Rights of Way Changes in the Land and Conveyancing Law Reform Act 2009

Rights of way are one of the most common forms of easements you are likely to encounter in Irish law.

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Two of the most common methods of acquiring rights of way, by prescription and by the doctrine of the lost modern grant, have been abolished by the Land and Conveyancing Law Reform Act, 2009.

 

Of course a right of way can always be created by a Deed of Grant by one landowner to another.

 

In order to now claim legal title to an easement such as a right of way it is necessary to get a Court order and register it with the Property Registration Authority either in the Land Registry or in the Registry of Deeds.

 

Owners or easements prior to the commencement of the Land and Conveyancing Law Reform Act, 2009 have three years within which to bring their application.

 

In order to obtain an easement by prescription by way of Court application now you will have to prove that you were a user as of right for a minimum period of 12 years (or 30 years where the servient owner is the State).

 

A user as of right means use without interruption without force, without secrecy or without consent of the servient owner. This is important as it means if you are using the land with oral or written consent of the servient owner your claim to a right of way will fail. (See also houses for sale in Ireland and related property law articles)

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Interruption of use

If use of the land is interrupted for a continuous period of one year will break the relevant user period and prevent the acquisition of the easement. However there is an exception to this in section 37(1) which provides that if the interruption occurs when the servient owner is incapable of managing his affairs because of a mental incapacity the running of the user period is suspended.

 

Note:

  • A servient owner is the owner of land subject to an easement;
  • Servient land is land subject to an easement;
  • Dominant land is the land benefited by an easement.

 

Civil law (Miscellaneous Provisions) Act 2011

 

The Civil law (Miscellaneous Provisions) Act 2011made further tweaks to the law in this area by making amendments to the Registration of Title Act 1964 and the Land and Conveyancing Law Reform Act, 2009. It provides that where there is agreement between landowners (an uncontested easement) there is no need to seek a Court Order and you can register your easement with the Land Registry.

 

The Civil law (Miscellaneous Provisions) Act 2011 also gives credit to the dominant owner for each year of use which has already passed prior to the commencement of the Land and Conveyancing Law Reform Act, 2009.

 

Filed Under: Property Law Tagged With: , ,

Repossessions of Properties Halted by High Court Judgment

Many hard pressed homeowners, fearful of losing their homes as a result of being unable to repay their mortgages, have been handed a lifeline by a High Court decision in July 2011 by Ms Justice Dunne.

property-repossession-ireland

Background

Prior to the implementation of the Land and Conveyancing Law Reform Act 2009  lenders relied upon section 62(7) of the Registration of Title Act 1964 to apply to Court to seek a possession order when the borrower had defaulted on his loan.

The decision of Ms Justice Dunne that section 8 of the Land and Conveyancing Law Reform Act 2009   repealed section 62(7) of the Registration of Title Act 1964 means that lenders can no longer rely on section 62(7).

Since the Land and Conveyancing Law Reform Act 2009 came into effect on the 1st of December, 2009 the consequences of this decision and section 8 of the  Land and Conveyancing Law Reform Act 2009 are as follows:

  1. There is no right to apply to Court for an order for possession of property where the borrower entered into the mortgage prior to 1st December, 2009 and have fallen into difficulties after this date.
  2. The Land and Conveyancing Law Reform Act 2009 does contain provisions (in Chapter 3) similar to section 62(7) of the Registration of Title Act 1964 but this will only be of use to lenders and banks in respect of mortgages taken out after 1st December, 2009.

The implications of this decision are far reaching as many of the mortgages which would now be in difficulty would have been taken out prior to 1st December, 2009.

The decision of Justice Dunne arose when four cases, in which orders for possession were sought, were heard together-

  • GE Capital Woodchester Homeloans Limited v Michael and Sinead Grogan
  • GE Capital Woodchester Homeloans Limited v Colm Mulkerrins
  • Secured Property Loans Limited v Tom Clair and Mary Clair
  • Start Mortgages Limited v Robert Gunn and Maura Gunn [2011 IEHC 275].

The details of each case above were slightly different but all four cases involved the mortgage being taken our prior to 1st December, 2009.

property-repossession-ireland1

Effect of High Court decision

The net effect of the decision in these cases is:

  1. Where the mortgage was taken out prior to 1st Dec. 2009 and go into default after that date the bank has no legal right to seek possession;
  2. Where the mortgage was taken out prior to 1st December, 2009 and no letter of demand was issued prior to this date there is no right to seek possession;
  3. Where the mortgage was taken out prior to 1st December, 2009 and legal proceedings were initiated prior to this date the bank can seek an order for possession;
  4. Where the mortgage was taken out prior to 1st December 2009 and the letter of demand for payment was sent out prior to this date the bank can seek an order for possession.

 

For the many people who are affected by this decision they now have more time to negotiate with their lender and more time in which to sell their property.

They may also find the lender more amenable to a “deal” as the bank will face the difficulty of being unable to seek an order for possession in these cases without the necessary amending legislation.

And in the current economic climate it could be argued that it would be a brave (or foolish) politician who would champion the necessary amending legislation.

Alternative Approach by Banks

Notwithstanding the decision above there is an argument to be made that the banks will not be completely stymied by this decision but may in fact have a legal cause of action arising from a simple breach of contract (the mortgage contract). It has been held by the High Court in the past (Gale v FNBS, 1984) that a mortgage contract gives the lender a contractual licence to enter and take possession of the property.

As with all matters to do with the law consult your solicitor for his/her advices for your particular circumstances.

Filed Under: Debt Problems | Bankruptcy, Property Law Tagged With: , , ,

10 Key Areas to Consider When Leasing Commercial Premises in Ireland

If you are thinking about leasing a commercial shop unit in Ireland there are a number of key areas you need to consider before going ahead.

fri-lease

Here is a non-exhaustive list of issues that you will need to be satisfied about before investing your cash in a full repairing and insuring lease (FRI lease)-

1) The term

How long will your lease be? Will you have statutory rights under the Landlord and Tenant (Amendment) Act, 1980? Will you have a break clause? Is Vat payable?

2) Repairs

Who is responsible for repairs? If it is a lease in excess of 5 years you as tenant will likely be responsible.
If it is a lease of less than 5 years you may only be responsible for internal repairs.

The question of whether it is a new building or an older building will also be significant and other issues to be addressed would include latent and inherent defects in the building, what is considered fair wear and tear and what risks are covered by insurance.

3) Insurance

If it is a full FRI lease then you as tenant will almost certainly have to pay the insurance premium held in your landlord’s name.
This will vary depending on whether you are the sole occupier of the building or if it is multi tenanted in which case you will be obliged to pay a proportion of the landlord’s premium.

You will therefore be concerned about the risks that the landlord is insuring against and whether the building is insured for reinstatement value or cost.

As tenant you will also want to insure against public liability, employers liability, plate glass and contents but this will depend very much on the nature of your business.

4) Alterations

You may need to make alterations when you take on the property to ensure that it is right for the purpose intended.
This will generally require the landlord’s consent which cannot be unreasonable withheld or delayed.

5) Alienation of the premises

Alienation is the legal term for your assignment of the lease to a third party; you will need the landlord’s consent to this but the landlord cannot unreasonably withhold or delay his consent.

However the question of reasonableness is one which might be disputed and the landlord may argue that his refusal is in the interests of “good estate management” and is therefore reasonable.

6) Service charges

Service charges may or may not arise in your particular circumstance. If there are service charges in respect of common areas you will need to ascertain exactly what is included and how much your service charges will be.

7) Rent reviews

How the rent will be reviewed will be of critical importance to you; generally rent reviews will take place at 5 yearly intervals and is an area that may require arbitration or some agreement as to how any disputes will be resolved.

8) Guarantee

Will you be obliged to provide a guarantee for rent, rates and other outgoings?

9) Break clause

Is there a break clause in the lease?

10) Stamp duty and VAT

You will be liable for the stamp duty on the lease but landlords also have an option to charge VAT or not. This is another area that you will want to check before investing as it can have a significant impact on your cash flow.

These are just some of the many factors you need to consider and be clear on before leasing a commercial premises.

Filed Under: Property Law, Property Purchases and Sales Tagged With: , ,

Houses For Sale In Ireland

If you are looking at houses for sale in Ireland there are a number of priority tasks that you will need to take care of to ensure a sound investment. Whether you are looking at houses for sale in Dublin or houses for sale in Cork you will still need to ensure

1. You have obtained finance

2. You have instructed a solicitor to act on your behalf.

At Terry Gorry & Co. Solicitors we can ensure that you are professionally represented at each stage of the purchasing process from drawing down finance to completion of your house purchase.

For example, if you are buying a second hand house in Ireland we will do the following as a matter of course:

Purchasing second hand properties

Terry Gorry & Co. solicitors will

  1. Inspect the title to the property and ensure that it is in order
  2. Carry out searches against the property, the vendors and you as the purchasers to ensure that there are no outstanding judgments or claims on the property or issues likely to crop up to cause a hitch

For your part as the purchaser you will need to ensure that you have written loan approval before signing contracts and that you have a surveyor or engineer carry out a full survey of the property to check for any structural defects or other problems.(This is part of the property purchases and sales series on this site)

 

If this is not done then when you sign the contracts it will be deemed in law that you were aware of any problems before signing and even if these problems become apparent later on.

 

You engineer’s survey should also be helpful in relation to any extensions, alterations or conversions that may have been carried out on the property which may have planning implications. If this is the case then proper planning documentation will need to be supplied by the vendor’s solicitor with the title deeds.

 

You might also check with  the local Gardai who may let you know about any social/crime problems in the area which you might not be aware of.

 

Generally you will need to pay 10% of the purchase price as a deposit on signing the contract to buy. It is advisable at this stage to insure the property as once you have signed the contract you are committed to completing and should the house go on fire in the meantime you could face a severe financial loss.

 

There will be a closing date for completion in the contract and once you sign you are committed to completing on time which can leave you open to a liability for daily interest on the full purchase price.

 

Clarifying and advising us of the situation with regard to the contents is also important as is carrying out a final inspection before completion to ensure that the house is left in an agreed condition and the garden is not full of rubbish which should have been disposed of by the vendors.

 

As you will see from the above, looking at houses for sale in Ireland is one part of the process of buying your first property-but ensuring that you have a competent, professional solicitor acting for you to ensure a smooth transaction is essential also.

 

You can use the contact form on this site for a quotation for your property purchase or any of the telephone numbers above for Terry Gorry & Co. solicitors.

Filed Under: Property Purchases and Sales Tagged With: , , ,

Commercial Landlord And Tenant Disputes

Landlord and tenant disputes are on the rise for obvious reasons with the downturn in the economy and landlords being faced with the choice of trying to recover outstanding rent or additionally trying to recover their premises and get the tenant out.

Generally the failure to pay rent by the tenant will be a breach of a covenant of the lease leading to a right accruing to the landlord for a straightforward breach of contract and the normal remedies available to the landlord when this occurs.

The legal proceedings that a landlord will take will depend on the amount of rent owed-if it is less than 6,348.69 euros it will be by way of Civil Summons in the District Court, if it is between that figure and less than 38,092.14 euros it will be by Civil Bill in the Circuit Court. Higher than that and you will find yourself the subject of High Court proceedings.

Recovery of Premises

Generally you will find that most commercial leases will have a covenant providing for the right to recover possession of the premises when there is a breach of a covenant of the lease.

Notice To Quit

If a lease has just expired, that is the time is up, the landlord needs to serve a Notice To Quit giving whatever period of notice is stipulated in the lease itself. After the service of the Notice To Quit the landord should mark any rent received as “mesne rates only” as not to do so could be seen as a waiving of the Notice by the landlord.

Forfeiture

Forfeiture procedure is appropriate where the landlord wants to get the tenant out before the term of the lease is up. He will want to do so if the rent is overdue and not being paid and the landlord thinks that he is better off trying to let the premises to someone else.To do this the landlord must be sure that the lease makes provision for forfeiture in the event of rent not being paid or whatever other breach of covenant the landlord is alleging. Most leases will contain such a covenant; if yours does not it will provide for forfeiture for breach of a condition of the lease.

In order to use the forfeiture procedure the landlord must first, by law, give the tenant the opportunity to remedy whatever breach has occurred.Firstly the landlord will need to serve a Notice of Forfeiture on the tenant which will set out the alleged breach and the time withing which it must be put right or that the landlord will re-enter the premises. This is called a Section 14 notice as the requirement arises from section 14 of the Conveyancing Act 1881.

If the remedy is not forthcoming and the breach is not sorted out then the landlord can re-enter the premises peaceably-it is important that to note that anything other than the minimum damage can lead to a criminal offence being caused by the landlord. If resistance is offered by the tenant then it would be very difficult for a landlord to enter peaceably and should withdraw.

Ejectment Civil Bill on Title

If the landlord can not take the premises peaceably he will need to go the Court route and it is by way of Ejectment Civil Bill on Title.Be warned that this is a slow process and the Courts have traditionally given a fair degree of latitude to tenants giving them more time to put things right.

Tenant Relief

Conveyancing Act 1881, section 14(2), provides some relief for the tenant provided that the landlord has not re-entered and the tenant has put matters right by paying the rent or whatever breach is alleged.The courts have traditionally been very fair with tenants in these matters and a tenant who has paid up, even late, will be in a strong position to get this statutory relief from the Court.

Filed Under: Property Law Tagged With: , , , , , ,

Judgment Mortgage-Registering A Judgment Mortgage

Judgment mortgages are de rigeur in Ireland at the moment with considerable numbers of people finding themselves in difficult financial circumstances.

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A judgment mortgage will only arise after the obtaining of a judgment against a debtor on foot of a debt. The effect of then registering a judgment mortgage on a debtor’s property will be to give the registrar of the judgment mortgage priority over unsecured creditors of that debtor.

 

A judgment mortgage can be registered on either registered or unregistered property and it can be registered on the family home of a debtor, notwithstanding the fact that the spouse of the debtor may be a joint owner and owe nobody a cent. Normally it is necessary to obtain the consent of a spouse to allow a charge to be registered on the family home but this is not the case with a judgment mortgage.

 

Under the new Land and Conveyancing Law Reform Act 2009 a judgment can be registered as a judgment mortgage by applying to the Property Registration Authority and filling out the necessary forms and providing the necessary paperwork or proofs.

 

Well Charging Order

The next step afforded to the judgment creditor is to apply to Court to get a Well Charging Order and Order for Sale. This is a request from the creditor to the court to recognise that their judgment mortgage is well charged on the property and to be granted an order for sale of the property.However the court, as always, has a wide discretion to grant any order it sees fit and it can make a range of other orders as well including adjustment orders between joint owning owners and any other order it sees fit.

 

Order For Sale Execution

If and when the judgment creditor obtains an Order for Sale from court, be that Circuit Court or High Court, he will then have to go to and apply to have the property sold through the Examiner’s office in the High Court or the Circuit Court and the Courts will arrange the sale of the property by public auction.

Filed Under: Property Law Tagged With: , , ,

Stamp Duty Reliefs

There are a number of stamp duty reliefs and exemptions and this post will look at the most common ones.
Transfers Between Spouses
Transfers between spouses are exempt from stamp duty.

Stamp Duty Reliefs

Consanguinity Relief
This relief applies to transfers between blood relations such as transfers from parent to child, grandchild, grandparent, brother, sister and some others. The relief provides for payment of 50% of the normal stamp duty that would have applied had there been no relationship.

Young Trained Farmer
There is no stamp duty on a transfer of qualifying land to young trained farmers.

Site Transfer From Parent To Child
When a parent transfers a site to a child for the purposes of building a private residence, and the value of the site is less than 500,000 euros, then there is no stamp duty.The size of the site can not be greater than 1 acre.

Farm Consolidation Relief
There is considerable relief in relation to the transfer of farms to encourage the consolidation of farms and the best place to investigate this scheme is the farm advisory body, Teagasc.

Charities And Sporting Bodies
Charities and sporting bodies both enjoy relief from paying stamp duty when acquiring property; both the charities and sporting bodies need to be approved and further enquiries should be made from the Stamp duty section of Revenue Commissioners for further information.

Gifts/Voluntary Transfers
Bear in mind that if the transfer is a voluntary transaction, that is a gift, the stamp duty will be calculated on the market value of the property at the date of transfer.

Filed Under: Property Law, Taxation Tagged With: , , ,

Stamp Duty | Stamp Duty Rates In Ireland

Stamp duty is a tax on documents and most peoples experience with stamp duty will be in relation to property purchase which gives rise to the notion that stamp duty is applied to property. But it is actually a tax on the instrument which witnesses the property transaction and you will also see stamp duty applied to other instruments (legal documents) such as shares in companies.


The Stamp Duties Consolidation act 1999 governs this whole area and in that legislation there is a Schedule 1 which sets out the heads of charge for stamp duty which stipulates that the stamp duty on a conveyance or transfer of property will range from 0% to 9%. Each year the government in the Finance Act may change the rate of duty in various heads of charge but the duty will be calculated on an “ad valorem” (for value) rate.

Generally stamp duty will be payable if the document/instrument is executed in Ireland or if the transaction relates to property in the State. You used to have 30 days within which to stamp your document/instrument with the Revenue Commissioners; this is now 44 days and you can do the stamping online with the new online stamping service provided by the Revenue Commissioners called eStamping with the purchaser being the liable person for the duty. However if it is a voluntary transfer, such as a gift, both parties will be jointly and severally liable.

Residential Stamp Duty Rates

The rates of duty applicable for residential property (whether new or second-hand) are as follows:
First €125,000 Nil
Next €875,000 7%
Excess over €1,000,000 9%

* Transactions, where the consideration (or the aggregate consideration) does not exceed €127,000, are exempt from stamp duty.

Stamp Duty Rates On Non Residential Property

Up to €10,000 Exempt

€10,001 to €20,000 1%

€20,001 to €30,000 2%

€30,001 to €40,000 3%

€40,001 to €70,000 4%

€70,001 to €80,000 5%

Over €80,000 6%
These rates are applicable from February, 2010.

How much stamp duty you will have to pay will depend on whether you are considered to be a first time buyer, owner occupier or investor. First time buyers do not have to pay stamp duty on either new or second hand houses but there is a clawback of duty if the first time buyer or owner occupier lets all or part of the property other than under the Rent A Room scheme. This rent a room relief is not available to investors.

Stamp Duty On New Homes

Investors pay full duty on new homes; first time buyers are exempt. Owner occupiers may qualify for relief from stamp duty if there is a Floor Area Compliance Certificated for the property and whether the house is completed or if it is the sale of a site and contract to build a new house.

Conveyance Combined With Building Agreement

Owner occupiers will pay duty on either 25% of the total price excluding vat or the price of the site(excluding vat), whichever is the higher.
No stamp duty is payable on contents although they are taken into consideration when apportioning the total price paid.

Stamp Duty on Leases

Stamp duty is payable on leases and is divided between any premium payable which is calculated at normal stamp duty rates and duty payable on the rent. Generally if the lease is for less than 35 years and the rent is less than 30,000 euros there is no duty.
If the lease is greater than 100 years stamp duty is payable at 12% of the average annual rent.
If the lease is greater than 35 years and less than 100 years then duty is payable at 6% of the annual average rent.
If the lease is less than 35 years stamp duty is due at a rate of 1% of the average annual rent.
It is important to note that these rates apply on the creation of a new lease; if you are dealing with an existing lease and are taking an assignment of the lease then it is treated as a normal property transaction and the normal property transfer rates apply.

Filed Under: Property Law, Taxation Tagged With: , , , ,

Capital Gains Tax On Property In Ireland

Capital gains tax is a tax on the gains that arise on the disposal of an asset.This post will look at CGT on real property only (not shares). The charge to capital gains tax will arise when a number of conditions are fulfilled, namely,
1. there must be a chargeable gain which
2. accrues on the disposal of an asset.


The chargeable gain is calculated on the gain arising on disposal, not the sales price, so for example if you but property for 50,000 euro and sell for 100,000 euros then your gain will be clearly 50,000. Generally a company that has such a gain will not pay capital gains tax, it will pay corporation tax (unless the sale is of development land).

It is important to note that the charge to tax arises on a disposal, not necessarily a sale, so the gift of an asset gives rise to a chargeable situation if a gain arises and similarly a part disposal can give rise to a charge to tax as it too is a disposal.

The year of assessment is the year ended 31st December.

Calculating Your Capital Gain

In calculating your gain you are allowed to deduct the cost of the asset and any incidental costs of acquiring the asset, any enhancement expenditure (of a capital nature) spent on the asset and the costs of disposal such as legal fees and auctioneer’s fees.

Up to 31st December, 2002 you were allowed to use a “multiplier” to reflect the effects of inflation on your asset in calculating your gain. For example if you bought an asset for 50,000 in 1982-83 you used a multiplier of 2.253 which you applied to the cost of your asset giving you a base cost of 112,650 which would reduce your “gain” considerably.That is no longer the case since 1/1/2003. So any assets purchased after this date will not get you the benefit of the multiplier or indexation (as it was brought in to reflect the increase in value as a result of the rise in the consumer price index over time).

If you were unfortunate enough to incur a capital loss then you could set this off against any gain in a given year and you can also carry forward unused losses to later years to offset against later gains.

Everyone has an annual exemption of 1,270 which can be set off against a gain before computing your tax liability; this annual exemption can not be carried forward though.However a spouse can not give their unused annual exemption to their spouse. The current rate of capital gains tax is 25%.

Capital Gains Tax on Gifts

For the purposes of gifts or voluntary transfers the “cost” of the asset is the market value at the time of the gift and similarly any transfer between connected persons, such as husband and wife, are deemed to be transferred at market value.

Capital Gains Tax On Development Land

Development land is land the market value of which is greater than it’s current use value at date of disposal. The significance of land being classified as development land is that the multiplier for inflation can only be applied to the current use value at date of acquisition and can not be applied to any enhancement expenditure.

Unlike ordinary disposals, the development land gains of a company are chargeable to CGT and taxed at the normal rate of 25%.

Wasting Assets

There is no charge to CGT for the disposal of a wasting asset which is an asset the expected useful life of which is less than 50 years but an exception to this rule is a lease of property which is for more than 50 years. If the lease is for less than 50 years it is a wasting asset and is exempt and if a lease is greater than 50 years but has less than 50 years to run, then it becomes a wasting asset and is exempt.

Capital Gains Tax Reliefs

Principal Private Residence

The principal private residence relief provides relief from CGT for a private residence on ground up to 1 acre provided the house has been used by the seller as his principal residence throughout his period of ownership. If he/she has not occupied the house for all of that time then there may be a gain arising out of the period of time during which he did not occupy the house.

Dependent Relative

There is also relief where you supply a house rent free to a dependent relative.

Transfer Of Site To A Child

Relief is also available where you can transfer a site of up to one acre to a child up to a value of 500,000 euros from parent to child. The child must build a house on the site and live in it as his/her principal private residence.

Filed Under: Capital Gains Tax, Property Law, Taxation Tagged With: , , ,

Letting Agreement Template Ireland

Letting agreement template

Filed Under: Property Law Tagged With:
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