Tipp FM Legal Slot – 31st March 2015 – Monthly Wrap Up – Modern Transactions, Buying & Selling Property
On Tipp FM, John M. Lynch spoke to Seamus Martin on ‘Tipp Today’ about discussions over the past few weeks.
[soundcloud id=’198559550′]Modern Transactions
We hear a lot about delays in conveyancing – what can you tell us on this issue?
As we are all too painfully aware the practice of buying and selling has become plagued by bottlenecks in recent times. Sales are being lost, banks withdrawing funding and buyers and sellers suffer extreme frustration and financial loss.
More and more we are finding that a significant amount of time is spent dealing with a transaction that does not get finished. We are hearing a similar story across the board.
This was echoed recently at a meeting of the Oireachtas Committee on Justice earlier this month. They highlighted that a survey of the Institute of Professional Auctioneers and Valuers (IPAV), which represents almost 1,000 auctioneers, found that the average transaction time was 4½ months.
One of the reasons put forward for this was unwillingness by solicitors to deal by email which is obviously much quicker than sending correspondence by letter.
We, at Lynch Solicitors, have used email for almost 10 years. We are also in the process of actively changing how we engage in the conveyancing process. We have had discussions with clients and consultations with auctioneers and other stake holders to see if we can reduce transaction times and failure rates.
What about changes to the overall process?
Our governing body the Law Society has also picked up on the need to make the transaction of buying and selling much more efficient. It has taken the lead from the UK system (which is streets ahead of us time wise) by launching an e-conveyancing initiative. This would mean that by the target date of December 2017, hopefully all paperwork will be uploaded and dealt with on a centrally located computer system. This means that all parties to a transaction have instant access to paperwork from the outset. Exchange of funds can take place electronically rather than by cheque or bank draft which can in itself add an extra week per payment to the time involved.
This is all very welcome and will improve the process for the consumer.
Will this work in all cases?
There will continue to be cases that title will need to be checked in full. Issues will continue to arise with planning permission. We will still have to ensrue MUD Act compliance. We will continue to have to investigate roads and services.
The recent introduction of extra property charges (Household Charge, NPPR, Local Property Tax) where receipts or certificates back to 2009 must be provided have not helped to ease the transactions.
Can people themselves do anything to speed things up?
People involved in buying or selling should really contact their solicitor at an early stage to help be in a positon to issue a contract as soon as a house or buyer is found.
If all the paperwork required for these areas is not present the purchaser may find that they have difficulty selling the property on again or getting a loan on it and with the taxes that apply if the correct records are not to hand the amount outstanding remains as a “mini-mortgage” on the property which will be the purchaser’s responsibility. It is vital then that all these boxes are checked before funds are handed over.
It is hoped that the new system will reduce the average time to purchase from 22 weeks to 5 days where no mortgage is involved, which would prove a milestone for those working in this area and for their clients in turn.
Property
We spoke this month about buying in a recession and some of the things to look out for – can you give the listeners a quick summary of the most important points?
Property Prices have been a regular feature in the news over the past few years. We are constantly hearing that prices are at an all-time low and that it is a buyer’s market. Now is a great time to buy given that there will be a limited window before prices are likely to rise again – we see in Dublin for example where properties are being sold well over and above asking prices for the first time in years – for those who have the finance then now is the time to make a move to purchase.
And what are the things purchasers need to do at the beginning?
Those who are interested in purchasing should do their research first and foremost. Once the right property is found is when you then contact your solicitor to get the ball rolling and lead you through the formalities.
What exactly does the solicitor do?
It is our job to iron out the contract and investigate the title to the property. We have to be sure that the property has a good marketable title so that you will not have any problems selling or mortgaging the property.
We at Lynch Solicitors take a pragmatic approach to buying and selling property but at the heart of that are our client’s best interests. Always remember the day you buy is the day you sell.
Speaking of being pragmatic we also spoke about tips to make sure that if you are selling your property things will go smoothly..
As a seller you want to sell your property at the best price and to the best buyer.
You want the transaction to run as smoothly as possible with minimal delays and minimal costs.
Timing is obviously important then?
It’s critical that you don’t waste time. As soon as you decide to sell your property consult with your auctioneer and your solicitor so that any potential issues can be identified. The bottom line is act early act and do not wait until you find a buyer to take action. Some solicitors will be reluctant to get the ball rolling until a booking deposit is paid to the auctioneer by a purchaser but at Lynch Solicitors we feel that this leads to wasted time and would urge that all work that can be done would be done at an early stage to avoid delays down the line.
What does the solicitor who is acting for a seller do?
The most important things that your solicitor can assist with early on are making sure the title documents are located and available. This can take time if there is a mortgage on a property and they are with a lender. I had a case recently where a client of mine was purchasing and it took up to three weeks for these to come through.
Also you will need to be sure all NPPR, Household Charge and LPT are paid to date.
Your solicitor will also deal with NB issues such as clarifying whether roads and services are in charge of the local authority and can ensure the relevant planning compliance is to hand. Doing this early on will mean that you will close the transaction sooner and minimise any delays that could occur or issues that would arise.
Remind us again then what people should be doing if they are looking to buy but need a mortgage to do so..
For most people getting a mortgage will be the most important financial decision they will make. Those seeking to get finance to purchase should shop around themselves or through a mortgage broker early on to see what offers are out there. In applying, you will need to provide the bank with payslips, proof of employment, bank statements etc and we would advise having these gathered at the earliest stage.
What happens when you are approved?
Once you are approved, a loan offer letter will be issued to you by the lender and a copy will be sent to your solicitor and we will go through it with you in detail. This is very important to make sure that you understand what is expected of you and that you are confident that you can comply with any conditions that must be met. The devil is in the detail and so all small print terms and conditions will need to be reviewed.
What are some of the things to be wary of?
What a lot of borrowers do not realise is that many loan offers will contain what is called an “all sums due clause”. This essentially means that all of your indebtedness to the lender for example your car loan or credit card bill are also secured against the property.
It can be very tempting to try and borrow as much as possible but you need to think about the future and events that might impact on your ability to repay for example childcare costs, higher interest rates & redundancy – If you do not meet your re-payments the bank can take obviously legal action to repossess your house.
