Purchasing Property/Outstanding Burdens

schmoo2k

I am in the process of purchasing a property, the seller has a clause saying that they don't know and are unwilling to confirm that there are no other outstanding charges / burdens against the property.

It is a receivership sale (not sure if that makes any difference).

Is it just a matter of making a "search" (how does one do that?) to see if there are any other outstanding liens on the title?

Our solicitor currently has the actual title documents for review.

Thoughts?

Reloc8

Leave it in the hands of your solicitor.

You're paying him or her to secure the purchase for you of an unencumbered property, at least I presume that is so so let them at it. Searches against the property is a normal part of the conveyance and your solicitor will be able to deal with the vendor on this.

schmoo2k

Indeed - but when they mention things like this, I like to have a vague notion of what is involved behind the scenes!

Procrastastudy

schmoo2k wrote: »

Indeed - but when they mention things like this, I like to have a vague notion of what is involved behind the scenes!

Honestly Land Law is like sausages - you really don't want to know.

Reloc8

schmoo2k wrote: »

Indeed - but when they mention things like this, I like to have a vague notion of what is involved behind the scenes!

Fair enough - basically, the other side (vendor) are not happy to give an assurance or representation as regards title to you - they took the view that its up to you through your solicitor to satisfy yourself that you're happy to buy.

Your solicitor will do searches against the property to establish stuff like whether any interest has been registered against it (such as a mortgage or judgment) which would be superior to the title you're trying to purchase and which would affect your ownership.

In a straightforward example, when you buy residential property its very often subject to a mortgage which is registered with the property registration authority. The purchasor's solicitor will confirm this through a search with the PRA (even if the vendor's solicitor actually told them about it the searches will still be done as a matter of good practice).

Its normal to have the purchasor's solicitor require that the purchase monies will be paid to the vendor's solicitor on that solicitor's undertaking to apply them to fully discharge this mortgage (amongst other things often) before giving their client any money.

If there is a cock-up (say you complete the sale with an outstanding judgment mortgage on the property) then its your solicitor's professional indemnity insurance which is on the line, as opposed to you being entitled to sue the vendor's solicitor or the vendor for rescission/damages.

All normal - but not something you'd take on yourself - you want your solicitor's insurance to cover something like this, the idea being of course that his or her expertise will in the first instance prevent any liability issue arising !

schmoo2k

That is very informative, thx.

I am surprised the selling solicitor can sell something (in this case a house) without being responsible for ensuring what they are selling is salable.

Out of curiosity how is the search done for possible liens against the premises (files of paperwork or online with West Law or such like?)

(Note: I did like the sausage analogy also...)

Reloc8

Well - caveat emptor, in that the vendor says here's the property, here's my title, do you want it or not ?

So, its for the purchaser to satisfy themselves that they are acquiring good title with a superior interest to any encumbrances, being that they are happy to take it subject to those encumbrances, if there are encumbrances, or that prior charges etc. will be cleared prior to or on closing.

Re Liens, you do searches in the Property Registration Authority, much as you do for any charges on the land (mortgages/judgments etc). You also insist on the original title deeds passing to you on completion - which means no one can claim a lien that hasn't been registered.

schmoo2k

I would be curious of your take on the current situation:
1. Bank has title to house which is part of portfolio of (I assume) bankrupt company.
2. Bank give to receiver to sell.
3. Receiver lists with estate agent who after two failed attempts to sell, goes sale agreed with ourselves.
4. We do the required searches and find various charges on the property.
5. We get senior council advice (we use same senior council that the receiver used for different matter relating to same property) and work with receiver and come up with a "road map" to make the title good for sale.
6. We get the usual mortgage approval from our Bank (who happens to be the same bank that is selling!).
7. The receiver goes back to bank with road map, which is now essentially down to getting assurance from that bank that 1 particular outstanding charge will be discharged in due course (there is a verbal agreement there, but we are now under time pressures), thus allowing us to close on the property and move in.
8. We have now just heard that the Bank have said to the receiver:
"Oh lets just clear that charge and put the property back on the market and see if we can get more money for it"

So engineers reports and usual stuff aside, we have effectively paid to rectify an "unsalable title" on behalf of the Bank to only get shafted at the 11th hour.

Right now I am in shock, this seems very unfair.

velosolex

I contacted the auctioneer selling a property in Dublin 8, paid and got a survey done, made an offer of the asking price and the auctioneer then informed me that "the contracts are out with a purchaser awaiting signature", needless to say I was unhappy that I was not told before I paid for the survey. I phoned the owner direct and relayed my story - he was surprised as he did not know that anyone was due to sign a contract! the sale was completed by the end of that week. It is my opinion that the auctioneer had this premises promised to the other party and was manipulating other potential purchasers to enable this.

Pat Mustard

velosolex wrote: »

I phoned the owner direct and relayed my story - he was surprised as he did not know that anyone was due to sign a contract! the sale was completed by the end of that week. It is my opinion that the auctioneer had this premises promised to the other party and was manipulating other potential purchasers to enable this.

You mean that the property went sale agreed at the end of the week. The sale transaction itself would probably have taken a few weeks.

In any case, this is what happens when auctioneers are almost completely unregulated. It's madness to allow them to negotiate large sums of other people's money when they are are almost unaccountable to purchasers.

schmoo2k wrote: »

I would be curious of your take on the
5. We get senior council advice (we use same senior council that the receiver used for different matter relating to same property) and work with receiver and come up with a "road map" to make the title good for sale.
6. We get the usual mortgage approval from our Bank (who happens to be the same bank that is selling!).
7. The receiver goes back to bank with road map, which is now essentially down to getting assurance from that bank that 1 particular outstanding charge will be discharged in due course (there is a verbal agreement there, but we are now under time pressures), thus allowing us to close on the property and move in.
8. We have now just heard that the Bank have said to the receiver:
"Oh lets just clear that charge and put the property back on the market and see if we can get more money for it"

So engineers reports and usual stuff aside, we have effectively paid to rectify an "unsalable title" on behalf of the Bank to only get shafted at the 11th hour.

I presume that the 'road map' you are talking about are steps to perfect title set out in Senior Counsel's opinion. There isn't any reason to hand the opinion over to the seller.

Are you saying that the bank is using your Senior Counsel's opinion on title in order to take the necessary steps to get good title? Is there an opinion on title with the title deeds already?

Receiver sales aside, in most property sales, clear title is expected to be given by the seller to the buyer. This means that it is expected that burdens and charges should be discharged from title, prior to sale. It is standard practise. It wouldn't be a Eureka moment for the seller's solicitors to think of something like that.

Are you sure that the bank is taking this action as a result of the work paid for by you? There are other possibilities which may be more likely.

If the receiver is pulling out of the sale now, I can see how you are upset. It may be shortsighted of the receiver to withdraw from the sale in the current market, unless he is sure of another buyer.