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Property Law Property Purchases and Sales

Buying Property? Why You Need to Know About Certificate of Title

Certificate of Title

Are you thinking about buying a residential property? Or a commercial property?

If you are you should know about the Certificate of Title system in conveyancing in Ireland.

Let’s take a look at how it works, shall we, and what it might mean for you as a purchaser?

Good marketable title

If you are not a cash buyer and you are borrowing from a bank your solicitor will have to give the bank a ‘solicitor’s undertaking’. This is an undertaking to obtain good marketable title to the property.

Once good marketable title is obtained the sale will complete and the solicitor will send in the title documents to the lender. The solicitor will then give a Certificate of Title and the bank will rely on this rather than the solicitor’s undertaking and the lender will hold onto the documents of title.

Once the bank’s mortgage is secured on the property and good marketable title has been obtained then the bank will be able to move on the property if there is a default on the loan.

It is a rare enough occurrence in Ireland, quite frankly, but when the bank does repossess a property they want to know they can sell it without any major title problems.

And they will already have the solicitor’s certificate, which certifies title, and on which they will rely.

If any problems then arise in relation to the sale of the secured property the solicitor who certified titled will have a major problem as the bank will be able to pursue him/her for professional negligence if he failed to notice a major title defect with the property.

How does this affect you?

You may be happy to proceed with the purchase of a property but your solicitor may not if there is a problem which will affect his ability to give an undertaking to obtain good marketable title and to certify title later on.

Problems which would concern a solicitor would be issues such as easements, rights of way, planning permission issues, building regulation problems, septic tanks on someone else’s property, no certificate of compliance from an architect/engineer, and so forth.

Minor issues which might be flagged up in a structural survey may not cause much concern, but the issues would need to be genuinely minor.

Qualification on title

If any of these serious issues arise the solicitor will write to the lender and state that he proposes qualifying his undertaking and certificate of title due to the problem he has encountered and he will ask the bank to accept this qualification and confirm its approval.

The lender may approve or may not agree. If the lender does not agree then the purchase cannot proceed.

The key point to understand is that if you are buying property and there is a lender involved and there is a problem with the title documents to the property the decision to proceed is not yours alone.

Because the solicitor will also be putting his professional indemnity insurance on the line and will naturally wish to have a say.

Without your solicitor giving an undertaking to the lender in the first place and later providing a certificate of title the lender will not advance your loan for completion.