Buying a House made simple
Buying a House Made Simple
Sir Winston Churchill
We shape our dwellings, and afterwards our dwellings shape us.
Buying a House Made Simple
Where to start
The legal and financial process of transferring a second hand house normally takes six to eight weeks.
CHOOSE A PROPERTY
What type of property do you want to buy? A house or apartment? Detached or terraced? Bungalow or two storey?
With an apartment and certain houses in new estates there will be an annual service charge. How much will this be?
First and most obvious -‘is it for sale?’
Second – is it within your price range?
Property professionals say there are only three things to know about a property:-namely “location, location, location.”
HOW IS IT BEING SOLD? PRIVATE TREATY BY AGENT, PRIVATE SALE BY OWNER OR AUCTION
The vast majority of residential sales are private treaty sales by estate agents. Agents charge the seller between 1 and 2% of the selling price plus VAT and advertising costs. When a sale is agreed the Agent will take a refundable booking deposit and write to the sellers solicitor instructing him to issue a contract to the buyers solicitor. The seller and the buyers solicitors will then communicate with one another and their clients’ until the sale is completed.
Private Treaty by owner.
The owner advertises and sells the property himself. The booking deposit is held by the solicitor as stakeholder pending completion.
Buying at auction can be a daunting task. The potential buyer must prior to the auction;
I. Organise a solicitor to read the contract and title,
II. Organise a surveyor to inspect the property.
III. Arrange loan facilities.
Griffin Solicitors will attend the auction and bid on your behalf. The successful buyer will be required to sign a binding unconditional contract on the day of the auction and pay a ten per cent deposit.
WHAT IS TITLE?
‘Title’ is the document or documents that prove ownership of land.
There are two types of title in Ireland, one known as Land Registry title (Registered) and the other known as Registry of Deeds title (Unregistered). It is an accident of history as to which system any property falls into.
Each owner of property that is registered in the Land Registry has a unique folio number. 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, together with details of any mortgages registered against the property. A folio is conclusive evidence of the person’s ownership of the property but not of it’s exact boundaries. The Land Registry is the modern system of land registration. The title is state guaranteed and has an integrated mapping system. The registration fees for Land Registry are more expensive than for Registry of Deeds. Ask Ethna and she will explain.
Registry of Deeds.
This is the default system of registration. “Good Title” is shown by the seller providing documents showing ownership of the property commencing with a prior sale for value (a “Good Root”) at least fifteen years old. Details of the purchase deed or mortgage are registered in the Registry of Deeds to show which document has priority in the case of conflict between for example, two mortgages registered against the same property by two different banks. The quality of the title is not in any way guaranteed by the Registry of Deeds and there is no proper integrated mapping system.
As and from 1st June 2011 any property sold for value has to be compulsorily re-registered in the Land Registry by the buyer. The seller must provide a Land Registry compliant map and undertake in writing to help the buyer answer Land Registry queries for six years after completion of the sale.
FREEHOLD or LEASEHOLD.
All properties in this country are either freehold or leasehold.
This is the highest interest that can be held in land and the owner is free to do as he wishes with the property.
A leasehold interest is less than a freehold interest. The Lease is for a specified term of years. The lease will contain terms and conditions restricting the use of the property. The effect of such restrictive covenants have been substantially lessened by legislation. In addition it is possible in most cases to buy out the ground rent. No new ground rents have been created on residential houses since 1974. It is quite common for pre 1974 properties to be held under long leases. As long as there is more than 70 years left on the lease then they are perfectly saleable.
Before choosing a property the purchaser must make sure he either has the necessary money to buy the house or has organised loan facilities. The banks are very cautious about whom they lend money to these days. Borrowers should be aware that they will be put through a rigorous process before they are approved. 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. The lending institution will require you to fill out an application form and give them all information regarding your income together with backing documentation. When the purchase is completed the lender will take a first legal charge or mortgage over the property in order to secure the loan against the property. In the event that the loan is not repaid then the lender can apply to court and obtain an order for possession and sell the property without the consent of the borrower.
The sale and purchase of land and houses are governed by law and in particular The Land and Conveyancing Law Reform Act 2009. The general rule is that all contracts for the sale of land must be evidenced in writing. What this means in practise is that either party may withdraw from the transaction up until a written unconditional contract has been signed.
Nearly all contracts will be in the form the Law Society of Ireland General Conditions of Sale 2009 Edition. This contract deals with the following matters:
- The names and addresses of the parties.
- The consent of the non owning spouse if the property is a family home.
- The purchase price and the deposit.
- The closing date. This is the date when the transaction is completed, the purchaser pays over the purchase money and receives vacant possession of the property.
- Description of the Property. Sets out exactly what property is being sold and whether the title is freehold or leasehold.
- Documents Schedule. A list of documents showing the ownership or title to the property and a list of the planning permissions and opinions on compliance with same.
- Special Conditions. These are the terms or special conditions which are specific to this transaction
- General Conditions. The fifty one general conditions which form the backbone of the Contract. They are generally fair and reasonable to both the buyer and the seller. The general conditions apply to the contract except to the extent that they are modified by the Special Conditions.
These are searches that a prudent buyer should make against the property and the people selling the property.
Planning search: Shows planning permissions affecting the property, any proposals for road widening and zoning. It does not show what else is planned for the area.
Land Registry search: An up to date folio showing the ownership of the property and whether there are any judgment mortgages or other burdens registered against the property. This is done if the property is registered in the Land Registry.
Judgement and Bankruptcy Search: carried out against the sellers to see that the the seller is not bankrupt and that there are no judgments registered against the property.
A Company Search: A Company Office printout for the company to confirm that the company remains on the company register and also will disclose any charges, which exist against it. It will also disclose the existence of a winding up order or petition.
Registry of Deeds Searches: a search carried out in the Registry of Deeds against all the owners of the property going back at least 15 years.