Buyers must know

Buyers must know

Purchasing a home can be an involved process and it is important for the purchaser to be familiar with the legal process and the what that entails.

Your solicitor has an important role in assisting you to complete your purchase and generally your solicitor will work with you, your lender and the vendors solicitor to conclude the purchase.

In most cases sales are conducted by private treaty and this involves the purchaser liaising with an estate agent and making bids depending on what you believe the property is worth and also balancing that with what you can afford. If you are successful then the estate agent will confirm that you  are the highest bidder and that you then will be required to pay a booking deposit.

Once you pay the booking deposit the estate agent should issue you with a receipt for the booking deposit amount which should be no more than 2% of the purchase price and in general €5000 would be enough to pay by way of booking deposit. This deposit is totally refundable if you do not proceed to sign contracts. After contracts are signed and exchanged though and the remainder of the deposit paid then it is at this point that your deposit is not refundable and if it transpires that you do not complete the purchase then you run the risk of losing this deposit amount. Furthermore if the Vendor tries to sell the property again and gets less for it than you were contracted to pay then the Vendor can come back to you for the shortfall.

It is important also at this point to mention purchase by auction. There  is an element of risk associated with buying at auction if you do not instruct a solicitor prior to attendance at the auction. It  is prudent to ask a solicitor to ask to see title and contracts prior to an auction and also to raise queries if necessary prior to the auction if matters arise in analysing the title that require clarification. The auction process is such that if you are the highest bidder on the day and you go beyond the reserve price and the property is deemed on the market, then in such a case the property will be knocked down to you and you are then deemed to be in a contract. After the auction you will be immediately required to sign the contract and pay the non refundable deposit which should be no more than 10% of the purchase price.

In the private treaty process the contracts are furnished after the booking deposit is paid and there is more time for the solicitor to do due diligence on the title and other matters. Generally once you pay the booking deposit the contracts should be with your solicitor within 5 to 7 working days. The solicitor should then go through title and raise any pre contract queries they might have.

When you are in the process of buying a property you will normally also be in the process of applying for a mortgage. This is an involved process and a mortgage broker can be of great assistance in guiding you through this process and will be in a position to advise you how you might alter some of your practices so that the application and the documentation that goes with that will be in line with the requirements of the bank.

The bank will usually also require to know who your solicitor is so that once your application is successful they can then send the loan offer and mortgage documentation to your solicitor after you have given them the details of the property you are purchasing.

Generally after about two weeks from the point that you agree a purchase price on your desired property and give those details to the bank, it is then time to attend at your solicitor’s office to go through both the contract and also the mortgage documentation.

The solicitor will guide you through the contract and explain the procedure to you. He or she will let you know if there are any special conditions in the contract that you should note in particular. Also it is important that you consider what defect indemnities you might be getting particularly if it is a new property. Also if the property is reasonably new there should be a Homebond Guarantee or Premier Guarantee  insurance policy that covers the property for 10 years on major structural problems and also for 5 years with regard to water ingress problems.

If the property is not new and does not come with the benefit of a defects indemnity from the builder or a Homebond or Premier Guarantee policy you are advised to have a building surveyor conduct a survey of the property to make sure it is structurally sound and to see if there are any other problems with the property. You solicitor will advise you of these matters and what you should be attending to in your meeting and also over the phone prior to this meeting. You are advised not to sign and exchange contracts until you have conducted the survey. You are also advised to use a registered and insured surveyor as only in those circumstances will you have recourse to the surveyor if something in terms of a defect comes to light after you buy.

Your solicitor at this initial meeting will also go through the mortgage offer and mortgage documentation with you. This  analysis will generally focus on the special conditions of the loan. These  will in most cases be with regard to life insurance/mortgage protection insurance requirements, valuation of the property to be purchased, buildings insurance in the case of a house (with an apartment insurance will be part of the service charge) and also there can be additional requirements like the bank requiring you to clear a loan that you have disclosed in the mortgage application.

The solicitor will often have raised some initial queries of the vendor’s solicitor prior to this meeting and often there will be additional queries that arise as a result of the meeting. That said you will be asked to sign the contract documentation and also the mortgage offer and mortgage documentation at this point and also organise to put the solicitor in funds for the balance deposit required to be sent back with signed contracts. The solicitor will hold such contracts until the further queries are dealt with to the satisfaction of the solicitor and then once matters are in order contracts and balance deposit will be sent to the vendor’s solicitor. Also after this initial meeting the solicitor will usually send back the mortgage loan offer duly signed back to the bank along with the solicitors undertaking to produce the title and signed mortgage to the bank once the purchase has completed.

After two to four weeks from paying the booking deposit then you should be in a position where you have signed and sent back contracts and also signed and sent in the loan offer and solicitors undertaking.

After contracts are signed by the other side and returned then you are in a contract but actual completion will take place a further two to four weeks after this point. The solicitor will usually at this point raise what are called Requisitions on Title which are a series of further questions on title that touch on really every aspect of  a property transaction. The solicitor will also furnish the draft transfer deed for approval by the vendor’s solicitor. This process can take up to a week to come back on the Requisitions and the deed. After those items are returned usually this will conclude the due diligence and then it is a matter of setting the final date for completion and then liaising with the bank to make sure they have all they need to be in a position to permit drawdown of funds.

Once the bank is in  a position to furnish funds then your solicitor can conclude the sale. They will order searches before the closing which are conducted on title and on the parties to the transaction to make sure they have no judgments against them. On the day of closing the solicitor will attend at the vendors solicitor’s office (or via post) and will receive title and keys and give over monies and searches. The vendors solicitors is required to deal with all acts appearing on searches and this will normally focus on the mortgage of the vendor which the vendors solicitor will have to satisfy the purchaser’s solicitor that this will be paid off from the proceeds of the sale and that it will be cleared from title as soon as possible. Once all these matters are attended to then title will transfer to the purchaser and funds will pass to the vendor  and the purchaser will be given keys and occupation of the property. Your sale will be complete and you are free to enjoy your newly purchased  property from this point onwards.

The whole process can take then anywhere from 4 to 12 weeks depending on circumstances and you should factor these timelines in when planning matters.

You will be required to sign the purchase deed on or soon after closing and then this can then be sent to the Property Registration Authority along with the mortgage deed to register your title in your name and also to register the banks mortgage on the title. Once all is registered your solicitor will then furnish the title deeds to the bank who will keep same in their possession while the property remains security for the loan. If you are buying without a mortgage your solicitor will generally hold the deeds in safe keeping for you or you can keep same yourself or put same in a safe deposit box in a bank. It is important to keep the title documents in a safe and fire proof place.

The within  is not designed as an exhaustive description of the purchase process as every case is different and particular matters will arise in each individual case but it is designed to inform you of the main matters that come up in a property purchase transaction and the timelines involved.