Categories
Property Law

Buying a House in Ireland-Kindle Book Promotion

I am starting a Kindle Countdown Deal price promotion starting at 8 am, Sunday 2nd August on my property book, “Buying a House in Ireland: A Step by Step Guide by a Builder/Solicitor”.

For a limited period of time the price of this book, “Buying a House in Ireland: A Step by Step Guide by a Builder/Solicitor” will be slashed to less than £1. It will cost just £0.99.

I have been buying and selling property in Ireland since 1986 so I have a good handle on what to look for and what to avoid when it comes to property.

And I have just updated the book with new material including

-Help to Buy relief, statements made outside the contract, deed of confirmation for gifts, how to negotiate successfully, buying in Ireland from abroad, buying for cash, what happens on closing day.


The promotion starts on Sunday morning and lasts for only 3 days and ends on 5th August 2020. 

Then over the few days it will go to £1.99, then £2.99, then £3.99 until it reverts to the regular price on 5th August at £9.99.

It’s a good deal and this book sells well anyway.


But Amazon lets authors promote their book every 6 months with a Countdown deal like this and it is very effective.

You can learn more about the book here.

To be honest the main reason I am doing this promotion is to get reviews for the book, which I have just updated. So if you buy one I would appreciate if you left an honest review on Amazon.co.uk.

Thanks.

Categories
Property Law

Beware of the Representations Made to You in the Lead Up to Signing a Property Contract

Are you thinking about buying a property? Or a business?

If you are, you need to be cautious and vigilant about the statements you are tempted to rely on, and who is making those statements.

Let me explain.

I act for large numbers of people who are buying (or selling) property. When I meet the purchasers or speak to them on the phone they frequently tell me “the auctioneer said” or “the developer said” or “the seller said”.

I have to tell them to ignore, or at the very least treat with a great deal of caution, these statements because from a legal perspective they cannot rely on them. Because invariably when the auctioneer’s sales advice note issues or when the contract is issued by the vendor’s solicitor there will be disclaimers and conditions along the lines that the purchaser cannot rely on any statement outside of the written contract of sale.

And that the contract contains the entire agreement between the purchaser and vendor.

In other words, the vendor’s solicitor will go to the trouble in many cases of inserting a special condition similar to the following:

Entire Agreement and Representations

  1. The purchasers agree and accept that no statement or measurement contained in any brochure or advertisement issued by the Vendor or any agent on behalf of the Vendor relating to the Subject Property shall constitute a representation inducing the Purchasers to enter into the sale or any warranty forming part of this Agreement.
  2. Any statement, description or measurement contained in in any such particulars or in any verbal form given by or on behalf of the Vendor is for illustrative purposes and are not to be given as matters of fact.
  3. Any misstatement or omission or mis-description or incorrect information given verbally or in form of any printed particulars by any person on the Vendor’s behalf shall not give rise to any cause of action claim or compensation or to any right of rescission under this Agreement.
  4. The Purchaser shall have no right of action against any agent, employee or any person whatsoever connected directly or indirectly with the Vendor whereby any mistake, omission, discrepancy, innaccuracy, misstatement or misrepresentation may have been published or communicated to the Purchaser during the course of any representation or negotiation leading up to the sale.
  5. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes and extinguishes any representations or warranties (if any) previously given or made accepting those contained in the Agreement and no variation shall be effective unless agreed and signed by the parties or by some person duly authorised by each of them.

You will also note that the sales advice note from the auctioneer/estate agent will be “subject to contract/without prejudice/contract denied” which is an indication that you will only be able to rely on what is contained in the contract or is clarified/confirmed between the solicitors as they negotiate a binding contract.

It can be a struggle for the solicitor to temper the enthusiasm of the inexperienced purchaser because they will assume what is being said to them by the agreeable vendor or estate agent can be relied on. Maybe it can, maybe it cannot and if there is a dispute you will need to look to the written agreement between the parties to see exactly where you stand.

And the written agreement between the parties is the Law Society Standard Conditions of Sale 2019 edition.

IDENTITY

11. (a) The Purchaser Accepts the evidence of identity as may be gathered from the documents specified in the Documents Schedule. The Vendor confirms that he has furnished to the Purchaser such information as is in his possession relative to the identity and extent of the Subject Property, but the Vendor is not and shall not be required to define exact boundaries, fences, ditches, hedges or walls or to specify which (if any) of the same are of a party nature, and the Vendor is not and shall not be required to identify parts of

the Subject Property held under different titles.

RIGHTS – LIABILITIES – CONDITION OF SUBJECT PROPERTY

13. The Vendor confirms that he has disclosed before the Date of Sale, in the Particulars the Special Conditions or otherwise, all easements, rights, reservations, exceptions, privileges, covenants, conditions, restrictions, rents, taxes and other liabilities (not already known to the Purchaser or apparent from inspection) which are known by the Vendor to affect the Subject Property and are likely to affect it following Completion.

14. Subject to General Condition 13, the Purchaser Accepts that the Subject Property is sold and the Purchaser shall be deemed to buy:

(a) with full notice of the actual state and condition of the Subject Property and

(b) subject to (i) all Leases (if any) mentioned in the Particulars or in the Special Conditions and (ii) all easements, rights, reservations, exceptions, privileges, covenants, conditions, restrictions, rents, taxes, liabilities, outgoings and all incidents of tenure affecting the Subject Property (each a “Relevant Provision”) and

(c) notwithstanding any partial statement or description of the Lease or the Relevant Provision in the Particulars or in the Special Conditions or in any document specified in the Documents Schedule.

Conclusion

I hope you see from these conditions in the contract for the sale of property are sufficient to cast aside any warranty or representation that was made in the run up to the binding contract coming into effect.

And that you simply cannot rely on these statements, no matter how well intentioned or helpful or clarifying they were intended to be.

Categories
Debt Problems | Bankruptcy Property Law

Did Lease Granted by Borrower Prevent AIB From Securing Possession of D4 Property?

differential costs order

AIB granted a loan to Richard Finbarr Fitzgerald and the parties entered into a mortgage contract. The 1995 mortgage, registered in the Registry of Deeds, was secured on a flat in Dublin 4 and the bank now sought an order for possession.

However, there was a problem.

Fitzgerald had gone bankrupt in January 2020 but had previously granted a 35 year lease on the flat to Ms Daly in 2002. The question then arose in this case as to whether this lease was void as against the bank and they could go ahead and recover possession, or did this lease snooker the bank and prevent repossession.

The bank were seeking to recover a debt outstanding from a loan granted in 2015.

The bank’s position was that Fitzgerald needed the consent in writing of the lender if he was going to grant a lease on the property, pursuant to the 1995 mortgage which states

“The Mortgagor shall not be entitled without the consent in writing of the Bank to exercise the powers vested in him by section 18 of the said Conveyancing Act of 1881 so long as any moneys shall remain unpaid on this present security.”

It is worth noting that the Land and Conveyancing Law Reform Act 2009 changed the law in this area, specifically section 112 which states:

112.— (1) A mortgagor of land, while in possession, may, as against every other incumbrancer, lease the land with the consent in writing of the mortgagee, which consent shall not be unreasonably withheld.

[CA 1881, s. 18][CA 1911, s. 3]

(2) A lease made without such consent is voidable by a mortgagee who establishes that—

(a) the lessee had actual knowledge of the mortgage at the time of the granting of the lease, and

(b) the granting had prejudiced the mortgagee.

(3) A mortgagee of land while in possession or, after the mortgagee has appointed a receiver and so long as the receiver acts, the receiver, may, as against all prior incumbrancers, if any, and the mortgagor, lease the land provided—

(a) it is for the purpose of—

(i) preserving the value of the land, or

(ii) protection of the mortgagee’s security, or

(iii) raising income to pay interest due under the mortgage or otherwise reduce the debt,

or

(b) it is otherwise an appropriate use of the land pending its sale, or

(c) the mortgagor consents in writing, or

(d) the court in any action relating to the mortgaged land makes an order permitting such lease.

(4) In this section “ mortgagor” does not include an incumbrancer deriving title from or under the original mortgagor.

(5) The power of leasing conferred by this section applies only to mortgages created after the commencement of this Part.

However, the contractual position between Fitzgerald and the bank, as a consequence of the mortgage entered into between the parties, could not be retrospectively amended by the 2009 act as this act was not applied retrospectively to existing contracts and mortgages.

The High Court held that the 1995 mortgage was not affected by the 2009 act and held that all the authorities led one to the conclusion

“If such prior written consent is not obtained by the mortgagor and the mortgagor proceeds to enter into a lease with a tenant, the lease will be binding on the mortgagor as lessor, but as against the mortgagee, the lease will not be binding.”

The bottom line is that any potential impediment to the realisation of the security must be approved of by the lender. The principles in N17 Electrics Limited have been applied consistently and the onus on proving that a mortgagee had consent to a lease lies with the party seeking to rely upon the terms of the lease.

This lease, therefore, was void as against AIB and an order for possession was granted, with a stay for 6 months to allow obtain new accommodation having regard for the fact that she had lived there for two decades.

Read the full decision in Allied Irish Banks PLC and Richard Finbarr Fitzgerald [2020] IEHC 197.

Categories
Debt Problems | Bankruptcy Property Law

The Misuse of Inhibitions and Cautions to Frustrate Lenders-High Court Cancels Inhibitions on Property

Since the property crash in 2007 some hard pressed property owners, who had judgments registered against them, have used various ploys and ruses to block and thwart the holders of judgment mortgages from selling their property against their wishes.

A recent High Court case concerned this very issue and it is worth taking a look at the decision in ACC Loan Management Limited v Fryday & others. The timeline in this case is critically important and is as follows:

ACC obtained judgment for €1,301,344.44 against William and Vanda Fryday in 2009 and registered this judgment as a judgment mortgage in 2011 on certain property folios of the Frydays. In 2012 ACC sought a court order to the effect that the judgments were “well charged” on the folios in question.

The Frydays had sworn affidavits in December 2012 and January 2014 as part of the legal proceedings and did not make any suggestion or assertion that anybody else had an interest-beneficial or legal-in the property.

Then, in April 2014 and December 2014 the mother (Lavinia) and brother (Richard) of the first defendant (William) registered with the Property Registration Authority two inhibitions on the properties in question. These inhibitions were based on the mother and brother claiming to have an interest in the property and were lodged with the consent of the registered owners (William and Vanda, a married couple) of the property.

ACC had obtained a well charging order and an order for sale of the properties and now sought to have these inhibitions cancelled. Naturally, the Frydays opposed this application. ACC argued that these inhibitions were only registered by the notice parties, Lavinia and Richard, to thwart and prevent the bank from selling the property and to frustrate the bank in enforcing the judgment it had obtained against William and Vanda Fryday.

The Court, having considered the timeline set out above, held that the inhibitions claiming an interest by the Frydays (Lavinia and Richard) were only claimed when the bank went to enforce its judgment and seek the well charging order with a view to sale. The Court ordered the cancellation of the inhibitions as it found that the sole purpose of the inhibition was to prevent the bank from enforcing its well charging order.

Conclusion

The use of lis pendens, cautions and inhibitions by property owners against whom judgment has been obtained is quite common. The problem from the lender’s perspective arises when he wishes to sell and needs to cancel or vacate these burdens on the folio. It can be costly and slow to do so but the registration of such burdens is relatively straightforward with an application to the Property Registration Authority being the route to take, pursuant to the Registration of Title Act 1964.

The chilling effect of an inhibition, caution, or lis pendens is to discourage interest in potential purchasers of the property on which the burden has been registered.

Read the full decision: ACC Loan Management Limited and William Fryday and Vanda Fryday and Lavinia Fryday and Richard Fryday It is a detailed judgment and sets out how and why the Judge arrived at the decision to exercise the Court’s discretion to cancel the inhibitions.

Categories
Property Law Property Purchases and Sales

Commercial Property Investment-4 Vital Things to Consider

Thinking about buying a commercial investment property? There are a number of factors you will need to consider. 

Here are four important ones: 

1. The tenant

The quality of your tenant is critically important because it will determine how sound your rental income stream will be. Having a major retail brand or franchise as a tenant is a huge advantage over having a one man or woman business.

If there is difficulty in collecting the rent you can certainly go to Court and get a Court order for vacant possession and a judgment for the outstanding rent and costs. But this judgment will be of little value if you cannot enforce it and your debtor simply does not have the money to pay the judgment amount. This is a strong possibility with an inexperienced sole trader.

You will also have incurred your own legal costs and you can be sure your solicitor will want to be paid.

So, a weak tenant carries inherent and obvious risks from the outset.

2. The physical condition of the property

The physical condition of the property is worth considering carefully if you want to avoid a property which will require significant expenditure in maintenance or repair and refurbishment. The type of lease in place will determine who is responsible for repairs and maintenance to the building so this would want to be checked before investing.

3. Location

The location of your investment property is vitally important for a number of reasons. Firstly, from the perspective of selling the property on when you are ready. Secondly, if you have to evict the tenant or he does not renew the lease you will have to find another tenant and the location, if good, will make this a much easier task.

On the other hand the business that was carried on may have been one which relied to a large extent on the business and personal contacts and reputation of the tenant. It may be difficult to re-let the premises if it is in a secondary location and is only suitable for a small number of businesses.

4. The legals

You will need to ensure that all legal, planning, and regulatory matters are in order. This involves checking that good title is being offered, the planning and building regulations/building bye-laws are in order, the terms and conditions of the existing lease, and any rates or management company liabilities have been fully discharged and there will be no unpleasant surprises for a buyer of the building.

Conclusion

Buying a commercial investment property is broadly similar to buying a residential investment property. You are more likely, however, to have a sitting tenant with a commercial property and you may be buying a property that is subject to a long commercial lease-for example for 15, 20, or 35 years.