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Solicitor warns of legal traps in property raffles

22 May 2019

A Scots property solicitor is warning people to think twice before attempting to sell their house or land their dream home through a property raffle.

Graham Adams, legal director at Wright, Johnston & Mackenzie, spoke out after seeing an increase in the number of homes being raffled off in recent years – and with it a rise in the number of high profile cases of this unconventional approach going wrong.

Mr Adams said properties attempted to be sold in this way tended to be high value properties that the owners were struggling to sell through the traditional route.

"However," he continued, "I’d warn anyone who’s thinking of entering a raffle like this that there can be many pitfalls. In some cases the value of these properties appears to be overestimated – indeed you have to wonder why the seller has not been able to sell the property through an estate agent.

"You must have a property survey carried out before you accept the keys. It’s also important to do your due diligence – you may see beautiful photos of a property, but that won’t tell you if you have troublesome neighbours, what the surrounding area is like, whether there’s landfill or a proposed windmill farm nearby and so on, or it could be a listed building that is tricky to renovate."

In addition, "A sale for undervalue could be rendered null and void by a court in future. Winning a house could be a liability rather than an asset. The winning entrant may not have the comfort of being able to undertake the normal due diligence on the property. This leaves the winning entrant being liable for significant fees when they take over ownership of a property with problems.

"My golden rule would be if it sounds too good to be true, it probably is."

For potential sellers too, Mr Adams said, what seemed like an easy option could be plagued with problems. An example was the recent attempted raffle of Orchardton Castle, Kirkcudbrightshire, where the owner received a warning from the Advertising Standards Authority after the raffle of her 17-bedroom property failed to generate enough entries, forcing her to give away a cash prize to the winner instead.

He commented: "There are lots of potential problems with marketing your home in this way. The Gambling Commission could come down hard if things haven’t been done completely by the book. You need to ensure you’re not unwittingly doing anything illegal or in breach of competition or gambling laws.

"There have also been several cases in recent years where PayPal has decided to withdraw support from property raffles, or where the seller hasn’t sold enough tickets and has had to award a cash prize to the winner instead of the property."

"My advice to buyers and sellers alike would be to be very wary of this kind of property sale."

 

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