10 Legal Steps to Buying a House in Ireland
Conveyancing is that area of law that deals with the transfer and acquisition of the ownership of land.
This Lawyer.ie guide is brought to you by Michael Burns, an expert property solicitor. He has held senior positions in some of the leading financial institutions in Ireland (including KBC, Allied Irish Banks plc and Investec plc) advising on conveyancing issues arising in relation to title deeds and mortgage drawdowns.
Michael now has a specialist law practice providing a faster and lower cost conveyancing service for Irish consumers whether you are buying or selling a property or doing both at the same time.
1. CHOOSE A PROPERTY
This may seem obvious but the first thing that must be done is to actually choose the property that you wish to buy. There are few questions that you should ask about the property such as ‘Is it for sale?’ If it is not for sale there is no point in trying to buy it.
Secondly is it within your price range? We would all like to live in a three- story house with eight bedrooms but we have to be realistic and know what we can afford or what our bank manager/lending institution will be willing to lend us.
Thirdly is the house a good investment? You must look at things such as the area that the house is situated; it’s proximity to major towns/cities, is it near a motorway or is it in the line of a planned motorway.
2. HOW IS IT BEING SOLD?
Although most property is bought and sold privately in today’s climate, property is also sold by way of public auction. Approaching an auction can be a daunting task for a proposed purchaser. In this situation it is normal for you to instruct a solicitor to make the necessary precautionary enquiries. He will also attend the auction with you. It is also essential to have the property surveyed before the auction.
Also before the auction the title will have to be investigated (see Step 4) and the financial arrangements will have to be in pace before the auction begins. When the auctioneer says ‘SOLD’ you are committed to the purchase if your bid has been successful. This means that you have to pay a deposit immediately and the balance is then due within the month.
3. WHAT KIND OF TITLE IS IT?
‘Title’ in relation to property means not only the documents that show that it is you that owns the property but also it guarantees that no one else can come along and say that they own the property. There are two types of title in Ireland known as Land Registry title (Registered) and Registry of Deeds title (Unregistered).
The owner of property that is registered in the Land Registry will have a numbered folio. This document records the name and address of the owner, a description of the property and a map of the property known as the file plan. A folio is conclusive evidence of the person’s ownership of the property. When Land Registry property is being sold the folio must be produced in order to sell.
Registry of Deeds title is that which is registered with the Registry of Deeds. This occurs where the title has built up over a number of years. These documents would include Deeds of Conveyance used to transfer freehold-unregistered land or Deeds of Assignment used to transfer leasehold unregistered land.
On completion of a sale of unregistered property the purchase deed is lodged with the registry of deeds where the details of the registration and the time of the registration are noted on the Deed. The main reason for registering a deed in the Registry of deeds is that the time of Registration governs conflicts between two different deeds, e.g. if two mortgages on the one property are lodged on the one day the one that is registered first will have priority.
In general in this country land is either freehold or leasehold. A freehold interest in property is the highest interest that can be held by an individual and in general such an owner is free to do as he wishes with the property.
A leasehold interest is less than a freehold interest in that it is for a term of years and accordingly will end at some date in the future. The owner of the freehold is granting a lease for a period of time. It creates a relationship of landlord and tenant and is governed by the provisions of Deasy’s Act 1860.
There have been significant changes in the law that relate to the private rented residential sector, which is now governed by the Residential Tenancies Act 2004.
Before choosing a property the purchaser must make sure he either has the necessary money for the purchaser or otherwise has secured a mortgage for the value of the proposed purchase.
The market for home lending is very competitive between the banks and the various lending institutions at the moment.
It is very important for a person who is considering purchasing a house to consider the financial commitment that is involved. The lending institution should be approached as early as possible.
They will give you an idea of the amount they are willing to lend you. You will then know how much you can spend and the type of house and the area that you will be looking in. the lending institution will require you to fill out an application form and give them certain information as regards your income.
When a borrower and a lender enter into a mortgage transaction the lender takes a legal charge over the property. This is the security for the loan in the event that the borrower fails to repay the mortgage.
6. CONTRACT STAGE
The sale and purchase of land and houses are governed by Section 2 of the Statute of Frauds (Ireland) Act, 1695.
The general rule according to this statute is that all contracts for the sale of land must be in writing. However, this definition is not strictly true as what the Act requires is that any agreement to sell land be evidenced in writing.
At a very minimum it is necessary that there be written evidence in relation to the parties, the property and the price paid. In practice most conveyances use the Law Society’s standard form of particulars and conditions of sale.
This contract deals with the following matters:
a) Makes provision for consent of a non-owning spouse under the Family Home protection Act 1976. Under this Act a spouse cannot sell any property, which is a family home without the consent of the other non-owning spouse. This must be a prior consent and accordingly must be endorsed on the contract prior to it being signed by the spouse who is the owner of the property.
b) Makes provision for the names and addresses of the parties.
c) Sets out the purchase price and the deposit.
d) Sets out the closing date. This is the date on which the parties to the contract agree the deal should be finalised, the purchase money paid over and the deeds and the keys to the property handed across.
e) The contract will also list the various documents, which have been shown prior to the contract being signed. A purchaser who signs the contract without inspecting all the documents which have been made available to him is deemed to have full notice of them and is caught by the consequences of any onerous conditions which may appear on them.
f) The contract then continues with a number of standard conditions. The most significant of these contains the procedure to be followed when a property is bought and sold at auction, a number of warranties and in particular a warranty that any development of the land since 1 October 1964 has full and proper planning permission.
These are enquiries that a purchaser should make in the course of purchasing property. There are some, which should be made prior to the contract being executed, and some which are made on the date of closing the transaction.
The pre-contractual ones are as follows:
(a) Planning search: This can be made in the planning office. This will let the purchaser know how the property is zoned, be it residential, commercial or otherwise; whether there any proposals for road widening in the area; and whether or not any applications for planning permission in respect of the property have been granted or indeed rejected.
(b) A Licensing Search: this will arise when the property is a pub or a hotel. It will establish the nature of the licence and the extent to which the premises are licensed.
(c) A Compulsory Purchase Order Search: This can be made with local authority. If a CPO has been made the vendor can no longer give good title as the title no longer vests in him strictly speaking.
The following searches are done on the day of closing:
(a) A Land Registry search: This is a search in the land Registry to inspect the register or folio to find what the up to date position is. Such a search will establish the ownership of the property, the title whether absolute or possessory, whether it is leasehold or freehold, whether or not there are mortgages, rights of residence or other restrictions on the folio.
(b) A Company Search: This is a search made in the Companies Registration Office, which will confirm that the company exists and is still on the register and also will disclose any charges, which exist against it. It will also disclose the existence of a winding up order or petition. It is normal on closing to get a certificate from the Company Secretary certifying that no resolution has been passed.
(c) A Judgement Search
(d) Bankruptcy Search
(e) Sheriff and Revenue Sheriff Searches
(f) Registry of Deeds Searches
A person buying a house must realise that there are a lot of other hidden costs involved apart from the purchase price of the house.
(a) Stamp Duty
This will apply to all transactions involving the purchase of property. The duty will depend on the value of the house.
(b) Search Fees
Will vary depending on the title and extent of the enquiries to be made.
(c) Solicitors Fees
Varies from solicitor to solicitor and quite competitive at the moment.
(d) Surveyor’s Fees
Again depends on the details of work to be done but it is essential for a surveyor to assess the condition of the property.
(e) Registration Fee
These are the costs associated with registering the title with either the Registry of Deeds or the Land Registry.
It is essential that adequate insurance be put in place covering the structure of the property when the purchase is completed. It is the seller’s responsibility to have the property insured up to the date of the closing and then once the deal is completed it is up to the purchaser to insure the property. The lending institution will also insist that mortgage protection insurance be taken out. This ensures that if the borrower dies that the proceeds of the mortgage protection insurance will pay off the remainder of the mortgage.
Land and buildings can involve other people’s rights to or over the property, for example rights to way, rights to fish etc. All of these matters will be properly investigated before proceeding with the purchase. These are made as part of the Requisitions on Title during the contract stages mentioned earlier.
(b) Fixtures and Fittings
Fixtures, which are attached to the land, are presumed to be part of the sale unless specifically excluded in the contract.
(c) Family Home Protection Act, 1976
As already laid out above this Act curtails the right of an owner to sell the family home without the prior consent of his or her spouse.
(d) Planning Permission
Any house built since 1 October 1964 requires Planning Permission. It is the responsibility of the purchaser’s solicitor to ensure that the necessary planning documents are in order. An architects certificate will usually be required confirming that a second hand house was built in accordance with the conditions of the planning permission.
10. MOVE IN!
You can contact us for a quote using the form below. Because we are a specialist provider, our legal fees for conveyancing are often lower than other more general law firm practices. We always endeavour to respond to each quote request within one working day and will provide a full breakdown of charges including outlay, registry fees and Vat.