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Subsidiary folio on land/property

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  • 06-08-2020 5:23am
    #1
    Gadgie
    Registered Users Posts: 1,079 ✭✭✭


    An auction property I'm interested in buying has a subsidiary folio attached. The property is in receivership and the bank obtained a judgement mortgage on the folio, which was subsequently transferred to a subsidiary folio. Can anyone tell me what this is? There's some info on the PRAI website, but I can't make head nor tail of it.

    The bank already had a mortgage on the folio, the ownership of which was transferred to a fund (Beltany property). There are a couple of other judgement mortgages on the folio, from builders I think. The contract for sale says that the receiver will discharge all the burdens on the folio. I'm wondering if this applies to the subsidiary folio though.

    I'll be getting legal advice from a solicitor before signing the contract if I decide to bid on the property, but just hoping someone can help me understand some of the issues before I go down that road.

    Let me know if you need any more info.


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    #2
    chops018
    Registered Users Posts: 2,458 ✭✭✭chops018


    Usually in a Receiver sale a Form 24 by the Mortgagee/Receiver cancels all subsequent charges.

    However, if there is an associated folio then I am not sure. It would depend on what folios are being transferred. If it is both folios and the same charges are thereon then naturally the Form 24 for transferring both folios should see the subsequent charges being cancelled and you get clean title.

    It's difficult to say without sight of the contract and folios involved.

    As you say, this is one to get proper legal advice on.


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    #3
    Gadgie
    Registered Users Posts: 1,079 ✭✭✭Gadgie


    I downloaded the subsidiary folio and part 1a has the same text about the judgment mortgage ontained by the bank that is on the main folio. Part 2 says that Beltany is the owner.

    Anyway, I'll be getting a solicitor to review before deciding to bid at the auction. There are other potential issues with the property in relation to planning.

    Just for my own understanding, what is the purpose of the subsidiary register and why would the bank's judgement mortgage need to be registered on both the main folio and a subsidiary?


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    #4
    chops018
    Registered Users Posts: 2,458 ✭✭✭chops018


    Gadgie wrote: »
    I downloaded the subsidiary folio and part 1a has the same text about the judgment mortgage ontained by the bank that is on the main folio. Part 2 says that Beltany is the owner.

    Anyway, I'll be getting a solicitor to review before deciding to bid at the auction. There are other potential issues with the property in relation to planning.

    Just for my own understanding, what is the purpose of the subsidiary register and why would the bank's judgement mortgage need to be registered on both the main folio and a subsidiary?

    My guess is that the registered owner used the land on the "head" folio and also the "subsidiary" folio, as you call it, as security to obtain a loan/finance from a lender.

    The owner got a loan and put up both folios as security. The mortgage/charge was then registered on each folio with the exact same wording as more than likely they were registered on each folio as a burden for the same thing i.e. cross charged lands over one loan. Basically, someone who owned two pieces of land registered over two folios got one loan and had to register that loan as a burden over the two folios.

    Thread carefully, cross charged loans can sometimes be missed. Just get assurances that the folio you are looking to buy will not have the charge that is registered on the other folio affect you.

    I would put this to the Solicitors for the Receiver while you await having a Solicitor look at it - they should give you an answer. You really do need to have a Solicitor review it all in its entirety.


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    #5
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Have you looked at the contract for sale? What Folio is being transferred?


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    #6
    Gadgie
    Registered Users Posts: 1,079 ✭✭✭Gadgie


    chops018 wrote: »
    My guess is that the registered owner used the land on the "head" folio and also the "subsidiary" folio, as you call it, as security to obtain a loan/finance from a lender.

    The owner got a loan and put up both folios as security. The mortgage/charge was then registered on each folio with the exact same wording as more than likely they were registered on each folio as a burden for the same thing i.e. cross charged lands over one loan. Basically, someone who owned two pieces of land registered over two folios got one loan and had to register that loan as a burden over the two folios.

    Thread carefully, cross charged loans can sometimes be missed. Just get assurances that the folio you are looking to buy will not have the charge that is registered on the other folio affect you.

    I would put this to the Solicitors for the Receiver while you await having a Solicitor look at it - they should give you an answer. You really do need to have a Solicitor review it all in its entirety.

    Sorry, I should have been clearer. The subsidary folio contains only the bank's judgment mortgage, and appears to have been created using the same instrument that registered the judgment mortgage on the main folio.

    The bank's judgment mortgage is on part 3 of the main folio, with a note saying that the "title to this judgment mortgage has been transferred and is now registered on folio [xxxxx]S entry no 1".

    There's nothing else on the subsidiary folio, and on the land registry website it covers the same land area as the main folio.

    Am I allowed to contact the receiver's solicitor directly? I thought my solicitor had to do that?
    Claw Hammer wrote: »
    Have you looked at the contract for sale? What Folio is being transferred?

    The contract for sale only mentions the main folio. I only became aware of the subsidiary folio by reading the certified folio copy in the legal pack.

    Thanks for the replies - I really do appreciate them. And I will get a solicitor to review the documents if I decide to make a bid. I'm just trying to get things straight in my head before I go down that route.


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    #7
    chops018
    Registered Users Posts: 2,458 ✭✭✭chops018


    Gadgie wrote: »
    Sorry, I should have been clearer. The subsidary folio contains only the bank's judgment mortgage, and appears to have been created using the same instrument that registered the judgment mortgage on the main folio.

    The bank's judgment mortgage is on part 3 of the main folio, with a note saying that the "title to this judgment mortgage has been transferred and is now registered on folio [xxxxx]S entry no 1".

    There's nothing else on the subsidiary folio, and on the land registry website it covers the same land area as the main folio.

    Am I allowed to contact the receiver's solicitor directly? I thought my solicitor had to do that?



    The contract for sale only mentions the main folio. I only became aware of the subsidiary folio by reading the certified folio copy in the legal pack.

    Thanks for the replies - I really do appreciate them. And I will get a solicitor to review the documents if I decide to make a bid. I'm just trying to get things straight in my head before I go down that route.

    Yes, of course you can, better to come from your own solicitor but if you were a buyer who was representing themselves until the bid was accepted then you can make whatever queries you want before the auction.

    If it is the Receiver/Mortgagee who owns the charges selling then more than likely you will be fine but of course have it checked fully by your own solicitor and do indeed ask questions of the auctioneer or the solicitors for the Receiver.

    I see it is only the main folio being sold. That is very odd. As I said, you rightfully need to ensure that proper, clean, marketable title will pass to you once the sale has closed. Just literally ask them the question:

    "I see at entry number X on part 3 of the folio it mentions the charges/judgment mortgages are registered on folio Y, can you please confirm that this will not affect the folio the subject of the sale and that upon completion of the purchase that the purchaser will receive good, clean, marketable title with all charges cleared?".


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    #8
    Robbo
    Moderators, Social & Fun Moderators, Society & Culture Moderators Posts: 10,559 Mod ✭✭✭✭Robbo


    chops018 wrote: »
    My guess is that the registered owner used the land on the "head" folio and also the "subsidiary" folio, as you call it, as security to obtain a loan/finance from a lender.
    A subsidiary folio was most likely created due to the involvement of NAMA at some point. When NAMA sold on the loan, the new owner of the charge would have prudently registered their interest on both the main and the subsidiary folio.

    I'm not entirely sure if their needs to be the same level of replication when removing the charge but it's something for the OPs solicitor to advise on.


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    #9
    chops018
    Registered Users Posts: 2,458 ✭✭✭chops018


    Robbo wrote: »
    A subsidiary folio was most likely created due to the involvement of NAMA at some point. When NAMA sold on the loan, the new owner of the charge would have prudently registered their interest on both the main and the subsidiary folio.

    I'm not entirely sure if their needs to be the same level of replication when removing the charge but it's something for the OPs solicitor to advise on.

    See that now, cheers. Exactly why you need a Solicitor to look at the contract and title documents properly and why guesstimations from limited info online are not really any good!


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