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Why Does it Take So Long to Sell a Property in Ireland?
It is said that a Kerry man, when asked for directions, once replied “well I wouldn’t have started from here anyway!” The same is true of the Irish property conveyancing system. Were one to sit down and design, from scratch, a system to maintain a record of who owns what property and to facilitate efficient transfer of title, you wouldn’t have designed the system that we have today. Alas, our conveyancing system is a mishmash of procedures and processes that literally date back hundreds of years to when the British ruled Ireland. It is not at all uncommon to see names of British Lords on title deeds going back to the 17th century on properties being sold today.
Substantial improvements have been made over the last number of years, chief amongst which is the sophisticated and impressive online Land Registry available to view at www.landdirect.ie , but many of the outdated vestiges of the past remain with us meaning the process is often tedious & excruciatingly slow. However, some sales close in a matter of weeks and others take over a year so it is incumbent on estate agents, buyers, sellers & their solicitors to ensure that the process concludes as quickly as possible, notwithstanding the impediment of an archaic system. Below are some of the factors that influence how long the process takes and how you can speed up your sale.
Sale Type
When selling a property in Ireland, you can sell either by private treaty or by auction. Both have their benefits & drawbacks. Private treaty is how the vast majority of property in Ireland is sold. This works whereby the seller (known as the vendor) engages an estate agent to list their property for sale and offers are invited. Offers are made by interested parties to the estate agent and these offers have no legal basis whatsoever; offers can be withdrawn without penalty at any point. The estate agent presents the highest offers to the vendor and if the vendor is minded to accept an offer, the property is marked “sale agreed” and the legal part of the process commences; this is known as conveyancing.
The other means of selling property is by auction. In this instance, the property is listed for sale and all the legal documentation pertaining to it, including the contracts, are made available to interested parties. Bidders can then submit bids on the property on the day of the auction; these bids are legally binding. As the bids are binding, buyers will typically send a surveyor to the property to inspect it in advance of submitting their bid. This is somewhat inefficient as it means that if there are seven bidders on a property, there will typically be seven surveys conducted. This differs from private treaty whereby only the buyer whose offer has been accepted goes to the trouble and expense of engaging a surveyor. In auctions, again as bids are binding, the bidders have to engage legal representation to review title & associated documentation in advance of the bidding. With private treaty, a solicitor is only engaged by the buyer once they move to sale-agreed.
As auctions co-mingle the bidding and legal process, the sale closes within a defined period after the auction, typically 14 days. With private treaty, the time from sale agreed to closing is often over 100 days. In this article, we’re going to focus on private treaty sales as that is how the lion’s share of property in Ireland is transacted.
Accepting the Right Offer
When your estate agent brings an offer to you, the financial status of the bidder will be explained. The hierarchy of preference here is generally:
- Cash Buyer
A cash buyer has cash on hand and is ready to transact. A benefit of a cash buyer is that they don’t need to have the property valued by their lending institution; this saves time and eliminates the risk that the bank won’t sign off on the price agreed.
- Mortgage Approved
A mortgage approved buyer with the cash part of the purchase price on hand in cash is the next most liquid buyer. One risk here is that, as they are raising a mortgage, their lender will need to sign off on the purchase price agreed. If the lender feels that their client is overpaying for the property, they will assign a lower value to it than the sale-agreed amount. This in turn reduces the amount that the purchaser can borrow and if the buyer cannot or will not make up the shortfall from their own funds, the sale will fall through.
- Subject to Sale of a Property
These buyers are often referred to as being “in a chain” and as such, if the sale of their property falls through, the chain breaks and so the sale of your property is now also off. Sometimes a vendor will choose to accept a buyer who is in a chain because their offer is the highest but when doing so, you must be aware of the higher chances of the sale falling through.
If accepting such an offer, the strongest position is when the buyer has a signed contract on their own property - this means the chain is very strong and should not break. The weakest buyer is one who is only putting their property up for sale; oftentimes, the buyer will say “my property will sell quickly according to my estate agent”. That may well be the case but an offer that depends on the sale of a property that’s not yet on the market is quite a tenuous one.
So a vendor accepting an offer from a buyer in a chain might find that their sale is held up through no fault of either side’s solicitor but because the sale of the buyer’s property is being delayed which is causing a knock on impact. All else being equal, cash is king if a quick sale is the goal.
Ensuring the Buyer Has Their Ducks in a Row
When a vendor accepts an offer, there is a good degree of excitement. The trouble taken over photographs, floor plans and the viewings was all worth it and now an acceptable offer has been made to a happy vendor. Estate agents are keen to mark the property “sale-agreed” and move onto the next deal. Oftentimes, in their haste to get the deal done some important steps are skipped. The property should not be marked “sale agreed” until all of the following steps are fully completed:
- Booking Deposit
No estate agent will move to sale-agreed without a booking deposit as this is the money that they use to discharge their fee once the sale closes.
- Solicitor
In order to generate the sales advice note (a one page document communicating the agreed sale to both sides’ solicitors), the estate agent will need the purchaser’s solicitor’s details so this step is never missed.
- Surveyor
In the past, Auctioneera would move to sale-agreed once we had received the booking deposit and purchaser’s solicitor’s details. Now however we insist that the purchaser must nominate a surveyor before we will mark a property as sale-agreed. This forces the purchaser to get this step in place and the survey typically follows quickly.
- Bank Valuer
It’s not always possible to get the bank valuer’s details at this point because the bank may insist that the property is sale-agreed before they assign a valuer to the property. However, it should be emphasised to the purchaser that this is a required step and should be actioned as soon as practical after sale-agreed.
Keeping The Vendor’s Solicitor Informed
This is perhaps the main reason why sales take far longer than they should. Oftentimes, property owners will list properties for sale and the first that their solicitor is even aware that the property is on the market, is when it moves to sale-agreed. Weeks will now typically pass before the vendor’s solicitor receives the title deeds, drafts the contracts, answers the requisitions on title and sends all the necessary documents to the purchaser’s side. Rightly exasperated purchasers call the estate agent a month post-sale-agreed querying why their solicitor has not received any correspondence as of yet; alas the answer often comes back that the vendor’s solicitor is waiting for the original title deeds; this is wholly avoidable and the estate agent should rightly not even list a property for sale unless the vendor has a solicitor onboard. Had the vendor engaged a solicitor while the property was for sale, all the requisite documentation could have been to hand and sent to the purchaser’s solicitor on the day the property became sale-agreed. If an expeditious conveyance is desirable, the number one thing that a vendor must do is to engage a solicitor at the same time as they engage their estate agent. At Auctioneera, we insist our vendors have a solicitor before we go to market. To browse quotations from low cost, fixed fee solicitors, be sure to check out the Auctioneera Conveyancing Marketplace.
Sourcing Title Deeds
If the property is mortgaged, the original title deeds will be with the owner’s lender. Sourcing these can literally take weeks so the time to request these documents is when the property is for sale not when its sale is agreed!
MUD Act Documentation
If your property is in a multi-unit-development, your solicitor will require the management company to provide MUD Act documentation & replies. Management companies are busy and so it can take a number of days to get this arranged. While there is a fee, typically in the region of €250, charged by the management company, it is advisable to make the request while the property is on the market. Most management companies will agree to accept an undertaking from the vendor’s solicitor to discharge the MUD Act query charge from the proceeds of sale. This takes the sting out of this bill.
Planning & Building Regulations
If you have carried out any alterations to your property, the purchaser’s solicitor will need to satisfy themselves that such alterations are compliant with building & planning regulations. Waiting to be asked for these documents can delay the process substantially. If, for example, an attic conversion is deemed to have required planning permission but none was granted at the time of construction, retention planning permission will need to be sought. This can take months. The same goes for extensions & any other alterations. If an engineer / architect is required here, there will be an expense but the property will not sell without the proper documentation so if alterations have been done, the sooner an architect / engineer is engaged, the better.
Solicitors Asleep at the Wheel
Some solicitors are fantastically organised, proactive and efficient. Alas, some are not. Unfortunately, you often only find out into which category your solicitor falls in the depths of the conveyance. Either way, oftentimes it is the client who shouts the loudest who gets their case progressed to closing. So make sure to stay in regular contact with your solicitor throughout the process and ensure that pressure is kept on the other side to keep things moving.
PPS Numbers
In order to sell a property, the vendor will need to have an Irish PPS number. While Irish citizens will have these, foreign vendors may not. Applying for a PPS is not a quick process and can substantially delay the sale.
Tenants
If a property is being tenanted but being offered for sale with vacant possession, make sure that tenants have lawfully been served with notice to vacate the property. For more on this, see this article: https://www.auctioneera.ie/should-i-remove-my-tenants-before-putting-my-property-up-for-sale
Mortgage Protection & Home Insurance
Once the purchaser’s solicitor has satisfied themselves that they are happy for their client to sign the contracts, the next step is for the purchaser’s solicitor to draw down the loan funds from the lending institution. The lending institution will need mortgage protection insurance or life insurance in place as well as home insurance, before they will release the funds. This is to ensure that in the unlikely event that the borrower were to die or the property is damaged, insurance cover is in place for either eventuality. Buyers should be shopping around for insurance from as soon as they go to sale-agreed to ensure they know where to source this when they need it.
Ordnance Survey Map
The Irish government through the Property Registration Authority is working toward a situation where every property in Ireland is registered on the State backed register of title. Not all properties are registered there but rather title is registered in the archaic Registry of Deeds with many title deeds dating back over hundreds of years. All transactions must be registered with the Land Registry such that eventually all title will be recorded there. If your property is already registered with the Land Registry, then proving title is pretty straight forward. However, if it isn’t, the property must be registered with the Land Registry in what is known as a first registration i.e. the first time the property is registered with the Land Registry. This requires an ordnance survey map to be prepared showing the boundaries. It is worth checking as early in the process as possible if your property’s title is registered (already on Land Registry) or unregistered (first registration required) as if it’s the latter, an ordnance survey map will be required. To check this, input your eircode into landdirect.ie If the perimeter of your property is marked with a colour (red, green or purple) then the title is registered. On the interactive map, you can click on your property to reveal its folio number. This is its unique identifier on the Land Registry. If it is an unregistered title, there will be no border on it and when you click on it on the map, you will be advised to refer to the Registry of Deeds for further information; an unregistered title will not have a folio number.
Conclusion
The Irish property conveyancing system is somewhat antiquated, largely paper-based and slow. However, it is improving and if there is buy-in from all sides that a quick sale is desirable, by implementing some of the above advice, the sale can move from sale-agreed to sold in weeks not months.