Our conveyancing solicitors here at McCarthy + Co have happily assisted many clients with the legal aspects of buying and selling their homes for over 30 years. If you are considering buying a house in Ireland, you may find the following answers to common questions we are asked useful.
If you can’t find the answer you are looking for here, get in touch with us by phone or email and a friendly member of our team will be glad to assist you.
How does a conveyancing transaction work?
A conveyancing transaction is the stage of selling or buying a house where the ownership of the Property is transferred from one person to another.
There are four key steps in a conveyancing transaction. These are as follows.
- You find a property you like – you agree to a price with the seller and then put down a booking deposit with the selling agent (often referred to as the auctioneer). At this point, the selling agent will instruct the seller’s solicitor to send contracts to us.
- You make sure the property is structurally sound – by instructing an engineer, meanwhile, our legal team will check out the contract for you and make sure that the title and the planning documents are in order. While all this is happening, you will be working on getting the go-ahead from the bank to take out a mortgage, if you are borrowing to fund the purchase.
- Signing contracts and paying the deposit – If your engineer is happy with the physical condition of the property, we’re happy with the title to the property, you’ve received a formal loan offer from the bank, and you still want to proceed with the purchase, you sign the contract and pay over the amount required to bring the deposit up to 10% of the purchase price. Once contracts are signed by both you and the seller, you are legally committed to the deal.
- Finalising details and securing the keys to the property – Between the contract signing date and the closing date you will busy yourself with complying with the bank’s requirements (such as taking out house insurance and a mortgage protection policy) so that we can get the loan cheque. Once the loan cheque issues and the seller has done everything that has been agreed in the contract you hand over the remaining 90% of the purchase price at which point you will be given the keys and will be entitled to possession of the property.
What’s the story with booking deposits?
Once you have found the property you want to buy, and the purchase price has been agreed, the auctioneer will ask you to put down a Booking Deposit. There is no set amount but generally auctioneers seek 5% of the purchase price. Having regard to the fact that properties are valued in hundreds of thousands of euros this can amount to a significant sum of money. If you feel that the amount being looked for is too much, or that it will mean that you will have to borrow to make it up, don’t be afraid to attempt to negotiate a smaller deposit.
The booking deposit is fully refundable. You can look for it back at any time before you sign the Contract without having to give any reason. The fact that putting down a booking deposit doesn’t create a legally binding agreement to buy the house is a bit of a double-edged sword. On the one hand, it’s great to know that you can pull out of the transaction if some problem with the title or with the physical condition of the property emerges; on the other, there is the risk that, if the property market is strong, the seller might get a higher offer after accepting your booking deposit and could decide to “gazump” you, giving you the heave-ho by handing back your deposit and selling the property to the higher bidder.
While the booking deposit is entirely refundable before contracts are signed it is important to ensure that the auctioneer you are dealing is properly licensed and insured. The Property Services (Regulation) Act 2011 was passed to protect consumers in the property market in their dealings with auctioneers and estate agents and the like (now known as Property Service Providers or
PSPs). Auctioneers are required to be registered with the new Property Services Regulatory Authority (PSRA) and must have professional indemnity insurance in place and should be happy to show you evidence of both.
Auctioneers are also required to contribute to a fund that is set up to compensate clients who lose money due to dishonest practices. Purchasers in Ireland have never been more protected in their dealings with auctioneers. However, if you happen across a bad one it will still result in major headaches, so it is wise to do a bit of homework on who you are dealing with before handing over your money.
Before you hand pay over a booking deposit to the auctioneer ask to see their PSRA license. Some auctioneers can express surprise that this information is being sought. However, they are required by law to make these documents available on request and if they are reluctant to furnish you with copies you should probably keep your money in your bank account.
Who pays the auctioneer’s fees?
The auctioneer is retained by the seller and is acting exclusively for them, having only their interests in mind. Remember, while the auctioneer may do an excellent job of connecting you with the type of property you are interested in buying, you have no professional relationship with the auctioneer and, accordingly, the seller is obliged to pay their fees in full.
Can I rely on things the auctioneer and the seller tell me?
The long answer is: yes, in certain circumstances but it’s a very risky thing to do and you could end up in court arguing the point; the short answer is: no. If the auctioneer or the seller tell you anything which you believe to be significant in relation to buying a house, and which will have the effect of persuading you to purchase the property, tell us so that we can formally seek clarification from the solicitor for the seller. Ultimately, if it’s not written into the contract you are going to find it very difficult to rely on it, or to quote Groucho Marx: oral agreements aren’t worth the paper they’re written on!
OK, I’ve paid my booking deposit. What’s next?
Once the auctioneer receives the deposit, he’ll write to both the solicitors for the seller and to us with short details of the names and addresses of the parties, a description of the property, the purchase price, and any other details that have been agreed at that stage, such as what contents are included in the sale price and when the intended closing date is.
Once the solicitor for the seller has received this notification, he will send us the contract and the title documents to examine. We will then go through the terms of the contract to make sure that there are no conditions that were not agreed by you when negotiating the purchase and to ensure generally that there are no terms which would not be in your interests to agree.
We will then investigate the title to the property to satisfy ourselves that the person selling it has the legal authority to do so and that you will be the undisputed owner once you have handed over the purchase monies.
We will also seek confirmation that the property is compliant with planning permission and building regulations which we will furnish to you to have your surveyor refer to when inspecting the property to ensure that everything is in order. You should also have your surveyor carry out a planning search on the property before you decide to sign contracts. You will be deemed to be aware of anything that is on the planning register as it is a document of public record, therefore, it is important that you have your surveyor check it and report to you on it, before you make a decision to proceed.
It goes without saying that you’ll want to see that all title and planning matters are in order in relation to the property you are purchasing. Remember the old wisdom: the day you buy is the day you sell. You will only be able to recoup your investment in your property later if you can sell it back on the market. If you think you’ve found your dream house and have your heart set on it, don’t commit to it until you’ve got confirmation from us that the title and the planning are all OK together with an assurance from the engineer that everything is structurally sound.
Even if you are willing to overlook what you might consider to be acceptable non-compliant issues remember that, if you’re borrowing, your lender will seek certification from us that all title and planning matters are in order. If there are any blemishes that you are willing to live with these will need to be notified to the bank and agreed to by them before they will release the money needed to complete the purchase.
Completing the purchase and buying your house
Once we’re satisfied with the title, your surveyor is satisfied with the physical state of the property and planning permission matters etc., you’ve received formal loan approval, and presuming you still want to go ahead with the purchase, then and only then should the contract be signed.
At that stage, you will pay over the balance of the deposit (as previously indicated this typically involves a further payment bringing the total monies paid up to 10% of the purchase price) through us to the seller’s solicitors. The seller’s solicitors will then hold this second payment on trust until the sale completes. The auctioneer will continue to hold on to the booking deposit until the transaction is concluded.
From this point on the contract is binding on both parties, however, it may contain conditions allowing either party to withdraw from the contract for one reason or another (for example loan drawdown clauses are common in contracts to protect borrowers, if the bank has a change of heart and decides not to lend their money after all, the purchaser can withdraw from the
contract without penalty).
Require further legal assistance with buying a house in Ireland?
You can read our Quick Start Guide to Buying a House, which answers all of the questions in this post plus many more. Alternatively, call us on 1800 390 555 and we will connect you to a conveyancing professional within our team. You can also email [email protected] and we will get back to you as soon as we can.
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