---
title: "EIG Property Auctions – Undervalue Sale?"
url: https://lexlaw.co.uk/eig-property-auction-undervalue-sale-lpa-receivers-duty/
date: 2024-08-01
modified: 2026-06-02
author: "LEXLAW Solicitors & Barristers"
description: "Did your property sell for less than expected at an EIG auction? You may have grounds for a claim. Learn about the legal obligations of receivers and how to challenge a property sale that you believe was undervalued. Our expert property litigation team can help you recover potential losses from EIG online auction sales from non-established auctioneers."
image: https://lexlaw.co.uk/wp-content/uploads/RPRS-property-auction-Richard-Reed-EIG-RICS-undervalued-property-receivers-duty-property-sale-dispute-property-litigation-uk-1024x585.webp
word_count: 1937
---

# EIG Property Auctions – Undervalue Sale?

## Was Your Property Sold at an Undervalue? A look at Receiver Duties

The sale of a repossessed property by a receiver can be a complex and distressing process for the former owner. A central concern is often whether the property was sold at its true market value, or whether it was undervalued. This article delves into the legal framework surrounding the receiver's duty to obtain the "best price reasonably obtainable" for the property including in particular the choice of auctioneer.

Is it ever appropriate for an [LPA Receiver](https://www.insolvencydirect.bis.gov.uk/freedomofinformationtechnical/technicalmanual/ch49-60/chapter%2056-2/Part%204/Part%204.htm#:~:text=An%20LPA%20receiver%20is%20a,contained%20in%20a%20mortgage%20deed.) to use a one-stop-shop for distressed property where the same very small company secures, values and then auctions the property? This might make things easy for the less energetic LPA Receiver but does it get the best value on sale? The LPA Receiver has a legal duty to ensure he/she obtains the *true market value* and surely using well-established auctions houses like [Allsop](https://www.allsop.co.uk/auctions/residential-auctions/) (est. 1906), [Savills](https://auctions.savills.co.uk/) plc, [Lambert Smith Hampton](https://propertyauctions.lsh.co.uk/) Auctions, [SDL](https://www.sdlauctions.co.uk/) Property Auctions, [McHugh & Co](https://www.mchughandco.com/) (est. 1983), [Strettons](https://www.strettons.co.uk/auctions/) (est. 1931) and [Auction House](https://www.auctionhouse.co.uk/) is a better choice than using new insubstantial online auction market entrants that do not operate real life auctions and have no history or repute and simply open an account with [EIG the property auction data company](https://www.eigpropertyauctions.co.uk/)?

## What are EIG Property Auctions?

[EIG Property Auctions](https://www.eigpropertyauctions.co.uk/) has made it significantly easier for *anyone *to become a property auctioneer, thanks to its comprehensive online platform and support services. Here’s how this shift has happened and what it means:

**Access to Auction Technology**: EIG provides a white-label, one-stop solution for online property auctions, allowing individuals or businesses to host their own auctions without needing deep technical expertise or a traditional auction house infrastructure. Their platform includes customisable online payment methods, legal document storage, and integrated money laundering checks, making it accessible for newcomers to enter the auctioneer space.

**Comprehensive Data and Tools**: EIG aggregates details on virtually every property going to auction in the UK, offering a vast database for research, market analysis, and comparison. This enables aspiring auctioneers to make informed decisions, track market trends, and understand pricing strategies without years of industry experience.

**Step-by-Step Guidance**: EIG and related resources offer clear steps for becoming a property auction expert, including understanding auction basics, researching the market, building a network, mastering due diligence, and practicing bidding strategies.

**Support for Online Auctions**: The move to online auctions, accelerated by EIG’s technology, means auctions are no longer tied to physical venues or established auction houses. Anyone can set up and run auctions from anywhere, broadening participation and allowing new entrants to act as auctioneers with EIG’s ongoing support and advice.

**No Industry Barriers**: With EIG’s platform, the traditional barriers—such as needing a physical auction room, a large team, or years of experience—are lowered. The platform handles the technical and legal complexities, so individuals can focus on sourcing properties and marketing their auctions.

In summary, EIG Property Auctions has effectively opened up the property auction industry, enabling *anyone *with access to EIG’s tools to become a property auctioneer. This marks a significant shift from the past, where auctioneering was a closed profession dominated by established firms and the case law is based on this now false premise.

## The Receiver's Fiduciary Duty

A receiver occupies a position of trust and confidence, owing fiduciary duties to those whose interests they affect. This fiduciary duty is paramount in the context of property sales.

Thus, at the heart of the matter is the fiduciary duty owed by a receiver to the mortgagor. This duty, as clarified in cases such as *Cuckmere Brick Co v Mutual Finance* [1971] Ch 94, mandates that the receiver exercises reasonable care to achieve the true market value of the property at the time of sale. This principle has been consistently reaffirmed, with terms like "best price reasonably obtainable" and "proper price" being used interchangeably (see *Michael v Miller* [2004] EWCA Civ 282).

Crucially, the receiver's duty is analogous to that of a mortgagee (see *Silven Properties Limited v Royal Bank of Scotland* [2003] EWCA Civ 1409). This means that the legal principles established in mortgagee cases are equally applicable to receivers.

The scope of the receiver's duty extends beyond simply achieving a good price. It encompasses a broader obligation to act in the best interests of those entitled to the proceeds of sale. This includes:

- **Diligent enquiry:** The receiver must make reasonable inquiries to ascertain the true market value of the property. This may involve obtaining valuations from multiple sources and considering factors such as location, condition, and potential development opportunities.

- **Effective marketing:** The property must be adequately marketed to reach a wide range of potential purchasers. This includes considering different sale methods (auction, private treaty), advertising channels, and the duration of the marketing campaign.

- **Avoiding conflicts of interest:** The receiver must avoid any situations that could create a conflict of interest, such as purchasing the property themselves or selling to a connected party.

- **Transparency and accountability:** The receiver must maintain clear records of their actions and be prepared to justify their decisions.

## To Whom is the Duty Owed?

The receiver's fiduciary duty to obtain the best price reasonably obtainable extends beyond the mortgagor to encompass all those with an interest in the property. This principle is rooted in the concept of equity of redemption, which represents the mortgagor's right to redeem the property by repaying the mortgage debt.

**Guarantors of the secured debt** are prime examples of parties with an interest in the equity of redemption. As individuals who have pledged their personal assets to secure the mortgage, guarantors have a vested interest in maximizing the proceeds of the property sale to minimize their potential liability. The case of *Standard Chartered Bank v Walker* [1982] 1 WLR 1410 supports this view, recognizing the guarantor's interest in the property's value.

However, the position of **guarantors of unsecured indebtedness** is less clear-cut. While they may have an economic interest in the property's value, their relationship to the property is less direct. The case of *Burgess v Vanstock* [1998] 2 BCLC 478 highlights the complexities of determining the extent of the receiver's duty to unsecured creditors.

It is important to note that the scope of the receiver's duty to parties beyond the mortgagor may vary depending on the specific circumstances of the case, including the terms of the mortgage, the nature of the guarantees, and the interests of other stakeholders.

**In summary**, while the receiver's primary duty is to the mortgagor, the obligation to obtain the best price reasonably obtainable extends to those with a direct financial interest in the property, such as guarantors of the secured debt. The precise extent of the duty to other interested parties requires careful consideration of the specific facts of each case.

## Burden of Proof and Standard of Care

The onus is generally on the claimant (often the mortgagor) to prove that the receiver failed to meet the standard of care required to obtain the best price (see *Aodhcon LLP v Bridgeco Limited* [2014] EWHC 535 (Ch)). The court applies a stringent test, requiring the claimant to demonstrate that the receiver was "plainly on the wrong side of the line" (see *Cuckmere Brick Co v Mutual Finance*). This is often equated to the margin of error allowed to a valuer in a negligence claim (see *Michael v Miller*).

Particular scrutiny is applied when the sale price barely covers the outstanding debt (see *Aodhcon LLP v Bridgeco Limited*). The court recognizes that repossession can depress property values, but this does not absolve the receiver from their duty.

The sale to a connected or associated party inverts the burden of proof, placing a heavy onus on the receiver to justify the sale price (see *Tse Kwong Lam v Wong Chit Sen* [1983] 1 WLR 1349). Sales to the receiver or mortgagee themselves are prohibited as they constitute a conflict of interest (see *Farrar v Farrars Ltd* (1888) 40 Ch D 395 and *Hodson v Dears* [1903] 2 Ch 647).

## The Role of Expert Evidence

Expert valuation evidence is indispensable in undervaluation disputes. It provides the court with the specialized knowledge necessary to assess the reasonableness of the sale price. However, the role of the expert is not to usurp the court's decision-making function; rather, it is to assist the court in reaching its own conclusion.

A key principle is that the court is concerned with the actual market value at the time of sale, rather than theoretical valuations based on hypothetical conditions. The case of *Aodhcon LLP v Bridgeco Limited* emphasizes this point, highlighting that a RICS valuation, while informative, may not accurately reflect the price that could have been achieved in the prevailing market conditions.

Furthermore, expert evidence must be grounded in reality. The case of *Meah v G E Money Home Finance Limited* [2013] EWHC 20 (Ch) underscores the importance of aligning expert opinions with actual market interest in the property. An expert's valuation must be supported by evidence of market demand and comparable sales.

It is essential to select a qualified and independent valuation expert who can provide clear, unbiased, and defensible opinions. The expert's methodology, assumptions, and conclusions must be robust and withstand scrutiny.

## Receiver's Conduct and Marketing Strategy

Receivers must exercise informed judgment in determining the sale process. While they are not obligated to improve the property before sale (see cases such as *Meftah v Lloyds TSB Bank* [2001] 2 All ER (Comm) 741), they must take reasonable steps to market the property effectively. This includes providing accurate and comprehensive sales particulars and employing appropriate advertising strategies (see *Aodhcon LLP v Bridgeco Limited* and *Michael v Miller*).

The decision to sell by auction or private treaty rests with the receiver, but the chosen method must be suitable for the property and market conditions (see *Michael v Miller*). Regardless of the method, adequate marketing is essential.

## Challenges for Claimants

Proving that a property was sold at an undervalue can be a formidable task. Key challenges include:

**Limitation periods:** Time limits apply to bringing claims. Missing the deadline can be fatal to a case.

**Establishing the true market value:** Determining the accurate market value at the time of sale can be difficult, especially in rapidly changing market conditions. Expert valuation evidence is often crucial but can be contested.

**Causation:** The claimant must demonstrate a direct causal link between the receiver's actions (or omissions) and the loss incurred due to the undervaluation. This can involve complex economic analysis.

**Burden of proof:** The claimant generally bears the burden of proving the receiver's breach of duty and the resulting loss. This can be a high threshold to overcome.

## Conclusion

Determining whether a property has been sold at an undervalue by a receiver is a complex legal matter requiring careful scrutiny. While the law imposes a clear duty on receivers to obtain the best price reasonably obtainable, proving a breach of this duty can be challenging. This is particularly the case when market conditions are volatile or when the receiver has acted with apparent diligence.

Successful undervaluation claims often hinge on expert evidence, meticulous documentation, and a deep understanding of the legal framework governing receiver duties. Given the complexities involved, seeking expert legal advice at an early stage is crucial for individuals who believe their property may have been undervalued.

If you suspect that your property was sold at an undervalue by an EIG auction advertiser, our Property & Insolvency Litigation Team can provide the expert guidance and representation you need. We have a proven track record in handling complex property disputes and are committed to helping you recover potential losses.

**Contact us today for a confidential consultation.**