[00:00] – Introduction

[00:15] Hello and welcome to the SME Business Show with me, Alec Drew. Each show focuses on one particular topic and so we invite an expert from that sector to share their knowledge, insights and tips to help you get the most out of your particular business or out of your professional life. Today’s topic is conveyancing and I’m delighted to be joined by Colleen O’Connell, Principal of Summit Law.

[00:39] Alec – Hiya Cillín.

[00:40] Cillín – Hi Alec.

[00:41] Alec – Let’s just talk about conveyancing in the general term, what is it and why do we need it?

[00:45] Cillín – A conveyance is the transfer of ownership of property from one person to another. Similar to a transfer of a car ownership or something like that, but more complex.

[00:55] Alec – Is there a difference between domestic and commercial conveyancing?

[00:59] Cillín – There are subtle differences that I can take you through. It might be planning, it might be service charges, or it might be rates. But they’re similar, but there’s definitely nuances between the two.

[01:08] Alec – Let’s just focus on the domestic side of it. Maybe you might take me through the process and what’s involved there, just on an overview.

[01:15] Cillín – Well firstly, if somebody is buying a residential property, it could be a house or apartment, they’re going to put their booking deposit down once they’re successful. Their details would be given to the estate agent, and the estate agent would give the buyer’s details to the seller solicitor, and they send us out the contracts.

So I act for buyers and for sellers alike, but if I’m acting for a buyer, and if I get the contracts today, that’s my starting point. I have to examine the contracts, examine the title and make sure it’s good quality, a good sellable title, and raise any queries. And once all the queries have been dealt with by the solicitor who sells the property on behalf of the seller, we can sign the contracts and then once they’re signed and exchanged, we agree a closing date. So that’ll sort of take you from start to finish in generality.

[02:03] Alec – That’s the broad strokes. Is it possible you could represent both sides in one of these transactions?

[02:08] No. Unfortunately not. The Law Society wouldn’t allow that and it ethically would never do it. It has to be safe to have two separate solicitors on both sides.

[02:16] Alec – There seems to be some sort of inordinate delay in terms of property transactions. Maybe you might talk us through that and how to avoid them.

[02:23] Cillín – If you’re selling a property. Be sure to tell your solicitor that you’re going to put the property up for sale before you actually do so. Simply because it’s happened a lot of solicitors whereby the client has told them that great news I’ve sold the property, can you draw up the contracts and send them out. We’re not even aware of it so we have to contact the bank if there’s a lender involved and that can take four to six weeks even to get the title deeds and then you’re only getting all your paperwork together. So the sooner you tell your solicitor the better because we’re not on the back foot then trying to scramble to get the title deeds. That’s always your starting point.

[02:59] Alec – I also understand there’s issues certainly around where there may be a chain of buyers and sellers. Maybe talk to us about that.

[03:08] Cillín – You may look to be selling your property, but you’re also looking to fund the sale of your property to help you buy your own property. So if a buyer comes along to buy your property, they’re hoping to get the deal done within in a certain amount of time. But you may be looking to close on a particular timeframe because you can’t be out of your property and into the new property unless that’s done together. So that’s what creates a chain and it can come from both ends. So it’s something that we have to deal with. There’s no satisfactory answer to it but the more information we have, the better to try and do the deals as closely as we can.

[03:44] Alec – I’m of a generation that remembers a thing called bridging loans. Do they exist today?

[03:50] When I started my career, I would have seen a few of them, but no, the way the banks are run now, the way they vet clients in terms of their finances, they have to have everything ready to go, be it for start and to finish. You can’t sign the contracts for a purchase or for sale kind of separately. They all have to be done together, and bridging is somewhat a thing of the past.

[04:09] Alec – That’s a shame. I know there’s challenges, particularly around if you live in a sort of multi-story complex. What are they called? Mud developments?

[04:20] Cillín – The mud developments, multi-unit developments. We buy and sell a lot of apartments here around the country. So, part of what you’re dealing with is as a solicitor you need to make sure that the planning is in order, but you also need to make sure that if it is a multi-unit development, such as an apartment, that the management company are registered, that all the accounts are in order, things like there’s a sinking fund. We’re hearing a lot of issues, such as fire safety audits for a lot of developments, and it’s left people who are owning these properties having to actually reach into their own pockets to pay sums over what they would do for their service charges. And I know the government is stepping in to a certain extent with things like the MECA scheme for difficulties, but also there’s a scheme for apartments coming through because a lot of developments were not actually built according to fire safety rules, and that’s where the government are having to step in. So to go back to it, you have to have all the information on the service charges from the management company and they need to be run correctly.

[05:20] Alec – I could see that adding an inordinate amount of time.

[05:23] Cillín – Yes, it comes back to it Alec because you have to check the planning, you have to check things like the service charges, like the Mudaxx. You have to, hopefully you’re not dealing with a chain. Another delay could be if it’s a probate sale. You could actually be waiting for a grant or probate to issue in that estate. That can take anywhere from 6 to 12 months. So you hope it’s all been done before you come to the table as a buyer to get those things ready. So I always try and make my clients aware of everything as soon as possible to give them these sort of timelines.

[05:54] Alec – And if I’m not mistaken also there’s a certain restriction timelines in which maybe a loan offer might be available to a client so we could be stepping in and out of that as an issue.

[06:03] Cillín – It’s especially difficult at the moment with the interest rate rises. What’s happening is the banks are allowing you sometimes it’s three months, sometimes it’s six months or further but then a rate rise comes in and they have to reassess the person who is buying So, it’s very time sensitive at the moment and it’s causing a lot of stress, but what I say to people is, there’s good people that I work with in terms of mortgage advisors that can give them the best information and we can work closely with them to help along with the process.

[06:29] Alec – So, can you give us just a broad strokes view of how to speed up things?

[06:35] Cillín – The more information we have the better. If you’re buying a property, number one, get a survey of the property, even before contracts are signed because your solicitor is looking at legal title, we’re looking a paperwork, but if we have the benefit of an expert surveyor or engineer on site that can spot there was alterations done to the property or there’s a defect there, we can highlight that and look to have it addressed. If you’re selling a property, you make sure your solicitor has the deeds before you look to list it. And you work closely with your mortgage broker or you work closely with your estate agent to try and make sure everything runs as smoothly and as quickly as possible. The sooner the queries are dealt with, the sooner we can get a contract signed and get you that closing date.

[07:14] Alec – What happens if the deeds are lost or misplaced?

[07:17] Cillín – It is more common than people think, if there’s a particular deed in the title that was missed, you can actually get an insurance bond to rectify that. And now you would, if you’re getting a loan for your property, you would have to show the bank that this insurance bond is in place to show that it rectifies the good title and it can go ahead on that basis. Otherwise, you’re left trying to find out who the engineers and architects were that dealt with the planning and you’re trying to recreate that, very cumbersome. So you make sure, do not leave the deeds at home. What I always say to people, if you have no mortgage, you leave the deeds with a bank or a safety deposit box, never have them at home. That’s what causes these problems.

[07:57] Alec – You alluded to this, the engineering and I know we’ll have one of our shows coming up talking about that, but you believe it’s a must if you’re going to be buying a property.

[08:06] Cillín – It is the biggest, biggest problem that, purchase or expense that a lot of people will do in their lifetime and the bank will give you the option, well it’s not so much an option, you have to do a bank valuation which is a small fee and they will send a valuer to look at the property but it’s pretty much a drive by valuation. It’s not an in depth structural review and I had a case recently whereby somebody was buying a, it was a one year old property, it was relatively new built and this was only a couple of years ago and they had the survey done and they found that the stairs were not built according to code. And it was a 12,000 euro fix. But because the survey was done, the seller had to stump up and resolve that. I’m always amazed when people don’t get a survey. If you don’t, there could be boundary line issues, there could be defects in the structure itself. And I go back to the MECA or pyrite issues. But otherwise, I just think it’s an absolute must.

[08:58] Alec – All right, so the onus is on you to do your best and check it out.

[09:02] Cillín – Absolutely, if you buy the property without getting a survey, another example is of a property that I was looking at for a client, the seller had put a two-story extension on without any planning whatsoever and it just meant that house could only be sold for cash, no bank would touch it, but again it was through the survey that it was initially brought to our attention. So I’m a huge fan of clients, I recommend each and every one, whether it’s a new build or previously built property, get your survey.

[09:28] Alec – I’ve heard of sort of quite a variation in terms of fees charged by solicitors. Maybe take us through it, what sort of range you can expect and maybe just talk about how you charge.

[09:38] Cillín – We charge set fees, whether you’re selling for 100,000 or 2 million, you’re going to get the same set fee from us and that’s 11.95 plus VAT and the outlay for the registration. But it varies, so it’s very common for me to give quotes to clients and they’ll come back to me if they’re satisfied with the quote, we’re not allowed to charge a percentage of the purchase price. So what I say to people when they contact me is, you don’t even need to tell me the purchase price because I’m giving you the professional fee and if you’re happy with it I’ll put the full quote together for you. And it tends to put people at ease but do shop around, there’s good value to be had.

[10:16] Alec – Can I miss the middleman and do it myself?

[10:18] Cillín – You can. If you’re getting a bank loan, the bank are going to insist on a solicitor but what I’d say to you is it is the biggest purchase you’re going to do in your life, and are you really going to risk all that? It is a tremendous amount of paperwork, but I wouldn’t recommend it.

[10:35] Alec – Right Ok. I’ll take your advice on that. Let’s just move a bit on to the sort of commercial side of it, because we talked at the beginning and there were some nuances.

[10:41] Cillín – Yes. Obviously the title has to be the same. You have to make sure that the title is in order, you have to make sure the planning is in order. One of the differences, if you’re buying a residential property, the property is for residential use, so you’re going to know every residential property has that planning. You’re buying a commercial unit you need to make sure that, the business that you’re going to run there is allowed, it’s what’s known as the type of use that it has. So there’s no point in you, if you’re a coffee shop owner, looking to buy an industrialized, you know, commercial unit, because you may not have the planning laws in favour of you operating there as a coffee shop. And that’s just a very simple example. ­­But you also need to know that you can change the use, if need be, from a particular commercial use to, You know, it might be another part of your business, but it operates in a different way. So you need to make sure the planning is in order. Rates are very important. VAT is very important because it’s not really something that you’re dealing with in residential properties and you need to make sure is VAT being charged and that’s dealt with before you move into the property, otherwise you’re going to be dealing with revenue on that. So what I always say to people when it comes to VAT, speak to your financial expert on that one. So it’s, there’s so many differences, they’re similar in some regards, but you really need to make sure the planning is in order and to make sure that your business can operate from that premises.

[12:07] Alec – I understand that sometimes an extra solicitor is brought in on behalf of the banks because of a commercial property.

[12:13] Cillín – Very often, in a residential transaction for example, you’re generally just dealing with the two solicitors and your bank and your lender, but on a commercial footing, most times out the banks will insist on their own solicitor to offer oversight and you’re not only dealing with the seller solicitor, you’re also dealing with the bank solicitor as well. So again, this is what takes time. It makes it quite cumbersome, but the reason they’re doing it is as much for the title and for the planning and to make sure the rates and there’s no legacy issues with the property. So that’s why it’s again, it all comes back to it to make sure everything is done correctly.

[12:47] Alec – Certainly, in a commercial situation you may have a management company that looks after an industrial estate. So, I presume the same sort of inquiries will be made about the accounts.

[12:57] Cillín – We need to know that if somebody is buying in a particular unit, and it may come with a few car parking spaces and maybe a large industrial unit for example, but that there is a management company running the whole development and that they’re up to date, that they’re registered. A lot of the time, once a developer has signed off on building a development, they have to transfer all the common areas to the management company. We need to make sure that’s done. If it’s not done, is it in the process of being done? And that all the payments are being made. So absolutely vital part of the process.

[13:29] Alec – You brought up the issue of car parking spaces and while you’ll often see in industrial estates that spaces are actually not marked out. I presume in the deed somewhere there will be allocated spaces and you need to be cognizant of it.

[13:41] Cillín – Very much so. And again, you know, when we’re looking at a residential deal, you might be looking at the boundary lines and this is where your survey comes in. The same rules apply in some regard with a commercial unit because we need to make sure where are the car parking spaces? Are they marked out? And I’d always say to people when they’re looking to buy, make sure you mark them out because otherwise you’re going to have people parking and assuming it’s theirs and the years go past and all of a sudden then it’s an issue because that’s my car parking space not yours. I always say let’s look at the boundary, let’s make sure we have absolute oversight on what’s inside the unit and also what’s outside the unit. Who’s in charge of the footpaths, who’s in charge of the common areas, and it all comes back to the one.

[14:23] Alec – I understand that there is sort of a bit of a quirk in terms of rates, for example, if you are unfortunate enough to move into a premises where there’s a legacy rates bill, that you assume that bill as well.

[14:34] Cillín – You need to make sure that if you’re acting for a client who’s looking to buy a property, one of the first questions we ask is, what are the rates? And give us the figures so we know that they’re up to date. And you would get a letter from the solicitor saying that they’re all up to date or they’re going to undertake to make sure that they’re paid on closing and that way you’re not inheriting some rate issue. It’s, it’s, it’s possibly the first or second question that we ask.

[14:57] Alec – And would I be correct in assuming that if there is a change of usage, the rates may change with that?

[15:03] Cillín – Yes, that goes back to the valuation office and you need to be very careful on that because there’s different rates apply for different types of commercial units. So if you’re going to look to change the use of the development that you’ve bought, number one speak to an architect or an engineer to make sure it can be done, and number two, check with the valuations office because yes, that can affect the rates.

[15:23] Alec – While we won’t go into the financial side, particularly around VAT, but it is my understanding that you need to enter some sort of arrangement with the revenue prior to you moving in and taking ownership of a property because you may find yourself exposed to quite a serious cash flow issue.

[15:41] Cillín – Very important one, Alec. Before you do anything, you speak with your financial advisor because whereas we’re looking at it from a legal point of view, very often people are very keen to get into the units and they’ll say, well, listen, how about I move in temporarily and then we’ll figure it out as we go along. Absolutely not. You need to know exactly what the VAT rules are before you put your foot through the door. So that’s why we say speak with your financial advisor, your accountant on it, and make sure you’re fully informed.

[16:07] Alec – Certainly if we’re talking about the commercial side, then to sum up, really we’re talking about it’s important that you have an engineer, but that’s also for the domestic side. That also you may have an extra solicitor involved and to talk to revenue and make sure that’s tidied up through your financial advisor and the rates as well. My goodness, it’s just so easy, isn’t it?

[16:26] Cillín – It makes it all sound so simple. But again, what I say to people is just keep that structure. You have your surveyor, you have your accountant and then we’ll try and bring them all together and make sure you have the best information.

[16:39] Alec – Cillín, where can we find out more about you and Summit Law?

[16:43] Cillín – My website, Alec, is summitlaw.ie. You can find all the information there, and I have a lot of useful videos for everybody who’s looking to either buy a residential or commercial, and I’m more than happy to speak to them.

[16:54] Alec – A special thanks to our guest today, Colleen O’Connell, Principal of Summit Law, for coming into the studio and sharing so many valuable tips around conveyancing. If anything we discussed today resonated with you, why not reach out to us across any of the social media channels, the SME Business Show. Thank you for your company and please remember to join us again soon.