Property purchase - qualification

lgormn

Hi apologies if this is not the right forum. I am trying to purchase a home and have received a note from my solicitor to say that they need to qualify the undertaking and certificate of title to the bank on the basis that there was a management company set up for the management and upkeep of the common areas within the development at the outset but it no longer exists. I'm not really sure what this means and I can’t find any information about this. Could someone help explain this to me and is this something that will hold up the sale of the property?

Lenar3556

Typically a lender will ask your solicitor to certify that the property you wish to purchase has ‘good marketable title’. I.e that it is likely to be readily saleable either by you or the bank in the future. (If it were not, it could greatly affect the banks security on the loan)

To qualify the undertaking means that your solicitor will raise this issue of the management company with the bank as being something which could impact the future saleability of the property. The bank will then consider this, (or seek the advice of another solicitor on their panel)

As to how big of an issue it is for you - It will depend. How big are these common areas? What happened the management company? Why does it no longer exist? If it became insolvent, and was struck off by the CRO leaving significant common areas for which no one is in fact responsible, that would tend to be a deal breaker for most lenders.

Claw Hammer

If there is no management company, there is no fire insurance on the building. Forget about a mortgage!

Lenar3556

https://www.boards.ie/discussion/comment/122414862#Comment_122414862

Depends on what was the managment company was for. It may have been in control of some car parking / green areas rather than an apartment block for example.

lgormn

https://www.boards.ie/discussion/comment/122414067#Comment_122414067

Thanks for the explanation - its for a house not an apartment block so the common areas were/are a green in the centre of the estate. It is around a quarter the size of a GAA pitch, if even that big. I work around the area where the house is situated and it is definitely maintained regularly. Everything else there is taken under charge by the local authority (roads, lighting & services) and I have a letter stating this from the vendor. The management company was dissolved a few years back and now there is a residents association instead. Each house contributes to the cutting of grass on the green throughout the year.

How long generally would the bank take to reply to the qualification? Is it common for the bank to refuse on this?

Lenar3556

That sounds rather minor.

Confirmation from the local authority that the roads and services are in charge may be helpful. Your solicitor possibly already has got this.

Perhaps also any further details as to circumstances why the Managment company was dissolved, and the alternative arrangements in place. Was the land transferred out of the company?

amykl_1987

https://www.boards.ie/discussion/comment/122414067#Comment_122414067

CRO would only strike off if annual returns are not filed. Otherwise it's if you file for liquidation of voluntary strike off.

Lenar3556

https://www.boards.ie/discussion/comment/122487670#Comment_122487670

Indeed. But when they become insolvent, and are no longer functioning, typically people lose interest and annual returns aren’t filed. The company is eventually struck off.

amykl_1987

https://www.boards.ie/discussion/comment/122487779#Comment_122487779

But has a liquidator been appointed (E2 form I believe)

Lenar3556

https://www.boards.ie/discussion/comment/122487786#Comment_122487786

A liquidation would be very unusual in an owners management company situation, there would rarely be any saleable assets.

amykl_1987

From experience OMC issues tend to be getting officers to appoint (director and secretary) so that could be the issue. Those on board sold up and moved and never got replaced and there is outstanding annual returns not filed. Remember the CRO had a covid exemption and since then their new system came in and strike offs haven't happened