O Rourke Reid

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O’Rourke Reid’s Residential Property Guide

Dear Buyer,

At O’Rourke Reid Law Firm we do our best to make the process of buying a property, whether you are buying your first house, moving home or investing in property straightforward and hassle free.

If you would like O’Rourke Reid Law Firm to act on your behalf in any of your Residential Property transactions, please contact our Private Client Department and we will be delighted to advise you further.

Yours sincerely,

Bernadette Young
Department Head, Private Client

Tel: 01 240 1261
Fax: 01 240 1210
Email: byoung@orourkereid.com

Contents

- The stages in buying a newly constructed House or Apartment
- Buying a Second Hand Property
- Stamp Duty
- Other things to be aware of when buying Residential Property
- The Home Buyer’s Checklist

The stages in buying a newly constructed House or Apartment

1. The booking deposit
Once you have found the home you have been looking for, the first step is to pay a booking deposit. This usually amounts to between €2,000 - €5,000 and is paid directly to the estate agent acting for the builder. You should ensure that the estate agent furnishes you with a receipt stating that the booking deposit has been paid Subject to Contract, title and loan approval. Once paid, the estate agent will then arrange for Contracts and Building Agreements, together with copies of the title documents, to be furnished to us, your solicitors. In general, if prior to the signing of the Contracts you decide not to proceed with the purchase of the property, the Estate Agent should refund the booking deposit to you.

2. How we act on your behalf
Once the Contract and Building Agreement are sent to us, we investigate the title to the property. We will forward a copy of the Contract and Building Agreement to you, together with the plans and specifications. If necessary, we raise any pre-contract enquiries with the solicitor acting for the builder. When satisfied that the title to your new property is in order, we then arrange a meeting with you at our offices to sign the Contract documents. On the signing of Contracts, you will be required to pay the balance of the deposit monies.

In general, the deposit monies will be 10% of the purchase price, less any booking deposit that you have already paid. However, on the purchase of a new house, the builder will often accept a lesser amount as a deposit. In any case, we will confirm the exact amount to you once we have received the Contract and Building Agreement. The signed Contracts and Building Agreements, together with the deposit monies, will then be returned to the builder’s solicitor.

It is only when these documents are signed by both you and the builder and the deposit paid and the agreements returned to us that you have a binding contract.

3. A Binding Contract
Once we have received one part of the Contract and Building Agreement back from the builder’s solicitor, a Binding Contract is in place. This means that the builder is legally obliged to sell the property to you and you are legally obliged to complete the purchase.

4. The steps you need to take in the meantime
Before signing Contracts and Building Agreements, we strongly advise that you obtain a Letter of Loan Offer in respect of your mortgage from your Bank or Building Society. Your Letter of Loan Offer will set out the terms and conditions of the loan including any special conditions you will be required to comply with.

To get a mortgage you must have Life Assurance and Buildings Insurance. Your broker or bank will offer you advice as to the best policies to suit your needs. It is imperative that you apply for your Life Assurance (mortgage protection policy) as soon as possible as some insurance companies will require you to undergo a medical examination. You should ensure that the Life Assurance (mortgage protection policy) and Building Insurance are in place and all other loan conditions are satisfied at least one week before the purchase of your house is due to complete.

You will also be responsible for completing a direct debit mandate in respect of your mortgage repayments for your Bank or Building Society. Remember that your loan cheque will not be released if this or any other special condition has not been satisfied.

There may be other conditions such as an Indemnity Bond Premium to be paid. This arises where you are borrowing over a certain percentage of the house price and your Bank or Building Society requires an additional policy to be put in place to ensure that their security is adequately covered. Again, your broker will advise you if this is required as it only arises in certain circumstances.

As your solicitors, we carefully explain the terms of your mortgage offer to you and arrange for you to execute all necessary documents which are then returned to your lenders.

5. Nearing Completion – What you should do next
When buying a new property, the builder’s solicitor will send us a Completion Notice, a copy of which we will immediately forward to you. Under the terms of the Contract and Building Agreement, you usually have a 14-day period from the date on which the Completion Notice is served to complete the purchase. Within this time you should arrange for an architect or surveyor to carry out a snag list of the jobs that need to be completed on the property. This list should be given directly to the site foreman.

Snags usually take 4 - 5 days to complete but the site foreman will confirm the time scale. Once all snags have been rectified, you should then arrange for a final inspection to be carried out. Provided the snag list has been satisfactorily attended to, you will then be in a position to complete the purchase of your new home. You should attend the property with the Estate Agent for a final inspection before completion.

If you fail to complete once all reasonable snags have been attended to, the builder will be entitled to charge interest on the balance of the purchase monies owing.

6. Completion Day – What happens on closing?
The closing of the transaction will take place at the offices of the builder’s solicitor, and we will be there to represent you. The title documents will be furnished to us by the builder’s solicitor and in return, the balance of the purchase monies will be paid over. We will have arranged for your loan cheque to issue from your Bank or Building Society provided you have complied with all Special Conditions in your letter of offer. We will send you in advance a Completion Statement which sets out the amount of all monies payable by you. On this day, the property will be transferred into your name and you will be handed the keys to your new home.

7. Post Completion
We will now proceed to stamp and register the title documents on your behalf. When completed, the title documents will be sent to your lenders for safekeeping.

Buying a Second Hand Property

If you are thinking of moving house or buying a second half property, the steps that you need to take are similar to what you do in buying a new property. The only step that is different is that the no building contract will be issued.

Survey
We strongly advise that you have a survey carried out on the property by a qualified surveyor or architect before signing Contracts. Even if the property is a relatively new property and is still covered by the Homebond Guarantee Scheme, a full structural survey is necessary. Protection under the Scheme will not be provided where there are defects which would have been obvious to a qualified surveyor.

The term “buyer beware” applies to all second hand properties – the vendor will not be liable for any defects which would have been apparent on inspection.

Outlays
Registration fees and other outlays are payable on the purchase of a property. We will be happy to provide you with a detailed schedule of the outlays payable on request.

Sale of existing property and Purchase of another property
If you are a home owner selling your existing property in order to purchase your new home, we advise that you should have an unconditional legally binding contract in place for the sale of your current home before signing contracts for the purchase of your new home.

The Closing Day
With a second hand property the closing date is set out in the Contract. Where you are buying and selling, we aim to complete the sale and purchase of your properties on the same day by attempting to agree the same closing dates in the Contracts for the sale of your existing house and the purchase of your new house. If that is agreed, we will complete the sale in the morning and the purchase in the afternoon. By doing so, the need for a bridging finance facility will be avoided.

Bridging Finance
Bridging Finance is a facility your Bank or Building Society may agree to make available to you if you purchase your new home before the sale of your existing property completes. The terms of the facility, including the applicable interest rate, will be agreed between you and your bank. Your lender may make available to you the balance of the monies required to complete the purchase, less the amount which you will be borrowing on your new mortgage. The bridging amount will then be redeemed by us from the proceeds of the sale. However, you must note that most banks will require that you have a binding unconditional contract in place for the sale of your existing property before a bridging facility will be made available.

Stamp Duty

The rate of Stamp Duty was changed in the 2011 Budget of 7 December 2010. A 1% rate is now charged on all transactions of residential property up to €1 million, with a rate of 2% applying to any residential property transaction in excess of over €1 million. The new regime is simply explained in the table below.

Consideration	Rate of Duty
€0 - €1,000,000	1%
Excess over €1,000,000	2%

These new rates apply with respect to all instruments executed on or after 8 December 2010.

The following reliefs and exemptions have been abolished:

First Time Buyers’ relief;
Exemptions for new build houses under 125 sq metres in floor area;
Relief on new houses over 125 sq metres in floor area;
Consanguinity relief for residential property transfers;
Exemptions for residential property transfers valued under €127,000; and
Site to child relief.

Other things to be aware of when buying residential property

Finding the best mortgage to suit you
You and/or your broker will decide with which Bank or Building Society you intend to take out a mortgage, having shopped around to find the best mortgage interest rates to suit your needs. If you opt for a fixed rate mortgage over a variable mortgage, you should be aware that you might be liable to a penalty fee should you redeem the mortgage before the end of the fixed rate term. Redemption arises where you pay off your mortgage early, redeem your mortgage by selling the property or if you refinance with another lending institution before the end of the fixed term.

Homebond Guarantee Scheme
In Ireland, almost all newly constructed houses which form part of a development are covered under the Homebond Guarantee Scheme. This means that for a period of 10 years from the date of final certificate, the property is guaranteed against certain defined defects of a major structural nature.

Certain defined defects of a non-major structural nature are covered for a period of 24 months. Definitions are provided in the Homebond documents furnished with the title documents. You must report any such defects to the builder and the Homebond Scheme as soon as they become apparent as any delay in doing so may invalidate the Homebond cover.

A similar scheme is now in place called the Premier Guarantee Scheme of Ireland.

Planning Search
Whether buying a newly constructed or second hand property, we advise that you attend your Local Authority Office to check the Planning Register and the Development Plan for the area, as these will provide you with information on any new proposed developments such as Compulsory Purchase Orders (CPOs), road widening or industrial sites for the area in which you are buying.

Building Insurance where you are purchasing an Apartment
If you are purchasing an apartment, your buildings insurance premium will be included in the annual service charge which you will be required to pay. We will arrange for a Letter of Indemnity to issue from the builder’s solicitor noting your interest and the interest of your lending institution on the insurance policy which is in place over the entire apartment block. This Letter of Indemnity will then be forwarded to your lending institution. The insurance covers the buildings only and you should arrange for your own cover for contents.

Household Services
If you are purchasing a newly built property, the builder will have arranged for the necessary services such as gas, electricity and telephone lines to be provided to the site. However, you are responsible for arranging connection to these services to your home by completing the necessary application forms for utility services. We recommend you do this several days in advance of the closing date to ensure that the services are connected when you move in.

If you are purchasing a second hand property you should take electricity and gas meter readings when you move in and arrange for the gas, electricity and telephone accounts to be transferred into your name as of the closing date. These forms are available from the relevant suppliers.

The Home Buyer’s Checklist

If the property is a second hand property – have you carried out a full structural survey?
Are Contract terms agreed to include closing date and inclusion of any contents in the purchase price?
Have you received your Letter of Loan Offer from your Lending Institution?
Have you arranged Life Assurance and Buildings Insurance?
Have you completed a Direct Debit Mandate?
Have you given proper evidence of identity to your lending institution?
Are there any other special conditions in your loan offer letter that need to be complied with, such as the provision of salary documents to your lending institution?
Have you carried out a snag list on the property if it is a new property?
Have you given us a copy of your state marriage certificate and PPS numbers as both are required to register your title to your new home? We will also require a copy of your passport/driving licence and utility bill.

This handbook provides general information only and should not be regarded as constituting legal advice in the purchase of residential property. O’Rourke Reid Law Firm shall not be liable for any loss, expense, damage or claim arising out of the information given or not given or statements made or omitted to be made in connection with this document.

All figures given are correct as of 8th of December 2010. However the rates may change periodically subject to legislation.