Buying a house with council development contributions unpaid

yllw.ldbttr

I am currently buying a house that our engineer says has some planning issues.

A few minor issues re the house elevation and location on site, small design changes, issues the engineer said would get retention no problem.

BUT, there are also some major issues.
It was sold to the original owner as a serviced site, but the developer never put in mains water, nor mains sewage. The site is near a small village in Cork.
The original planning stipulated a county council contribution of 15k.
This was never paid and property tax has never been paid either.

Original planning was granted in 2008 and building completed in 2009.

We really want this house.

I know there's no escaping the property tax, I'm pretty sure the solicitor has to deduct that from proceeds of the sale, but can we be liable for the original contribution which was not paid?

The vendor has no intentions of paying it since he claims he had to cover the costs of putting in a well and septic tank.

Any advice, could it affect the title of the property, does anyone know?

ABajaninCork

Personally, I'd walk away. The design problems aren't a showstopper, but the water mains and sewerage issues are!!

The vendor is liable for any property taxes due and your solicitor should ensure these are paid and up to date before title passes. I'm also surprised the vendor's mortgage company haven't said anything either. Surely the mortgage would have been granted on condition the water works were done, especially as the council promised a sizeable grant to do so?

What does your solicitor say?

Monife

If you are relying on a mortgage, it is unlikely the bank would agree to approve the drawdown with these planning issues. It is not good, marketable title. I am unsure if you would become liable for the charges, ask your solicitor. FYI, the vendor's solicitor will deduct 2013 and 2014 property tax from sale proceeds and you will only be liable for your due portion for 2014.

yllw.ldbttr

ABajaninCork wrote: »

Personally, I'd walk away. The design problems aren't a showstopper, but the water mains and sewerage issues are!!

I'm also surprised the vendor's mortgage company haven't said anything either. Surely the mortgage would have been granted on condition the water works were done, especially as the council promised a sizeable grant to do so?

What does your solicitor say?

Walking away certainly is an option but it is essentially our dream house, so we'd love to somehow work it out.
Original owner has no mortgage on the property. The other property on the site next door has the same issue, water and sewerage handled by well and septic tank but original planning was for mains. I assume this is an issue for the developer of the sites rather than the individual owners?

What do you mean re the grant? The vendor paid the cost of his own well and septic tank.

My solicitor has advised that we negotiate the issues via the estate agent before contracts are issued.

yllw.ldbttr

Monife wrote: »

If you are relying on a mortgage, it is unlikely the bank would agree to approve the drawdown with these planning issues. It is not good, marketable title. I am unsure if you would become liable for the charges, ask your solicitor. FYI, the vendor's solicitor will deduct 2013 and 2014 property tax from sale proceeds and you will only be liable for your due portion for 2014.

How could I find out whether the local council contribution would impact the title? I'd rather resolve that before I complete the sale of my own property.

Mrs OBumble

ABajaninCork wrote: »

... especially as the council promised a sizeable grant to do so?

What makes you think there would be a grant for this? It sounds like the developer never paid their original development levies and didn't do the work they should have done.

OP - all I'd say is that the house better be cheap. I don't know if they impose penalties as well as the tax, but the buyer is likely to be paying a lot to the council.

ABajaninCork

yllw.ldbttr wrote: »

Walking away certainly is an option but it is essentially our dream house, so we'd love to somehow work it out.
Original owner has no mortgage on the property. The other property on the site next door has the same issue, water and sewerage handled by well and septic tank but original planning was for mains. I assume this is an issue for the developer of the sites rather than the individual owners?

What do you mean re the grant?

My silicitor has advised that we negotiate the issues via the estate agent before contracts are issued.

Find out from the CC what happened regarding the grant, and how it can be resolved. I think Monife's right in that you can't draw the mortgage before these issues are resolved. And why do YOU have to negotiate with the EA? I would imagine that's the council to sort out. All the EA's doing is selling the house! Surely that's the solicitor's job to do? You're paying him enough!!

yllw.ldbttr wrote: »

How could I find out whether the local council contribution would impact the title? I'd rather resolve that before I complete the sale of my own property.

Again, I'd refer that to the solicitor.

yllw.ldbttr

Mrs OBumble wrote: »

What makes you think there would be a grant for this? It sounds like the developer never paid their original development levies and didn't do the work they should have done.

OP - all I'd say is that the house better be cheap. I don't know if they impose penalties as well as the tax, but the buyer is likely to be paying a lot to the council.

It's certainly at a discount to the market.
The tax will be the vendors problem to sort but I am worried about potentially being liable for the 15k council contribution.

ABajaninCork

Mrs OBumble wrote: »

What makes you think there would be a grant for this? It sounds like the developer never paid their original development levies and didn't do the work they should have done.

OP - all I'd say is that the house better be cheap. I don't know if they impose penalties as well as the tax, but the buyer is likely to be paying a lot to the council.

The bolded part below is what made me think the council were giving a grant/making a contribution. Of course, I am open to correction...

yllw.ldbttr wrote: »

I am currently buying a house that our engineer says has some planning issues.

A few minor issues re the house elevation and location on site, small design changes, issues the engineer said would get retention no problem.

BUT, there are also some major issues.
It was sold to the original owner as a serviced site, but the developer never put in mains water, nor mains sewage. The site is near a small village in Cork.
The original planning stipulated a county council contribution of 15k.
This was never paid and property tax has never been paid either.

Original planning was granted in 2008 and building completed in 2009.

We really want this house.

I know there's no escaping the property tax, I'm pretty sure the solicitor has to deduct that from proceeds of the sale, but can we be liable for the original contribution which was not paid?

The vendor has no intentions of paying it since he claims he had to cover the costs of putting in a well and septic tank.

Any advice, could it affect the title of the property, does anyone know?

yllw.ldbttr

Apologies, my fault re the wording above, the vendor was due to pay the council 15k.
That's the liability that I'm worried about.

ABajaninCork

Aaaah - NOW I get it!!

If the vendor's not willing to pay it, then either he discounts the 15k or I'd run! Why should you have to pay that charge??

yllw.ldbttr

ABajaninCork wrote: »

Aaaah - NOW I get it!!

If the vendor's not willing to pay it, then either he discounts the 15k or I'd run! Why should you have to pay that charge??

I can't see him paying it, nor can I see him discounting the price.
What I need to figure out is if the debt could be recoverable from me, or if it is attached to the person who built it/ original owner.
And also if it will impact the title.

Solicitor said it could... But I need a definite.

wexie

yllw.ldbttr wrote: »

Solicitor said it could... But I need a definite.

That's very much for your solicitor to clear up.

AFAIK the contribution stays with the property and the county council can (and for 15k most likely will) come after you for it.

If it was me I'd get the solicitor to contact the county council and get the county council to 'translate' the levies to today's values (I know this has been done before in Wexford, they may do it in Cork) you should find them to be significantly lower than 15k

EDIT : I'm not sure and can't find our own paperwork but I'm pretty sure that the levies are different depending on whether or not you're connected to mains water and sewage, that's certainly something to take into account.

fash

The levy attaches to the house. Plus interest.

However the house does not have permission- - what was built was never permitted and what was permitted was never built. You will need to apply for retention for the full house.

wexie

Have a look at this : http://www.corkcoco.ie/co/pdf/515124510.pdf

It would appear that the current planning contributions are about a third of what they would have been way back when.....

Much like the value of the house probably

(although I imagine it's good news for you )

yllw.ldbttr

wexie wrote: »

Have a look at this : http://www.corkcoco.ie/co/pdf/515124510.pdf

It would appear that the current planning contributions are about a third of what they would have been way back when.....

Much like the value of the house probably

(although I imagine it's good news for you )

When applying for retention do current rates apply or would the rates from the original planning period apply?

wexie

yllw.ldbttr wrote: »

When applying for retention do current rates apply or would the rates from the original planning period apply?

That I don't know, but it's certainly an interesting question

yllw.ldbttr

Feel a bit ill.
Pretty sure (from reading here) that this will almost certainly fall through.

wexie

yllw.ldbttr wrote: »

Feel a bit ill.
Pretty sure (from reading here) that this will almost certainly fall through.

Don't be discouraged just yet, no reason the sale needs to fall through.
However the council are going to want to see money, but that doesn't need to be 15k and it certainly doesn't need to be all paid in one go or up front.

The county council are probably very much aware of the fact that if the sale falls through they may never get any money, or at best it could be years down the line. From what I gather they may well be open to haggling these days.

Seriously, write down your questions and talk to your solicitor, this is a very large part of WHY you're employing a solicitor.

MouseTail

yllw.ldbttr wrote: »

Feel a bit ill.
Pretty sure (from reading here) that this will almost certainly fall through.

TBH I cant see how this house is saleable with these issues. You would want an enormous discount on market rates, and be a cash buyer.

Kristopherus

yllw.ldbttr wrote: »

I can't see him paying it, nor can I see him discounting the price.
What I need to figure out is if the debt could be recoverable from me, or if it is attached to the person who built it/ original owner.
And also if it will impact the title.

Solicitor said it could... But I need a definite.

The council contribution (rip-off) is payable by the developer. Is the vendor the original developer?

yllw.ldbttr

Kristopherus wrote: »

The council contribution (rip-off) is payable by the developer. Is the vendor the original developer?

Yes, one off house on what was meant to be a serviced site.

Kristopherus

yllw.ldbttr wrote: »

Yes, one off house on what was meant to be a serviced site.

If thats the case you should insist on him settling with the council.And also I would insist that he apply for retention as it is his smart antics that need to be addressed. You could be leaving yourself open to hefty extra charges is those issues are not addressed. Get you solr working on this tomorrow.

Mrs OBumble

yllw.ldbttr wrote: »

What I need to figure out is if the debt could be recoverable from me, or if it is attached to the person who built it/ original owner.
And also if it will impact the title.

Solicitor said it could... But I need a definite.

I know this isn't what you want to hear, but if your solicitor said it could, then the answer is that it could - no matter what some randomer here says.

What you need to find out - by asking the council, not us - is whether it's just the levy, or if it's not become the levy plus interest, debt-collection fees, etc.

Personally I'd be of the same mind as the poster who suggested that you need to get the vendor to get the retention before you even look at it. Because if you don't, then there'a a chance that you could apply, be refused, and end up with a house that you're not allowed to live in. (And esp if you're a blow-in to the area, I'd hazard a guess that this could easily happen.)

All that said, I wouldn't give up. You're an interested serious buyer. They can be few and far between in some parts of the country. Stand your ground, get good professional advice, but focus on what needs to be done to make this a winning proposition for all concerned. There IS a solution, you just need to find it.

TheDriver

You are buying trouble OP. Unless you are getting something seriously cheap and gambling why are you buying something that needs retention? What if they say no? How many things are not done properly that you haven't spotted yet? I would walk away because you will have many many sleepless nights with this and will hate the place by the time you're finished.....

yllw.ldbttr

Anyone have an idea of how long it can take to obtain retention?

TheDriver

If it goes well, only 12 weeks I think but you need a professional to submit, and there could be objections or simply council dont like it. Might be simple, might give you an ulcer

yllw.ldbttr

TheDriver wrote: »

If it goes well, only 12 weeks I think but you need a professional to submit, and there could be objections or simply council dont like it. Might be simple, might give you an ulcer

Thanks, that's probably long enough to cause the sale of my own property to fall through.

Thanks for the info everyone. Lots of food for thought.

JimsAlterEgo

yllw.ldbttr wrote: »

Anyone have an idea of how long it can take to obtain retention?

It may never be given, and in case with the council more than likely will not until the charge is paid.

yllw.ldbttr

JimsAlterEgo wrote: »

It may never be given, and in case with the council more than likely will not until the charge is paid.

Yes I understand that, just trying to figure out how long it would take if it were to be granted.

Ascii

Would I be correct in saying that the developer thought he would save the 15k by not paying for sewage and water and instead bore a well and install his septic tank. He will have no planning permissions for these works and these will need to be gained. If the well comes back with poor water results or the percolation area fails on the septic treatment plant, these will all require extra money to remedy.

Why someone would install a septic tank on their site when there is a mains sewerage system outside the door beggars belief. If that decision making and the rational was used throughout the building of the house on the whole, I would be very wary of what you are purchasing.

yllw.ldbttr

Ascii wrote: »

Would I be correct in saying that the developer thought he would save the 15k by not paying for sewage and water and instead bore a well and install his septic tank. He will have no planning permissions for these works and these will need to be gained. If the well comes back with poor water results or the percolation area fails on the septic treatment plant, these will all require extra money to remedy.

Why someone would install a septic tank on their site when there is a mains sewerage system outside the door beggars belief. If that decision making and the rational was used throughout the building of the house on the whole, I would be very wary of what you are purchasing.

I won't get into specifics but to be fair to the original owner it's much more complex than that.

There's no mains water nor sewerage within 100 metres of the house.

TheDriver

But you cant just do what you please outside of planning. He obviously thought to hell with it....i would be very concerned that septic tank wont have required space

JimsAlterEgo

yllw.ldbttr wrote: »

Yes I understand that, just trying to figure out how long it would take if it were to be granted.

however long it takes to satify the council as to quality of sewage and water works

yllw.ldbttr

As of this morning he has engaged an engineer to apply for retention and is regularising his affairs with the county council via his solicitor.

A move in the right direction then.

wexie

yllw.ldbttr wrote: »

As of this morning he has engaged an engineer to apply for retention and is regularising his affairs with the county council via his solicitor.

A move in the right direction then.

that certainly sounds like good news, a good indication that the vendor would like the deal to go through as well!!

Hope it all works out for you

cpoh1

Ascii wrote: »

Would I be correct in saying that the developer thought he would save the 15k by not paying for sewage and water and instead bore a well and install his septic tank. He will have no planning permissions for these works and these will need to be gained. If the well comes back with poor water results or the percolation area fails on the septic treatment plant, these will all require extra money to remedy.

Why someone would install a septic tank on their site when there is a mains sewerage system outside the door beggars belief. If that decision making and the rational was used throughout the building of the house on the whole, I would be very wary of what you are purchasing.

It is very common and in lots of cases unavoidable to have to install septic tanks and drill wells in houses out the country, i know lots of people who have systems like this, one friend in particular who didnt have any access to water or sewage mains anywhere near his house. He still had to pay the council €12k in connection fees which ended up being for electricity only. When building a new one off house these fees are applicable regardless of whether you actually connect anything.

The planning would have called waste and water connections out up front so there is no possible way it was skipped. Especially when wells and septic tanks are much more expensive than simply running a few pipes out to the road! Talks of retention is scaremongering.

OP this is a straightforward one, go talk to your solicitor. Either the owner stumps up the money and clears with the coco or you negotiate a discount and you clear on their behalf. Once the owner wakes up to the fact he cant run away from these costs and will have a vendors solicitor quering them no matter who is buying the house he will look after it.

cpoh1

yllw.ldbttr wrote: »

As of this morning he has engaged an engineer to apply for retention and is regularising his affairs with the county council via his solicitor.

A move in the right direction then.

What exactly does he need retention for?

yllw.ldbttr

cpoh1 wrote: »

What exactly does he need retention for?

His original planning stated water mains, but he has a well, so that, and my engineer listed a few other minor planning issues. Very slight deviations from the drawings etc.

cpoh1

yllw.ldbttr wrote: »

His original planning stated water mains, but he has a well, so that, and my engineer listed a few other minor planning issues. Very slight deviations from the drawings etc.

That's bizarre, and would make no sense financially because wells are expensive to install compared to running 3/4" line to the mains. Connection fees to the council typically have to be paid regardless so no saving there.

Make sure the rest of the house is absolutely spot on and no corners cut anywhere else.