Property Purchases and Sales | Terry Gorry & Co. Solicitors

Buying a House Versus an Apartment-Which is the Best Buy?

Are you thinking about buying your first residential property?

Have you decided whether you prefer a house or apartment?

In this piece I will give you my opinion about which is the best buy. I am assuming, in this article, you wish to live in the house, and not buy the property as an investment property.

But first, why should you pay any attention to me?

Firstly, I bought my first property in 1986. It was a small shop unit in Dublin with a one bedroom apartment overhead. Since then I have bought sites, other retail businesses, a petrol station, a pub, sites with planning permission, sites without planning permission, apartments, and houses.

I have also built a small (8 units) block of apartments. So, I have had a pretty long and, for the most part (with the exception of the property crash a few years ago), successful relationship with buying and selling property.

Let’s take a look, shall we?

The first big difference between buying a house and apartment is the legal interest you will be acquiring. Buying a house will mean you are buying a freehold interest; buying an apartment will involve acquiring a long leasehold interest.

From a legal perspective, this is not a problem. The leasehold for the apartment will be a long lease with a very small, insignificant rent. I have written elsewhere on this site about the differences between buying an apartment and house from a legal perspective.

The Management Company

Where problems may arise, however, is in the whole area of the management company.

In an apartment development each apartment owner becomes a member of the management company which will be needed to be set up. This management company’s job will be to manage and maintain the common areas-for example stairs, lifts, roof, of the development-and will have to appoint a managing agent who will manage it on a day to day basis.

However, problems with management companies can be common enough and some apartment developments are not well maintained with an understandable frustration for apartment owners and occupiers. Property owners will then retain the annual management company service charge, thereby making matters worse because the management company has even less money to provide the services.

Management companies also have to prepare and file annual accounts and collect the management fees from the owner of each unit.

In addition, it may have to pursue the owners who won’t pay by way of debt collection procedures which will be time consuming, expensive, and leave a bad taste all around.

Another factor to consider is that many apartments were purchased by investors as investments and future pension pots. This means that a large percentage of occupiers in an apartment block are likely to be renters. If you have a young family this may be less attractive for you given the likely higher turnover of occupants, and the lack of social cohesion in the “neighbourhood”.

Physical Problems

There is also the problem of anti social behaviour and noise pollution in an apartment complex versus living in a terraced or end of terrace house.

A problem I have also encountered from my own personal experience is leaking from balconies, and even bathrooms, causing damage being to neighbouring units. These problems can be hard to sort out, expensive, and lead to bad feeling between neighbours.

In summary, the problems I have seen with apartment living are

Poor management companies or agents
Noise pollution and hassle
Apartment units more likely to be owned by investors than owner occupiers.

The advantage of buying an apartment versue a house are

They are, all things being equal, cheaper than a house
They are lower maintenance, for example you will not have any garden to maintain.

Conclusion

My advice, and this is not legal advice but practical property advice from my own experience and observation since buying my first one i n1986, is that I would choose a house over an apartment if I could.

That is assuming that all things were equal, and we are comparing like with like-that is, a house and an apartment in the same area- I would choose a house, especially if I had a young family. If you are a retired person, then an apartment may well make more sense and you will not want to have to maintain a garden, access to public transport may be better etc.

Obviously you need to take into account your own personal circumstances-for example your family situation, your work circumstance, and budget-before choosing.

And my advice generally in relation to buying a property is to buy the worst property in the best area, rather than the best property in the worst area.

You can change many things about your property and make improvements over time, but you can never change its location.

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

Assessing where to buy your new property-the location
Assessing the physical condition of the property
Negotiating the deal with the vendor or, more likely, the auctioneer
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?

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.

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

Getting started-finding the right property and how to avoid a bad one
Where to find your property, and the problem with repossessed properties
What to be wary of at auction
How to deal with the auctioneer and negotiate the best price
The problem with buying with a friend Rent or buy?
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
The types of mortgage and the difference between a mortgage and charge
Self build houses and stage payment mortgages-how they work in practice
The fees to expect in buying your house
What you need to know about planning issues and your new home
The critical importance of a structural survey, and why it may save you a fortune
The problem with pyrite-and how to easily avoid it
What your surveyor needs to look out for
Critical questions about planning permission, building regulations, and compliance certificates
What is conveyancing and what are the stages in a conveyance?
The 2 types of registration of property ownership in Ireland
The significance of a “family home” and what is a family home?
The different types of ownership and why you need to be crystal clear about the difference
The practical effect of “caveat emptor” when buying a house in Ireland
Why buying an apartment is different from buying a house
Why buying a new property is different from second hand property
The most important thing that you as a buyer must do before signing the contract
What the vendor’s solicitor does
What the purchaser’s solicitor does
The most important thing a purchaser should do before agreeing to buy
Can a solicitor act for both parties?
A comprehensive checklist for vendors
A comprehensive checklist for purchasers
What is marketable title and why it is so important
What is the certificate of title system and why it is important for your protection
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.

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