Section 32 of the Local Government Reform Act 2014 came into effect on 1 July 2014 by virtue of S.I. No. 146/14.
It applies to all sales/leases closing on or after 1 July 2014, irrespective of the date of the contract, and introduces a number of important changes to the manner in which rates liabilities are to be treated, namely:
- It imposes a statutory obligation on a vendor to notify the rating authority that a sale has taken place and to discharge all arrears for which the vendor is liable (i.e. six years).
Where the rates due by the vendor are not discharged, those unpaid rates will be a charge on the property for a period of twelve years.
- It obliges a landlord to notify the rating authority that a tenant has transferred its interest (within two weeks of the assignment).
- It provides that a landlord will be liable "for a charge equivalent to no more than two years of the outstanding rates due" by a previous tenant where (a) the rating authority has not been notified by the landlord of an assignment and (b) the tenant did not discharge the arrears on the assignment.
The principal change, as a matter of law, is the potential for arrears of rates owed by a tenant to become a charge on the landlord's interest consequent on an assignment where any rates arrears have not been discharged.
This gives rise to a risk in consenting to an assignment of a lease unless the tenant provides evidence that all rates have been paid up to date.
For any queries in respect to commercial rates or leases please contact David Lavelle, Ray Fitzpatrick or Barbara Lydon.
08 September 2015