Category: Property Purchases and Sales

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Property Law Property Purchases and Sales

Problems arising with title to your property-statutory provision to the rescue?

buying irish property from abroad

The Land and Conveyancing Law Reform Act 2009 may come to your rescue if there is a problem with the title to a property.

Recitals

Section 59(1) provides

59.— (1) Recitals, statements and descriptions of facts, matters and parties contained in instruments, statutory provisions or statutory declarations 15 years old at the date of the contract are, unless and except so far as they are proved to be inaccurate, sufficient evidence of the truth of such facts, matters and parties.

Rent of leasehold

Section 59

(2) Where land sold is held under a tenancy (other than a subtenancy), the purchaser shall assume, unless the contrary appears, that the tenancy was duly granted; and, on production of the receipt for the last payment due for rent under the tenancy before the date of the actual completion of the purchase, the purchaser shall assume, unless the contrary appears, that all the covenants and provisions of the tenancy have been duly performed and observed up to the date of actual completion of the purchase.

All estates

Section 76 states

76.— (1) Subject to subsection (2), a conveyance of land passes all the claim, demand, estate, interest, right and title which the grantor has or has power to convey in, to or on the land conveyed or expressed or intended to be conveyed.

(2) This section takes effect subject to the terms of the conveyance.

Receipt clause

Section 77 (1) states

77.— (1) A receipt for consideration in the body of a deed is sufficient discharge for the consideration to the person giving it, without any further receipt being endorsed on the deed.

Implied covenants

Section 80 Land and Conveyancing Law Reform Act 2009 sets out the implied covenants in a conveyance for value. These implied covenants would include

  • The vendor has full right to convey the property
  • The vendor warrants a covenant for quiet enjoyment
  • The vendor warrants the property is free from encumbrances
  • The vendor will execute further assurances to vest the interest contracted, if necessary.

Statutory acknowledgment and undertaking

Section 84 binds the person in possession of documents to produce them for inspection or in court to establish title and to furnish copies on request.

Categories
Property Law Property Purchases and Sales

How to Negotiate Successfully-10 Tips for Effective Negotiations

negotiation tactics

Many people do not like to negotiate or haggle. But it is essential in our daily lives and we are regularly forced to negotiate whether we like it or not.

It may be with a loved one, with a child, with a service worker at an airline desk, with a receptionist in a hotel, with a Judge or member of an Garda Siochána, with a referee on a sports pitch, with an adjudicator at a WRC hearing, or when you are buying something like a car or a house or business.

If you accept this, you might as well learn how to do it successfully and for the best possible outcome.

I have negotiated to buy and sell property for over 30 years and I have learned, through practice and research, some useful tactics to the best results.

Let’s look at what I have learned, shall we, in the context of buying a house?

1. Listen carefully and aggressively to the other side

You need to listen very carefully to what the other side is saying because you will usually pick up some vital clue as to the other party’s real position-their real position as opposed to what the auctioneer says is the reason for sale. You may not meet the vendors themselves but if you do it is a good opportunity to pick up some vital clues about the property and the motivation for sale.

You need to practice the same aggressive listening skills when speaking with the auctioneer and the staff working in his/her office. It is amazing what you might hear in an unguarded moment when you speak with a busy receptionist or support staff.

You may not hear anything but keep in mind you have two ears and one mouth for a reason.

2. Adopt a friendly/playful voice

The tone of your voice and your general demeanour are factors in how the other side will react to you and your position. A friendly, non-threatening voice is the one I have found most helpful.

3. Tactical empathy

Showing empathy for the other party’s position is valuable and is only possible when you follow the advice in number 1 above: listen carefully to the other side.

4. Be prepared to walk away

No deal is better than a bad deal and you do need to be prepared to walk away. Splitting the difference is a lazy, misguided way of negotiating.

5. Getting to ‘no’

Forget about getting to ‘yes’ because you can very easily get to a false ‘yes’ which will not be delivered upon; you are better off getting to ‘no’ from the other side as you will have a better idea of their true position.

6. Deadlines can be an ally

You can make time your ally by recognising that even if a deadline is missed a new one can easily be introduced. Don’t rush into a bad decision, though, just to meet a deadline-let the other side worry about the deadline.

7. Stay calm

Keep your emotions in check, adopt the approach that ‘it’s just business’ and there is no need to lose the head or get carried away.

8. Most important word in negotiations

The most important word in negotiations is ‘fair’. If you tell the other side you only want what’s fair or want a fair deal you are more likely to get a deal.

9. Don’t ask ‘why’

Ask how or what questions, not ‘why’ questions. For example, ‘how am I supposed to do that?’, ‘how am I supposed to pay that much?’ Such ‘how’ questions will encourage the other party to bid against themselves and try to find a solution to your problem.

10. Arrive at a precise, specific final offer

Make whatever offer you like-something between 60% and 80% of what you are eventually prepared to pay-and increase this by reducing increments to arrive at a final specific, odd number-never an even number.

This gives the other party the impression that this is your true final offer and you have thrown everything at it to do a deal. Offer an even figure and the other party will not accept you are at your limit.

Conclusion

Negotiation is not an art that you cannot learn, or which is only something that you can do naturally and you are a born haggler. Far from it. There is a science to negotiating, too, and following the 10 tips above will help you getter better deals. Over time you will get better and better at it.

Good luck!

Categories
Property Law Property Purchases and Sales

Vat on Property in Ireland-the Essentials

Vat on property is something that is easy to overlook if you are buying commercial property. It may also apply to residential property, depending on the circumstances, so you need to be careful and obtain expert tax advice if there is any doubt in your mind.

The current situation with regard to VAT and property is the regime in place since 2008.

Since then most property transactions are exempt but there are important exceptions where the option to tax the supply of the property is exercised in certain situations.

When we refer to ‘property’, remember, we are also referring to leasehold property in addition to freehold interests.

Commercial property, new buildings

Vat is chargeable at 13.5% on a new building. A ‘new building’ is

  1. The first supply of a completed property within 5 years of completion
  2. The second and subsequent supply of a property, if the supply is made within five years of completion, and the building has been occupied for less than two years.

Commercial property, second hand buildings

Properties developed after 1st July, 2008 are exempt but the vendor and purchaser can jointly opt to tax.

If this option is not exercised the vendor/developer will face a clawback of a proportion of the vat which he has already reclaimed from Revenue on the acquisition or redevelopment of the property. This clawback will be calculated on the vat life of the property.

Leasehold property

After 1st July, 2008 all lettings are exempt from vat.

The landlord can, however, elect to tax and charge vat on the rent at 21%. If he does not opt to tax he will face a clawback based on the vat he has already claimed on the development and/or acquisition of the property.

This option to tax does not arise if the landlord himself or a person connected to him occupies the building.

Assignments of leases

The assignment of surrender of a long lease will be chargeable to vat if the tenant who is the assignor was entitled to reclaim vat on acquiring the original lease or the development of the property.

Residential property

The first supply of new residential property is liable to vat.

Valuable resource

This page from the Revenue Commissioners is worth reading closely if you are concerned about vat on property. You are strongly advised to obtain tax advice from an accountant or tax consultant if you suspect that the vat position is not clear in either your supply or purchase of property.

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Property Law Property Purchases and Sales

The Formation of the Contract in Purchase or Sale of a Property

In order for any contract to be enforceable you need 5 things:

  1. The parties must have the legal capacity to enter into a contract
  2. They must intend creating legal relations
  3. The contractual terms must be certain
  4. There must be offer and acceptance
  5. There must be consideration.

For the sale of land or real property it was the case that a written note or memorandum was made which was signed by the person to be charged with the contract. Although this requirement was relaxed by reason of the equitable doctrine of part performance.

Doctrine of part performance

This doctrine held that an oral contract for the sale of land, where no note or memorandum existed, could be enforced by the party seeking to enforce the contract has partly performed his actions under the contract and the other party has acquiesced in those acts of part performance.

Land and Conveyancing Law Reform Act 2009

This Act changed the law by repealing the old Statute of Frauds (Ireland) Act, 1695 as follows:

Section 51.— (1) Subject to subsection (2), no action shall be brought to enforce any contract for the sale or other disposition of land unless the agreement on which such action is brought, or some memorandum or note of it, is in writing and signed by the person against whom the action is brought or that person’s authorised agent.

[SF 1695, s. 2]

(2) Subsection (1) does not affect the law relating to part performance or other equitable doctrines.

(3) For the avoidance of doubt, but subject to an express provision in the contract to the contrary, payment of a deposit in money or money’s worth is not necessary for an enforceable contract.

Memorandum/Note of Agreement

The following matters should be included in the memorandum

  1. The parties
  2. The property
  3. The consideration
  4. Any other provisions agreed between the parties

Where the conditions of common law and the Land and Conveyancing Law Reform Act 2009 are satisfied an enforceable contract for the sale of land (real property) comes into being. This type of contract is known as an ‘open contract’ because all the terms of the contract are not set out in the memorandum.

Closed contract

A closed contract, by contrast, is one in which the parties set out all the terms of the agreement in a formal agreement. It is the practice in Ireland that the standard form Contract for Sale produced by the Law Society of Ireland is used.

You can learn more about the standard form contract for sale here. This is the contract that will be used in property transactions in Ireland.

Categories
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.