What do I need to know when buying an apartment property off-the-plan?
Buying “off the Plans” presents an entirely different set of challenges.
Buying “off the Plans” means Purchasing a Property which has not yet been built. You are buying based on the Developer’s Plans and specifications for the property and Development.
Some of the potential issues to bear in mind when purchasing a property “off the plans” are:
Without seeing the finished article, the Buyer must rely on the Developer to build according to the plans. A Developer usually contracts with the Buyer to build a property in accordance with the specifications provided and in a good and workmanlike manner and in accordance with all Planning Permissions, Building Regulations, etc. It is, however, also known for Developers to retain the right to make alterations to boundaries etc, although this should not affect the overall value of a property.
There will always be uncertainty as to when the property will be finished. The Buyer must rely on the Developer to build the property on time. If taking up a Mortgage on the property, the Buyer should ensure that his/her Mortgage Offer does not expire before the completion of the construction works.
If the Housing Market declines, the finished house may be worth less than the Buyer has agreed to pay. A Lender may not lend as much as was originally offered and the loan to value ratio would be an issue. This is a matter that needs to be discussed with your Solicitor.
If the Developer becomes insolvent after the Buyer has put down a deposit, the deposit may be at risk though, generally, there is Homebound or Premier Bond cover. Even where there is this cover, it can take some time for the Buyer to reclaim the deposit.
A Buyer should consider what he/she would do if his/her own circumstances changed before the property is finished e.g. Redundancy, Illness etc.
Employing an Independent “Snagging Architect/ Engineer” to inspect the property prior to completion of the transaction is essential. The Contract itself can force a Purchaser to complete even if there are minor issues which have not been addressed. However, early snagging can help avoid this eventuality.
A Buyer should not assume that he/she will able to “sell on” the property while under Contract and make a profit. Most Developers now add Clauses to ensure that it is Contracting Party alone who must complete the Purchase.
On a positive note, as the Property would not have been built at the time the Buyer commits to purchase it, a Developer may allow the Buyer to have a say in the fixtures and fittings in the property such as bathroom fittings, fitted kitchen, tiling etc. A Builder may also agree “extras” if the Buyer wants a particular interior finish.
If purchasing in a large development, a Buyer should consider which Phase the property is in. If the property is located within an early phase of development, the Buyer should be aware that Building works may well continue in the vicinity of the property for quite some time after completion of the Purchase.
If Purchasing a property from a Developer who is registered with Home Bond or Premier Bond, some protection is provided.
As in all property transactions, it is far better to speak with your Solicitor at an early date in the transaction to avoid unforeseen problems.
What is a title inspection report?
There are 2 separate systems for recording property transactions:
The registration of title system (Land Registry) which provides a State-guaranteed title to property
The registration of deeds system (Registry of Deeds) which records the existence of deeds and conveyances affecting property
A title is the ownership of a property and a deed is a written document that affects property.
Both systems are mutually exclusive. Your solicitor will know which of the 2 systems is relevant to your case. Both systems are under the control and management of the Property Registration Authority (PRA), an independent statutory body set up under the Registration of Deeds and Title Act 2006.
The Land Registry: registration of title
When title or ownership is registered in the Land Registry, all relevant details about the property and its ownership are entered on documents known as folios. These form the registers maintained in the Land Registry.
Property that is registered at the Land Registry is known as registered land, as every transaction on a property is registered on a folio. The folio is guaranteed by the State to be a confirmed record of the title to the property that it refers to.
A folio is a document that:
• Describes the registered property
• Refers to a plan on the Registry maps
• Gives the name and address of the registered owner(s)
• Describes any burdens affecting the property, for example, rights of way or charges (mortgages)
• You can use the folio to find out who has the title or ownership of a property, without having to read the original deeds.
The Land Registry also maintains maps or title plans of property described in the registers. These maps do not indicate whether a boundary includes a hedge, wall or ditch, so the registers are not conclusive on boundaries. Any dispute about boundaries must be resolved by the relevant parties. If they cannot reach agreement on the boundaries, the courts will resolve the matter.
You can search for a folio or title plan on landdirect.ie, or you can inspect a plain copy of a folio in the PRA’s public offices, which costs €5. You can also request a certified copy, which costs €40.
If the property is not registered in the Land Registry, it may have been dealt with by the Registry of Deeds.
Registration of Deeds system
The Registry of Deeds was established in 1708 to register and file memorials of deeds or transfers of unregistered land.
A memorial is a summary of the deed. It gives:
• The date
• The names and descriptions of all parties and all witnesses to the deed
• A description of the property affected by the deed
• Since May 2008, memorials have been replaced by ROD application forms.
When a deed is lodged in the Registry of Deeds it is not filed there permanently, it is returned to the party who lodged it for registration. Instead a ROD application form (formerly a memorial) is filed. The new signed deed becomes the latest deed showing the ownership of the property, adding to a chain of deeds that go back to when the property was first registered.
Deeds that are recorded in the Registry of Deeds have a legal priority over unrecorded deeds and other deeds recorded later in time.
As the memorial or ROD application form is on public record at the Registry of Deeds, anyone can inspect it and see who owns the property. However, a purchaser of unregistered land must read the actual deeds to examine the title to the property.