There are many issues that have to be dealt with when buying a property and as there is so much at stake it is imperative that a purchaser seeks legal advice. Below is a general guide to purchasing a property. There are many issues to consider when buying a property and we set out below a general guide.
Steps in Purchasing a Property
- A booking deposit will be required and is payable to the estate agent/auctioneer. The amount of the booking deposit will vary depending on the purchase price. This deposit will be refundable up until such time as the contract for the purchase of the property is signed by both the seller and the purchaser.
- At this time you should begin to look for a solicitor who is experienced with property transactions. It is important that you choose the right firm as the purchase of a property is the most expensive transaction that most people will make in their lives. A solicitor offers peace of mind by examining all relevant documents that are necessary to complete a property transaction.
- Most purchasers will have been pre-approved for a loan/mortgage before paying a booking deposit. A purchaser will now have to contact their bank to set up a mortgage agreement. Once you have been approved, the bank will issue a Letter of Offer which sets out the details of the loan agreement. Your solicitor will receive a Loan Pack which sets out the details of the mortgage documentation. Your solicitor will review the Loan Pack and discuss and explain the details to you. Documents will then be signed to allow you and the bank to proceed with the mortgage agreement.
- It is a requirement of virtually all banks that life insurance is taken out by the purchaser when a mortgage is obtained. This is in case either party dies while the mortgage is still in existence.
- Another type of insurance that will likely be required by all lending institutions is property insurance. This should typically cover accidents that are reasonably foreseeable i.e. flood damage, fire damage etc. It is important that the insured value of your buildings and contents are representative of their actual value to replace.
- The vendor’s solicitor ( solicitor acting for the person selling to you) will next send the contracts of sale to your solicitor. All relevant documentation of title should be sent with this contract for your solicitor to review. Your solicitor will arrange an appointment with you and the final details can be reviewed and amended if necessary.
- Your solicitor will suggest that the property be inspected for structural integrity. This is to ensure that a comprehensive inspection is carried out, and any flaws that the property has are known so that you can make a well-informed decision on the house that you are buying. An engineer or surveyor is best qualified to carry out such inspections. This is also necessary to ensure that any extensions have been carried out to specifications set out in the planning documents.
- Once you are satisfied that everything is in order, you will then be ready to sign the contract of sale. A sum of 10% of the purchase price will be used as a deposit. If the house is newly built i.e. by a developer/builder then the contract will be between you and them. There may also be a building agreement which sets out the exact specification as to which the house is to be built. The vendor’s solicitor will then be sent the documentation in duplicate for signing by the vendors.
- The seller’s solicitor will return one part of the contract of sale and other relevant documents such as the building agreement to your solicitor and at that stage, the contract will become binding on both the vendor and purchaser.
- Having already raised pre-contract your solicitor will then raise a full set of what are known as requisitions on the title and at the same time, your solicitor will draft the Deed transferred the property to you and let the vendors solicitors have a note of their closing requirements to allow for formal completion. This all occurs when your solicitor starts drafting the deed. The deed puts the property into your name.
- The completion of the purchase will take place at the vendor’s solicitor’s office unless agreed pre-contract to take place elsewhere. Your solicitor will check to make sure that everything is in order and transfer the funds and at that point, the auctioneer will be authorised to release keys to you.
- Post completion, your solicitor to attend to stamping the purchase deed, registering your ownership and registering a charge in favour of your lending institution and once that is concluded, schedule all of the deeds and return same to your lending institution to be held until the loan is cleared or the property is sold or refinanced.
Stamp Duty will have to be paid on the purchase of a property. The rate is 1% on residential properties that are valued under €1,000,000, with properties over that amount subject to a 2% rate. Non-residential properties are subject to a 6% rate regardless of value. The Revenue Commissioners provides your solicitor with a digital Revenue Certificate for placing with your title deeds which is required to allow registration of the title deeds in the Property Registration Authority. Since the 11th of October 2017, the stamp duty rate for non-residential property increased from 2% to 6%. A scheme introduced by Revenue allows the potential for a refund of a portion of stamp duty paid where the rate of 6% was charged. Read more here.
A Building Energy Regulation (BER) Certificate has to be provided for every home being sold by the seller. This Certificate advises as to the energy efficiency of the house. The Certificate will also be accompanied by an Advisory Report explaining how the house could be more energy efficient.
There are a number of costs to be considered when purchasing a property:
- Solicitors fees,
- Searching fees: relates to the title,
- House Insurance,
- Life Assurance,
- Architects/Engineers fees,
- Registration Fees in the Property Registration Authority,
- Stamp Duty,
- Miscellaneous additional outlays such as Commissioner for Oaths fees, legal searches, copy folio and file plan etc.
Purchasing a house is probably the biggest investment a person can make and it is critical that this transaction is carried out both diligently and effectively. Solicitors deal with such transactions on a daily basis and have extensive knowledge in relation to same. It is advisable that legal advice should always be sought before undertaking to purchase a property.