Buying a house often also brings people into contact with solicitors for the first time. There is a substantial legal requirement to the process and having a solicitor work with you who keeps you updated on how things are proceeding can eliminate a lot of stress from the situation.
We’ve got a checklist for you below on what buying a house in Ireland entails from a conveyancing point of view.
1. Decide on which property you want to buy
This sounds like a no-brainer but it is the start of the property buying path. Don’t underestimate the amount of time this takes. You’ll need to consider many factors before you decide on the apartment or house you want to buy, not least the budget available to you.
2. Figure out your budget
You can and should be doing this at the same time as choosing your property. Unless you’re buying for cash, you’re going to be speaking to many banks to raise the most competitive mortgage you can. The more money you have saved for your deposit, the more, in theory, you’ll be allowed to borrow. A substantial deposit will also help you negotiate better repayment terms with your mortgage lender. You’re also going to need to support your mortgage application with extensive documents to prove your credit-worthiness. Make sure you start a file where you keep your bank statements, credit card statements and salary slips together. Banks will provide you with a list of the extra documents they may want to see.
3. Make an offer / the booking deposit stage
It’s at this point your solicitor steps in. Most conveyancing transactions start with you, the buyer, giving your solicitor permission to represent you and receive the title deeds of the property. If the offer is accepted this is the point at which you are normally required to pay a booking deposit to an estate agent. This will generally amount to between 3-5% of the purchase price. This payment is refundable if you do not proceed prior to signing a contract. If it is a private sale (i.e. no estate agent involved), no deposit will generally be paid until contracts have been signed at which stage the full 10% deposit will be paid to the Vendor’s solicitor unless a lesser deposit is agreed. The contract is prepared by the Vendor’s solicitor and sent to your solicitor. As solicitor for the Purchaser, it is our task to check the terms of the proposed contract and review the title documents. This involves examining any issue which may affect the type of ownership that you as buyer will enjoy such as planning issues, rights of way, mapping issues etc.
Reaching the contract stage of house purchase is a milestone. All houses, land and apartments sold in Ireland are governed by Section 2 of the Statute of Frauds Act, 1695.
Essentially, this rule is about making sure that the sale is recorded in writing. There needs to be written evidence of the price paid for the property and solicitors use the contracts stage to record this information the conditions of sale.
The contract will also:
- Establish provision for a spouse who doesn’t own the house. The Family Home Protection Act 1976 states that a spouse can’t sell property without approval from the non-owning spouse if it is the family home. This has to be agreed to at the contract stage and the document signed accordingly.
- Capture the names and addresses of all parties.
- Record the details of the purchase price and deposit paid for the property.
- State the closing date. The closing date is when both the seller and the buyer agree that the purchase should be finalised, the money paid to the seller and the deeds and keys to the house delivered to you as the buyer.
- List all the documents that have been delivered to you as part of the house purchase. These documents include items like surveys and reports on the state of the property. If you sign the contract without reading through all of the documents, it is assumed that you are aware of what they say and you’ll have no recourse to counteract these later. So read every document!
- Confirm that standard conditions apply. The most well-known condition relates to planning permission. If standard conditions do not apply these must be expressly set out in the contracts.
5. Time to search
These are made to protect you. Some searches are done before the contract stage and some on the closing day.
Searches made prior to contract stage are:
- Planning search. This search will yield information on how the house is zoned, i.e. whether it is purely residential or commercial. It will provide details of planning permission applications that have been approved or denied in the past and it will say whether there are any changes planned for the area you are buying in.
- Licensing search. This search pertains to a pub or hotel.
- Compulsory Purchase Order Search. This search establishes whether the seller is the sole person who has the title deeds of the house.
The day the property transaction closes, the following searches are made:
- Land Registry Search. This search establishes who the owner of the property is.
- Company search. This search happens if a company is buying a property and the search confirms that the company exists.
- Judgement search.
- Bankruptcy search.
- Sheriff and Revenue Sheriff searches.
- Registry of Deeds searches.
There are more costs involved with buying a house than the deposit and purchase price. You need to factor in:
- Stamp Duty - determined by how much the house is worth.
- Search fees - cover the cost of all the searches.
- Solicitor fees - these vary from firm to firm and are usually competitive.
- Surveyor fees - cover the surveyor’s work.
- Registration fee - covers the cost to register the new owner of the title at the Land Registry or Registry of Deeds.
- Insurance - banks insist that insurance is organised as part of the requirements of securing a mortgage.
Although buying a property in Ireland is a more complex process than many people initially think, it is a rewarding one and working closely with your solicitor can make the process a lot smoother.
Here at Augustus Cullen Law we have extensive knowledge of property law and experience in helping people buy homes. We’re always eager to assist so call us if you’d like to talk to us about being your conveyancing partner when you’re in the market to buy a house.
28 November 2016