Naivety When You Are Buying Your First Property is Your No. 1 Enemy

buy house ireland

Are you thinking about buying your first property? It is an exciting, and terrifying, time.

One of the biggest dangers you need to guard against is naivety.

It’s not your fault, and everyone has to start somewhere with their first purchase. But you need to ensure it is a sound one. And you must guard against your inexperience and naivety.

I have bought and sold properties in Ireland since 1986 and you can learn from what I have learned, and my mistakes.

Let me explain my thesis that naivety is one of your biggest dangers in the process. There is a number of ways you can be naive, and, quite frankly, taken advantage of. This is because there is a number of specific but diverse activities you will engage in before you successfully move to your new home.

These activities include

  1. Assessing where to buy your new property-the location
  2. Assessing the physical condition of the property
  3. Negotiating the deal with the vendor or, more likely, the auctioneer
  4. Organising the finances.

Each of these four areas is a potentially tricky area on its own, but combine it with each of the other three areas and it is easy to see how you can make costly mistakes through naivety, and the fact that this is your first time.

The best approach to take is to ensure you have good advice every step of the way, don’t cut corners, and engage the help of professionals where you can.

The Structural Soundness of the Property

For example, don’t take chances with the structure of the property, and its physical boundaries. Have these checked out by an engineer/surveyor/architect who should also carry out a structural survey on the property to ensure the structural integrity of the property and no evidence of pyrite.

Ensure, too, that the surveyor had professional indemnity insurance and ask him any questions that are bugging you after he has given you his report; for example, a) is the property structurally sound? and b) do you recommend further investigation be carried out?

Negotiating the Deal

Negotiating the deal-always remember when you are buying the property that the auctioneer has only one client: the vendor. Don’t rely entirely, or at all, on representations or blandishments made by the auctioneer.

The likelihood is that when the contract is issued there will be a special condition in it which states you understand that you cannot rely on any other representations or warranties made prior to the issue of the contract. This, therefore, legally rules out you relying on what may have been promised by an enthusiastic, friendly auctioneer.

Organising the finance

Shop around for the best deal and be aware that the person in the bank who is selling you the loan will not be the person who stipulates the conditions set out in your loan offer. In the same way that you take what the auctioneer has told you with a pinch of salt you need to also understand that the front line person for the lender who is sending applications up the line has little or no influence over the loan conditions which will ultimately emanate from the bank’s legal and/or securities section.

A mortgage broker or advisor might be a useful tool in your toolbox provided that he/she is providing you with independent financial advice and has only one client: you.

Be cautious about advisors or brokers who have agencies with specific institutions or have some type of commission arrangement for selling a particular loan.

Through the whole process when you are dealing with someone-auctioneer, bank, vendor,engineer- always silently ask yourself: who is his/her client. If it is not you, be vigilant.

Conclusion

My advice to protect you against your inexperience and the fact that you are a “virgin” at this:

  • Use your head and get advice from those who have been through the experience of buying and selling property
  • Don’t be afraid to pay for professional advice, as buying property is a big investment and commitment
  • Keep a cool head and always remember who is acting for you, and who is not on your side.

These same fundamental principles also apply if you are buying a commercial property.

Closing Day in a Property Transaction-What Happens?

property closing

A question I am regularly asked by my property clients is “what happens on closing day?”

Closing day, or completion day, is the day that the property is finally handed over from vendor to purchaser. The vendor must hand over the keys of the house and vacant possession.

Prior to this the vendors’ solicitor will almost certainly have sent, by registered post or DX, all documents of title to the purchasers’ solicitor for completion. These documents are sent on the basis that they will be held strictly in trust and to the order of the vendors’ solicitor. This means nothing can be done with them until the vendors’ solicitor gives approval.

The purchasers’ solicitor must ensure that all the closing funds are transferred by electronic funds transfer to the client bank account of the vendors’ solicitor.

Legal Searches

The purchasers’ solicitor will also order legal searches for closing day, and will check them once they are received and send them on to the vendors’ solicitor to be certified and/or explained.

The purpose of these legal searches is to ensure that no judgments or judgment mortgages, or other burdens, have been registered against the vendors or the property between the date of signing the contract and completion day.

Once the purchasers’ solicitor has received all closing documents of title and satisfactory explanations, if necessary, for the searches he will authorise the vendors’ solicitor to release the purchase funds.

At the same time the vendors’ solicitor will authorise the release of the title documents and let the auctioneer know that he can release the keys.

Closing Day Inspection

Before the above sequence of events happens, however, you would be well advised to carry out a final inspection of the property, just before your funds are released.

Occasionally, I have seen problems on closing day such as a lot of rubbish left by the buyers when they have finished emptying out their house, or even the removal of some contents that the purchasers thought were part of the deal.

It is easy to assume that certain things which are built in or stuck to the ground are included in the sale, but it is always better to check the contents listing carefully in the contract when you are signing it, and to check the condition of the house just before you get the keys and your solicitor releases the money to the other solicitor.

It is much easier to resolve problems when the money has not been handed over, rather than after.

Hopefully, you now have a clearer idea of what to expect on closing day, regardless of whether you are a buyer or seller.

Buying and Selling in a Property Chain-What You Should Know

If you are buying or selling a house now there’s a good chance you’ll be part of a chain.

Do you understand what this means? Or how frustrating it can be?

Let me explain.

Let’s say you are a first time buyer and you come across the perfect property. You get your finance approval, succeed in the bidding war, and secure the property by paying a booking deposit to the auctioneer.

Once the contract is issued to your solicitor, and you’ve received your loan offer and had a structural survey  carried out,  you are anxious to see things progress to completion and handover of the keys.

Then you discover the effects of being in a chain.

Because once you sign the contracts things appear to grind to a halt.

You ring your solicitor every day asking for “any news?”, but the answer is always the same: “afraid not”.

You’ve no idea why. But soon you discover the reason: you’re in a chain!

This means that the people you are buying from-let’s call them Harry and Jenny-are themselves buying another property. And until they have secured the other property, Harry and Jenny will not return signed contracts to your solicitor.

Because if they do, they will be legally committed to selling their home to you. And if their proposed new purchase falls through they will be homeless.

Harry and Jenny are trying to buy a 4 bed house in Mullingar, ideal for their growing family of 4 kids.

So, Harry and Jenny will not return signed contracts to your solicitor until their solicitor receives signed contracts from the solicitor acting for Mick and Geraldine, the owners of the 4 bed in Mullingar.

Mick and Geraldine, too, are moving on. Their family has grown up and moved away and the big property they live in in Mullingar is too big for them, Mick is fed up cutting a quarter acre of lawn every weekend, and they want to move into something smaller and more manageable.

Mick and Geraldine are trying to buy a 2 bed apartment in Islandbridge. But the developer of the islandbridge development went into receivership when the stuff hit the fan after the economy collapsed in 2007/2008, and the receiver is still working his way through the developer’s assets.

The receiver will need the written approval from the lending institution that appointed him, so Mick and Geraldine will be waiting on contracts to issue, with the appropriate approval, and become binding before they can sign the contracts for the sale of their property to Harry and Jenny.

And until that happens, Harry and Jenny’s solicitor cannot return contracts to your solicitor.

This is a basic property chain, and they are becoming more evident in Ireland in 2017 with the increased levels of activity in the property market. The drying up of property supply also means that the chain is probably more likely to be encountered because there is nowhere for vendors to rent for 6-12 months. Therefore, unless and until they have secured a suitable property, they are not inclined to move.

Like any chain it is only as strong as the weakest link. For example, if the receiver is unable to get the letter of approval from his lender to sell the Islandbridge property, Mick and Geraldine will be staying put for the moment.

Obviously this means that Harry and Jenny won’t be going anywhere, they will be staying where they are, and you will not see a signed, binding contract from them anytime soon.

None of what I have written about above deals with the actual problems that can arise when it comes to completion day.

You as purchaser will need to ensure that your solicitor has the funds to complete the transaction. But the vendors of the property you are buying, Harry and Jenny, will need your money to complete their purchase from Mick and Geraldine.

And Mick and Geraldine will need Harry and Jenny’s money to purchase from the receiver of the bust developer.

Throw in the desire of one or more parties to vacate their old house and move to their new house on the same day and it is easy to see how taut and fraught the chain can become.

Being part of a property chain like this can be extremely frustrating and stressful.

At the outset you should make enquiries early in your negotiations because you can avoid it if you discover the vendors of the property you are buying from are themselves dependent on securing a property now, and their sale to you depends on that.

Unfortunately I have seen a few situations where it is only after a purchaser signs a contract in good faith that they are then told that they are in a chain.

It’s a bit late finding out then, quite frankly, and strikes me as a little unfair.






FREE Report 

“Buying or Selling a Residential Property in Ireland”

New Graphic

We respect your privacy. Unsubscribe anytime. 

Liability of Vendors, Builders and Lessors for Defective Premises

defective-premises

What is the liability, if any, of vendors, builders, or lessors of defective premises?

Let’s take a look.

Contract-liability of vendor and lessor

Caveat emptor is the contractual rule that prevails. Caveat emptor means “buyer beware”, therefore if you are a buyer you need to carry out your own enquiries and inspections, for neither the vendor nor lessor will be held liable for any defects in the premises, unless he has made some express warranty.

There are some exceptions, however, to the rule that no warranties are implied by the vendor or lessor of real property. For example:

  1. Where a vendor sells a house in the course of construction certain implied terms will be implied by the Courts
  2. A lessor of a furnished premises to be used for residential accommodation implies the premises will be fit for such occupation.

Tort

The general rule of negligence used to have no application in respect of a vendor or lessor of premises. That position has changed somewhat over the years.

The lessor of a building may now be liable in tort for defects created after the lease has been made if he alters the condition of the premises.

The lessor may also be liable if he creates a nuisance on the property or authorises usage of the property which causes wrongful interference with another’s use of the property.

In summary, the purchaser and tenants can sue in negligence if they can show proximity, reasonable foreseeability of damage, and breach of duty.

The Contract Builder

By contract builder I mean a builder who builds on specific instructions from a client, not one who buys a piece of land and speculatively builds a house.

The Courts have recognised there are implied terms, if not expressly stated, as follows:

  1. The work will be done in a good manner
  2. Proper materials will be supplied
  3. The house, when finished, will be reasonably fit for human habitation.

Furthermore, the contract builder will be liable in negligence for dangerous defects, in the same way as a manufacturer can be held liable for defective products. If the defects of quality did not lead to a danger to the health and safety of the occupier then the liability of the builder may only lie in contract, not negligence.

Contractual liability will also arise and the owner of the premises will benefit from the Sale  of Goods and Supply of Services Act 1980 and the contract between builder and house owner.

The Builder Vendor/Builder Lessor

This builder is one who builds on spec, not a contract builder referred to above.

We have seen above that the vendors and lessors of real property enjoyed an immunity by virtue of the caveat emptor principle, while the builder of the premises could be held liable in negligence or contract.

The builder vendor/builder lessor used to enjoy the immunity provided by “caveat emptor”. Down through the years, however, the Courts began to recognise that such builders could be held negligent for foreseeable damage to an occupier of his building.

The extent of the duty was in respect of quality defects, dangerous defects, and inconvenience.

Architects, engineers, surveyors, auctioneers

Architects, engineers, surveyors, and auctioneers may also be considered to be suitable defendants in negligence cases arising from the building context. A professional will not, however, be expected to possess qualifications which he does not hold himself out as possessing, for example, an auctioneer being sued for structural defects in a house.

Buying a House in Ireland: A Step by Step Guide by a Builder/Solicitor-the Book

Buying a house in ireland-the book

Thinking about buying or selling a residential property?

This step by step guide by a builder and property developer turned solicitor will help you avoid costly mistakes and ensure a sound investment

I bought my first property in 1986-a mixed commercial/residential in Dublin.

Since then I have bought many more-in and outside Dublin, and I have learned a lot of valuable lessons along the way.

I have also been involved in property development, investment, and direct construction.

That’s why I believe I am the  only solicitor in Ireland with a teleporter licence. (A teleporter is like a fork lift, except used on building sites for lifting blocks, bricks, tiles, slates, buckets of mortar, ground levelling, etc.

This book contains the lessons I have learned as an investor, builder, and developer, and combines it with my professional training and experience as a conveyancing solicitor.

You will learn:

  1. Getting started-finding the right property and how to avoid a bad one
  2. Where to find your property, and the problem with repossessed properties
  3. What to be wary of at auction
  4. How to deal with the auctioneer and negotiate the best price
  5. The problem with buying with a friend Rent or buy?
  6. How to use the internet for research and where to find the actual purchase prices of property in Ireland Mortgages, and the new Central Bank regulations in relation to deposits
  7. The types of mortgage and the difference between a mortgage and charge
  8. Self build houses and stage payment mortgages-how they work in practice
  9. The fees to expect in buying your house
  10. What you need to know about planning issues and your new home
  11. The critical importance of a structural survey, and why it may save you a fortune
  12. The problem with pyrite-and how to easily avoid it
  13. What your surveyor needs to look out for
  14. Critical questions about planning permission, building regulations, and compliance certificates
  15. What is conveyancing and what are the stages in a conveyance?
  16. The 2 types of registration of property ownership in Ireland
  17. The significance of a “family home” and what is a family home?
  18. The different types of ownership and why you need to be crystal clear about the difference
  19. The practical effect of “caveat emptor” when buying a house in Ireland
  20. Why buying an apartment is different from buying a house
  21. Why buying a new property is different from second hand property
  22. The most important thing that you as a buyer must do before signing the contract
  23. What the vendor’s solicitor does
  24. What the purchaser’s solicitor does
  25. The most important thing a purchaser should do before agreeing to buy
  26. Can a solicitor act for both parties?
  27. A comprehensive checklist for vendors
  28. A comprehensive checklist for purchasers
  29. What is marketable title and why it is so important
  30. What is the certificate of title system and why it is important for your protection
  31. Bonus chapter: selling your house, how to generate kerb appeal, and get the best price for your house.

You can buy the book an Amazon.co.uk in paperback or Kindle version.