In this series of blogs, I will take a look at the Conveyancing Process in Ireland and provide you with an in-depth guide in order to make the buying processes clearer and easier to follow.
It is important for our clients to be aware that there is a technical sequence of events which must take place before legal ownership of any property can occur. To that end, we have provided the following guide to inform you of the steps involved in the purchasing of residential property in Ireland today.
The legal term used to describe the process of purchasing property is called conveyancing. Conveyancing is simply the transfer of the legal ownership of a property from one person to another.
So what are the main steps in the conveyancing process for a house buyer?
- ‘Sale Agreed’ & Property Survey
The formal conveyance process tends to begin at the office of the auctioneer. A purchase price for the property is agreed between the buyer and the seller, via the auctioneer. The purchaser will pay a booking deposit for the house to the auctioneer. The booking deposit is fully refundable at this stage and it is important to note that there is no binding agreement yet in place.
As a purchaser, your next step entails instructing a solicitor to act on your behalf in the sale of the property. For many people, the purchase of a new home will be their first real experience of engaging with a solicitor and as such can seem to be rather daunting at first.
However, it is important to know that a solicitor’s role in conveyancing is to conduct and oversee the transaction in a way which best serves the interests of their client, and they will work to ensure that the process is carried out as efficiently as possible for their client. The solicitor will give you the best possible advice so as to ensure the adequate protection of your legal interests during the entire transaction.
If the property you are purchasing is a second hand one, your solicitor should advise you to have a full structural and planning survey carried out by a qualified architect or engineer. The maxim ‘caveat emptor’ i.e. ‘Buyer Beware’ still operates as the law today. Once contracts are signed, the purchaser agrees to take the property as it was at the time of the sale. Therefore, a planning and structural survey is an essential pre-requisite if the property you are buying is second hand.
- Letter of Loan Offer
The vendors of the property will have their own solicitors working on their behalf in the transaction. The vendor solicitors will draft Contracts for Sale for the property and send them, along with the Title Deeds to the property, to the purchaser’s solicitor.
If the purchaser is taking out a mortgage to buy the property, the financial institution will generally require the purchaser to instruct a solicitor. The bank will send the mortgage documents directly to the purchaser’s solicitor to review and be signed by the purchasers in their solicitor’s presence. As your solicitor, we will go through the terms and any special conditions in the loan offer with you prior to signing.
- The Pre-Contract Enquiries
The solicitor will then investigate the title documents furnished and raise any necessary enquiries at this stage. Examples of enquires include issues relating to planning and environment searches, rights of way, or the responsibility for maintaining the property’s roads and services. The solicitor will advise the purchaser to proceed to sign the contracts only when the vendor’s replies to the pre-contract enquires are deemed to be satisfactory.
As a result, the purchaser can be assured that once the contracts are signed, they will be obtaining what is known as ‘good marketable title’ to the property. In other words, that there will be no issues arising down the line if you wish to sell the property you are purchasing.
‘Title’ refers to the legal ownership of property and is evidenced by deed and other similar documentation. ‘Good marketable title’ means that the title provided is one which a purchaser would reasonably expect to receive, i.e. the seller has the right to sell the property and the title is free from encumbrances and any other claims of ownership.
The presence of good marketable title to the property is a key condition the bank/ lending institution will have as part of their loan offer. The solicitor makes what’s called an ‘undertaking’ to the bank that the purchasers will have good title to the property. This ‘solicitor’s undertaking’ is a legally enforceable promise to the bank to not use any of the loan funds to purchase the property until the marketability of the title has been confirmed.
- Contracts for Sale
Once the terms of the contracts have been fully agreed to and the title to the property has been thoroughly investigated, the solicitor will advise their purchasers to proceed. The purchaser’s solicitor returns the signed contracts to the vendor’s solicitors.
When the seller signs the contracts and returns same to the purchaser, a binding agreement comes into force. Both parties are now bound to complete the sale at this point.
Upon return of the contracts, the purchaser will also furnish the vendors with what is known as a ‘contract deposit.’ This is generally agreed as being 10% of the purchase price of the property less the booking deposit paid. A closing date for the sale will also now be agreed between the parties. The closing date will be the day the purchasers can collect the keys to the property and move in. The purchaser’s solicitor will draft a Deed of Transfer and send it to the vendors for their signature and approval.
Further inspection of the title to the property now occurs, except this time relating to more practical aspects of the sale. The purchaser solicitor will compile a booklet of questions known as ‘Requisitions on Title’ which will be sent to the vendor’s solicitor. The vendor solicitor is under an obligation to provide satisfactory replies to these questions before the close of the sale. The ‘Requisitions on Title’ booklet is returned to the purchaser along with the signed Deed of Transfer.
Meanwhile, the purchaser’s solicitor contacts the lending institution on the buyer’s behalf for the draw down of their loan funds. Prior to the release of these funds, the financial institution will normally require the purchaser to take out life insurance policy and a home insurance policy, the details of which are arranged between the purchaser and the lender separately.
- Completion of Sale
Here is where we have now reached the completing stages of the transaction. Both solicitors will arrange for the final closing date of the sale. This refers to the date which the remainder of the purchase price is paid and when the purchasers can finally move into their new home.
If the property in question is a new build, the solicitors will proceed to arrange the closing date once a Completion Notice is issued by the builders. It is advisable to instruct an architect or surveyor to draw up a snag list at this juncture, detailing an unfinished works in the house to be completed by the builders prior to close of sale. It is also always recommended to buyers that they themselves carry out a final inspection on the house so as to ensure all items on the snag list have been taken care of.
On the day of the close of the sale, the vendor’s solicitor will carry out what is known as ‘searches.’ These are Judgement, bankruptcy, Revenue and Sheriff searches which are carried out on both the purchaser and seller of the property. Once satisfied with the results of the searches, the purchaser’s solicitor will release the balance of the purchase price to the seller’s solicitor. Following this, the keys to the property are released the purchaser and they can now officially move in to their new home.
- Stamp Duty & Registration of Title
The final stage of the conveyancing process involves the stamping of the transfer Deed with the Revenue Commissioners, and secondly the registration of title with the Property Registration Authority. The stamp duty payable is based on the type and cost of the property. For residential properties valued up to €1m the stamp duty is 1% of the purchase price of the house. If the property is a new build, the stamp duty calculated is on the purchase price less the VAT.
Conveyancing is facilitated in Ireland by a system of land registration, which assures purchasers of property that they have acquired good title. There are two types of title in Ireland known as Registered (Land Registry title) and Unregistered title (Registry of Deeds). Both systems are managed the Property Registration Authority, an independent statutory body.
The owner of property that is registered in the Land Registry will have what is known as a folio which is a unique identifier number. This document states the name and address of the owner and includes a description and map of the property. The folio is conclusive evidence of the person’s ownership of the property and is State guaranteed.
If the title to the property is in the Registry of Deeds, it is referred to as ‘unregistered land.’ The Registry of Deeds records deeds and transactions affecting unregistered property in Ireland. It is not an official guarantee of legal ownership or title to a property.
Thank you for following my series of blogs, if you would like to discuss any areas in the conveyancing process please get in touch by calling us 045881193.
