lelong properties. They can help you find good deals and guide you through the process.

Final Thoughts

Due diligence is not optional; it is essential. By checking the Proclamation of Sale, title, outstanding bills, and property condition, you can avoid costly mistakes. Remember, auction properties are sold "as is" – what you see is what you get. If you are ready to start your search, browse BidNest’s listings of verified bank auction properties in KL and Selangor, or contact Peter Tan for personalised advice.