Common Pre’63 Investment Property Issues – Problems and Solutions
Property for Investors
Property Investors are different from home buyers
Pre’63 Investment Property Ground Rent Issues
One Client recently attended the office regarding a property that was on sale for well under market value. The sellers advised the property had a significant problem in that the Lease on the property only had thirty-four years left to run. A Bank will not normally lend on a title with less than seventy years left to run on the lease so this title was not deemed to be marketable and was being offered as a sale that would need a person buying with cash only. Our Client needed a Bank to fund the purchase and needed our office to make this happen!
The Vendors did not know who the Landlord was and sold the property on the basis that they would not have to carry out any investigations to track the Landlord down.
The matter was further complicated given the property was divided into units and so the rules for acquiring the freehold and the entitlements to do so are determined under legislation which is somewhat nuanced.
We were able to review the title documentation, prepare a report, which confirmed that the lease came within the requirements to have the entitlement to purchase the Landlord’s interest. We were able to carry out a number of different searches also to ascertain the potential whereabouts of the Landlord (in this case the Landlord had passed away in the late 1990s and the Landlords home sold. We ascertained through our sleuthing that the Landlord had at least one son but that this gentleman has departed to an address unknown).
Armed with our report and investigation results we were in a position to convince the Bank’s Solicitors that the entitlement to take in this interest would allow our Client secure same if he became the owner of the lease. The transaction proceeded and the Bank funded the transaction. The transaction completed and Griffin Solicitors made an application to the County Registrar for the acquisition of the freehold interest as a freehold owner could not be located. This is a technical area of law and can be quite lengthy but the matter was successfully concluded in under six months and the freehold interest was acquired for a nominal sum, under €10,000.00.
The Bank were satisfied that they had secured good title to the property for security of the loan given and the client was delighted in securing a very lucrative property for a nominal sum and turning his purchase into a significant return for investment.
The investor bought in the property for € . After all the legal problems were ironed out the property was valued at €
Pre’63 Investment Property Breach of Lease Covenant
Covenants are promises to do (or more frequently in property not to do) something. When you own a property under a lease there could be numerous covenants restricting your occupation of the property.
One of the most common breaches of covenant is that there is a covenant that you would not build on your property without the consent of the Landlord. However the building has already taken place without the consent having been applied for.
We encountered exactly this issue in a recent case.
We were able to reassure the Purchaser’s Solicitor that pursuant to a particular section of legislation the fact that planning permission had issued for the building works already carried out meant that the negative covenant was deemed to have consent. The Purchasers solicitor had not been aware of this legislation previously and was happy to rely on the provision set out and the transaction completed.
A second instance where a similar covenant not to build was breached but no planning permission was obtained we were in a position to track down the original landlord and obtain a waiver of the covenant. Again, this allowed the completion of the transaction successfully on behalf of our client.
A third instance we were able to track down the successor in title for the Landlord and again similarly get retrospective consent.
A fourth instance we were approached in advance by a Client who wished to sell their property but were aware that they were in breach of their lease. In this instance we applied for and bought in the freehold title prior to the property going on the market for sale, thereby eliminating the problem and the sale progressed smoothly thereafter.
Pre’63 Investment Property – Planning Issues
We have, over the years, encountered all variants of planning issues with properties. We have seen properties that have been built without planning permission ever being applied for or obtained, properties not built in compliance with the planning permissions that were granted for the development, properties with extensions or alterations carried out without consent or which were understood to be exempt but actually fell outside the exempt requirements. Once a property is going for sale we would always invite our clients to either attend our office or a complete a questionnaire in terms of planning. This ensures that we prepare the file in advance and can discuss any potential planning difficulties in advance with a view to having the problem rectified before the property ever hits the market.
Pre’63 Investment Property – Mapping problems
Mapping issues are one of the more challenging issues to overcome in conveyancing. There are two forms of registration an old form (registry of deeds) and a new form (Land Registry which is a digitised electronic form). Both titles are perfectly legal and the only issue for Vendors if they are selling a title registered in the old form that they have to provide a map to allow the Purchasers register under the new form. A number of issues can arise however as the maps in the old form of registration were not standardised so were prepared on various different scales so when new maps are prepared to comply with the new digitised format issues can arise with neighbouring properties.
Add to this that the PRA maps have also changed in their digitised format makes for an interesting challenge for the solicitors to overcome.
Get your questions answered.
Ethna is also well versed in Landlord and Tenant law acting for both Landlords and Tenant in the negotiation of leases and advising on the parties respective rights.