Guide to Buying Your New Home in 2021
This simple guide outlines the general legal steps involved when buying your new home. Due to Covid 19 restrictions some meetings now take place via video link in these transactions. Also particular care should be placed on loan offers with Covid 19 clauses.
Once you have decided on the property you want to buy and have come through the bidding process you will pay a booking deposit to the estate agent which will hold the house at the price which was agreed. The estate agent however can take bids from other parties after you have sale agreed and pass those bids on to the vendors who have the final say so no contract is in place until both parties sign all of the contract documentation. The booking deposit is fully refundable should you decide not to proceed before you sign the contracts for the house.
Always ensure to get a receipt from the estate agent as proof of the deposit paid and never pay a booking deposit directly to the vendors if there is no estate agent involved. In such situations pay the booking deposit through your solicitor only.
The estate agent will then write to both the vendor’s solicitors and the purchaser’s solicitors to inform them of the sale and the various details agreed upon to include contents, closing dates and other special conditions of the sale. Make sure to agree the contents to be included and inform your solicitor of this detail. All contents to be included should be noted in the contract.
Your solicitor will then write to the vendor’s solicitors to request that the contracts and a copy of the title documents are sent to them. This can take between two to four weeks before the contracts and copy title documents are received by your solicitor. The main reason for any such delay is that the deeds to the property could be with a lending institution and the process of retrieving the deeds can take some time. During this time you may get your surveyor to fully survey the house, its boundaries and services. Remember you can still decide not to proceed with the purchase at this point if the survey is not to your satisfaction. Key points to watch out for with surveys – extensions, alterations, planning issues, dampness, fire safety issues, boundary infringements and rights of way. Always pass your survey report to your solicitor for review before signing the contracts as there may be detail in the report which your solicitor could not be aware of and may need to be aware of.
Once your solicitor receives the contracts and copy title documents it is your solicitors responsibility to read through all of the contracts and the title documents to ensure you are purchasing what is known as ‘good and marketable title’. Essentially this means there is no issue with the title. If you are buying a new build this process can take some time as generally the booklets of title are large and will take some time for your solicitor to fully review.
In order to certify the title to you and your bank (if obtaining a mortgage) your solicitor may need to revert to the vendor’s solicitors with a series of questions and queries known as ‘pre contract enquiries’ after the title and contracts have been examined. Once your solicitor issues the pre contract enquiries they must then wait for the vendor’s solicitors to reply to them before proceeding further.
Whilst title is being examined and queries answered your solicitor will receive your loan offer from your bank, if obtaining a mortgage. Contracts should only be signed once your bank have issued an unconditional loan offer. Always ensure you understand the terms and conditions of a mortgage before signing the loan documentation. Once your solicitor is satisfied that the title is in order and you have an unconditional loan offer or are a cash buyer you will be able to sign the contracts. Make sure also that your solicitor sends you a copy of the contract and read through same thoroughly.
Ask questions at this time as it is vitally important that you understand what you are buying. Conveyancing can be complicated however you should have a clear knowledge of what you are buying, the type of title, the boundaries, services, rights of way, conditions attached to the ownership of the property, existence of management companies and planning before you sign the contracts.
When signing your contracts you will have to pay a contract deposit as outlined in the contracts together with stamp duty, search fees and registration fees for the property.
Please note that you should not be allowed to sign the contracts until your solicitor is a) satisfied that the title to the property is correct and b) satisfied that you understand the loan offer and have agreed to it.
Remember this is the time to ask questions as once the contracts are signed you are bound legally to buy the house.
During this time your solicitor will return the signed loan offer to the lender and ensure that all special conditions of the loan offer are complied with. Please note it is not your solicitor’s responsibility to in any way assist with the buildings insurance or life policy documentation as these are non-legal matters associated with your mortgage. Remember if you are buying a new house always try and make the contracts 'subject to loan approval' as your loan offer may expire before the house is ready and this will protect you if your bank refuse to lend you the mortgage at that time if circumstances have changed for you.
You should ensure that all building insurance documents, life policy documents, direct debit mandate forms and any other non-legal item is with your bank as soon as possible after signing your contracts.
Once the contracts have then been signed by the vendors your solicitor will receive one part of the contract and arrange to close the sale. This ‘closing date’ will coincide with your plans for moving.
Generally your solicitor must receive your loan cheque or EFT transfer and or balance funds from you 5 clear days before the closing date so that it will clear in your solicitors client account in their bank.
It is your responsibility to ensure that all non-legal documents are furnished to your bank well in advance of the closing date to ensure a smooth closing of the matter. If you are buying a new home you will be required to carry out a snagging inspection and produce a snag list to be completed by the builders before closing. Never close the sale without all matters on the snag list being completed.
On the closing date your solicitor will then attend the office of the solicitors for the vendors and formally close the sale by handing over the funds to the vendors solicitors and receiving the original title deeds and keys to the property. You will then collect the keys from either your solicitor’s office or the estate agents office.
Once the sale has closed you must attend your solicitor’s office to sign the deeds.
Your solicitor will then stamp your deeds online with the Revenue Commissioners and thereafter ensure that you are the registered owners of the property by making an application to the land registry offices.
Once registration is completed the deeds will be returned by your solicitor to either the client if there is no mortgage or if there is a mortgage to the lender as and per the solicitors undertaking to your lender. Your lender will then hold the deeds until either you sell the property or pay off the mortgage.
Finally a few other points to watch out for:
- BER Certificates - your new house has to have one together with an advisory report
- Local Property Tax - this must be paid up to date and can be apportioned between the vendor and purchaser. Make sure the house is categorised in the right LPT band as and per the sale price.
- NPPR/Annual Household charge – again these charges must have been paid and a receipt should be available
- Service charges / managed properties – if the property has a management company make sure the service charges are paid up to date, that the company has accounts filed and are in order and has a sinking fund in place.
- Water charges/refuse/electricity/gas – ensure they are all paid up to date, get meter readings from your estate agent on the closing date and switch into your own name immediately.
- Contracts Subject to Loan Offer - if there will be a long lead in time before the sale closes it is worth considering as now loan offers usually only have a 3 month expiry date . Also with the new Central Bank lending rules this is more important than ever.
- If you are buying a property which has been repossessed by a bank or taken over by a receiver expect delays and a lengthy process. Sometimes this may also mean additional costs for architect’s re-certification of planning, services and boundaries.
Niall Geaney BA LLB 2017 (c)