Title deeds provide proof of ownership on a particular property.
Every time property changes hands, a new title deed is drawn up detailing this transaction.
Before entering into a binding contract to purchase a new property it is extremely important that the purchaser’s solicitor inspects these title deeds thoroughly.
Where a purchaser has bought a property with the assistance of a mortgage, the mortgage lender will hold onto these title deeds, as they legally own the property until the mortgage has been repaid in full.
Contract:
A contract is the legally binding document, which is signed by both the purchaser and vendor and sets our all the key details and agreements regarding the legal transfer of the property.
In the majority of residential property transactions, the contract will be governed by the Law Society, General Conditions of Sale.
The purchaser completes the initial sections of the contract and then sends this to the vendor – this constitutes the purchases “offer to purchase”
The vendor then has an opportunity to consider this offer and if they wish to accept this offer to purchase they sign the contract and return the same to the purchaser.
It is only once this contract is received by the purchaser that the parties have entered into a legally binding contract.
Transfer Deed:
Transfer deed (or deed of assignment), is the document that legally transfers the property into the name of the purchaser.
This deed is drafted by the purchaser’s solicitor and then is sent to the vendor’s solicitor for approval and if approved for execution.
In order to ‘execute’ a deed- it must be signed and delivered by the vendor in the presence of witnesses.
The vendor’s solicitor retains this deed until they have received the entire purchase monies for the property (completion)
Following completion this is sent to the purchaser’s solicitor, who will then lodge this deed at Land Registry.
Land Registry:
In Northern Ireland there are two types of land – registered and unregistered land.
If the land is registered, it is dealt with by the Land Registry.
This is a map based system of title, which attracts a government guarantee of title.
The land registry will be able to provide you with the following information about any registered land:
– Unique folio number
– Current registered owner
– Any rights or charges that affect the folio
– Details of previous owners, rights and charges back to the date of the first registration with the land registry.
Registry of Deeds:
Where a parcel of land is not registered it is dealt with by the Registry of deeds.
This is essentially a system of registration of documentation about unregistered land.
This is a non map based system.
Under this system, each time the legal ownership of the land changes, a written summary (memorial) of the relevant document is lodged in the Registry of Deeds, along with the original Deed.
The Deed is then returned to the purchaser’s solicitor and the Registry of Deeds retain this memorial.
This registry does not guarantee that any documentation registered is valid; rather it merely records the documentations existence and its priority date.
Compulsory first registration:
Compulsory first registration is the legal process which transfers property from the Registry of Deeds system to the Land Registry.
All sales for value of land in Northern Ireland must now have title registered in the land registry and so if a property currently is within the Registry of Deeds, on completion of the sale an application must be made to the Land Registry for compulsory first registration.
The benefit of registration for the purchaser is the simplicity of the new title and of course the fact that the government guarantees the title
The benefit of registration for Land Registry is that more titles are contained on the public register.
Freehold title:
Where you purchase land/property with a freehold title, this essentially means that you as the land owner own the property outright in perpetuity.
As such, when freehold property is transferred there is a permanent change in ownership of land or a building that is not time sensitive and this will not revert to another unless a new sale is agreed.
Leasehold title:
Where you buy a leasehold property, you simply buy the right to occupy the land/building for a given length of time
You essentially have a lease from the freeholder – however these leases are usually long term and can be for hundreds or thousands of years.
Where a person purchases a leasehold property they purchase this property subject to a number of covenants (conditions) – the usual obligations on a leaseholder are to pay ground rent (usually a nominal sum) and to keep the property in good repair and condition and not to cause nuisance or breach any other covenants in the lease.
At the end of the lease the property returns to the full possession of the freeholder.
Fee Farm Grant
This is a hybrid type of land ownership which is unique to Ireland.
Fee Farm Grant is effectively freehold title , but with some characteristics of a long lease, including a rent and forfeiture right
The Property (NI) Order 1997 prohibited the creation od any new Fee Farm Grant’s after its enactment.
As a result of this, long leases were usually granted out of such title.
Boundaries
Every parcel of land has precise legal boundaries
These boundaries are invisible lines that separate the property from the next.
In the majority of cases, this invisible line runs along a physical feature, such as a hedge of a wall. However, this is not always the case.
Therefore, it is extremely important that in order to find the precise legal boundary you check the title deed.
Want to check that what is stated/ shown on the deeds plan reflects the exact physical boundaries as shown “on the ground”
Land Registry Map
Where property is unregistered title (Registry of Deeds) the vendor must obtain a land registry map search to ensure that none of the sale premises have been mapped into someone’s registered title.
Ordnance Survey Map (ACE MAP)
‘Address centre extract’- this is essentially a map centred on the address of a property
It is obtainable from the ordinance survey and is produced from their digital map-base
This is a large scale location map – which shows the boundaries of the premises as they align with their ground position
An ACE map is usually considered to show a more accurate reflection of the physical boundaries of a property than any map connected to a conveyance/ lease or fee farm grant.
Planning permission
Planning permission is essentially permission, which is required by a home owner/ land owner in order to be allowed to build on the land or change the use of the land (or it may be as simple as putting an extension on your home)
It is extremely important that a person checks whether they require planning permission before undertaking any such works.
If you fail to obtain planning permission, you may be forced to put things right at a later stage, which can prove both troublesome and costly.
It you have any doubt that the proposed works would require planning permission, contact your local area planning office for advice. If they believe that you need planning permission, ask them for an application form.
Building control:
Building control is responsible for ensuring that the Building Regulations (a set of construction standards laid down by parliament) are enforced in your local council
These standards include, requirements on health, structural stability, fire safety, energy conservation and accessibility
These standards are enforced through plan assessments and site inspections by impartial professionals with a thorough knowledge of the Building Regulations.
When building works are completed, building control will issue a certificate of completion once it is satisfied that all necessary building regulations have been adhered to.
Buildover Agreement
It is an offence under Article 236 of the Water & Sewerage Services (NI) Order 2006, to realign, build over or near water mains, sewers, pipes and associated works owned and maintained by NI Water unless with the prior consent of NI Water.
A build over agreement is essentially the requisite consent/ seal of approval for the proposed building work.
Indemnity Insurance:
Legal indemnity insurance is a specific type of insurance policy used in conveyancing transactions where there is some sort of legal defect which cannot be quickly resolves and which is reasonably unlikely to cause any actual loss but does have the potential to cause significant loss.
In most cases only one premium will need to be paid and the cover will last forever
A legal indemnity insurance policy provides cover against any loss suffered by the insured as a result of any lawful action taken against him in respect of the defect, including for example any resulting loss of value to the property or any legal costs incurred in defending an action
Pre- contract enquiries
Before entering into a contractor the vendor will have furnished replies to approximately 20 pre-contract enquiries, which will form part of the contract.
These enquiries are designed to ensure that the vendor discloses all key information about the property and especially any information which would not be obtainable from looking at the legal title.
Examples of enquiries will include – any easements or covenants over the land or whether there are any ongoing neighbour disputes.
Fixtures & Fittings
There is no set definition of what constitutes a fixture and fitting – however the general rule is that were an object is physically annexed to the property it is regarded as a fixture and were an object is freestanding it is regarded as a fitting
It is quite common that fixtures will be left behind in the property, whereas fittings will be taken by the vendor- however a purchaser cannot rely on this presumption.
It is extremely important that when selling a property the vendor completes the extensive “fixtures & fittings” list, which allows the vendor to specify exactly which objects they will be taking with them and which objects they will be leaving in the property.
The purchaser’s solicitor should go through this list with their client and ensure that they are happy with what the vendor is proposing to leave behind and what they are proposing to take with them.
Property certificates
When selling a property the vendor must provide the purchaser with two property certificates
The first of these is a Department of Enterprise (DOE) property certificate (which is now obtained from Fermanagh & Omagh District Council) and the second is a local council property certificate.
These certificates are a key element of the conveyancing process because they show what works have been carried out on the property and whether the owner had the appropriate permission to carry out these works and if there are any statutory breaches these certificates will show whether the council have taken or intend to take any legal action regarding them.
More importantly these certificate will show that any completed works have been inspected and approved by the Building authority regulation.
Searches
Searches are a necessity in any property purchase- they ensure that the purchaser knows as much as possible about the property they are buying.
There are a number of key searches which must be carried out:
Bankruptcy search – will show whether the vendor has been or is in the process of being declared bankrupt
EJO Search- will show whether any third party has a acquired a charge of the land you are hoping to purchase as a result of an outstanding debt
Statutory charges search – this search will show whether the property in question is affected by certain statutory restrictions which could not easily be discovered.
Registry of Deeds search (if property unregistered) – search for land that has not been registered- will show the passage of legal title from one owner to the next.
Energy performance certificate
An Energy performance certificate is a pre-requisite whenever a property is being built, sold or rented.
This certificate contains the following information
– Information about a property’s energy use & typical energy costs
– Recommendations about how to reduce energy use and save money
An EPC gives a property an energy efficiency rating from A to G and is valid for 10 years.
Stamp Duty (SDLT)
Stamp duty land tax is a progressive tax paid when purchasing a freehold, leasehold or shared ownership residential property.
The amount payable is worked out as a percentage of the whole value of the property and the percentage rate payable is graded into certain bands. (as cost of property rises so to does the % of SDLT playable)
Prior to the changes in legislation which come into play in April 2016 – any property which is purchased for a price not exceeding £125,000 was exempt from paying Stamp Duty Land Tax.
However, until new legislation even if the cost of the property is lower than £125,000, if this is the purchasers second home then they will be subject to stamp duty land tax at a rate of 3%.
Ground Rent
Where a property is held under a long lease, the purchaser (known as the lessee) will acquire this property subject to a number of covenants.
One of these covenants will always be that the lessee must pay the lessor a yearly rent – this is very often a nominal sum (£1 – £20), which is to paid in two instalments over the course of the year.
Payment if ground rent is extremely important, as it is a good indication that the covenants set out in the lease are being adhered to.
When a person is purchasing a property it is extremely important that you obtain a copy of the latest ground rent receipt, which was paid by the vendor.
Mortgage
When a person is purchasing a property, it is extremely common that they will not have sufficient assets to pay the entire purchase price
In such circumstances, a person many apply to a bank or building society for a mortgage
A mortgage is essentially a legal agreement, wherein a bank lends a specific sum of money to the purchase, in exchange for taking title of that property.
As a result – the bank will take the title of the property until the entire sum plus interest has been repaid.
It is extremely important that a person continues to meet their mortgage repayments, as failure to do so may result in your home being repossessed.
Survey
When you are buying a property, it is extremely important to get a survey done once your offer has been accepted.
The most common survey is called a home buyers survey
This survey will help you find out about the condition of the building and will highlight any problems, which you should be aware of. A classic example of this would be damp.
It will also be include any advice on necessary repairs that need carried out
Although, it is not compulsory to obtain a survey, it is still advisable, as it will allow a purchaser to make an informed decision about how much they are willing to pay for the property and may give the purchaser an opportunity to renegotiate the purchase price.
Offer & Acceptance
In order for a contract to be binding there must be an offer and this offer must be accepted.
Under the law society general conditions of sale, the vendor will complete the “property for sale” section of the contract and will send this to the purchaser
The purchaser will then- fill out further details in the contract, namely the agreed price, completion date and any special conditions. They will then sign this contract and send it back to the purchaser
This constitutes the purchasers offer to purchase
The vendor will then check the contract and if they are happy with any conditions included they will sign the contract and send this back to the purchaser.
This constitutes the vendors acceptance of the contract and the contract is now binding.
Completion
Completion marks the legal end of the conveyancing process
Before the contract has become binding the parties will agree a “completion date”.
It is extremely important that both the vendor’s and purchaser’s solicitor ensure that they have completed all the necessary tasks.
Completion date is the day when full payment will be transferred to the vendor and the vendor will transfer the title deeds in exchange.
This is essentially the day when the purchaser gets the keys to the property and can physically move in to the property.
NIHE
Northern Ireland Housing Executive
In certain situations a purchaser’s solicitor may feel it is beneficial to obtain a NIHE certificate.
The most common situation would be where a purchaser is purchasing a property in an area where the majority of housing is owned by the Housing Executive.
The purpose of obtaining this report is to ascertain whether the Housing Executive have any plans to redevelop the area.
NICHA LIMITED
Northern Ireland Co-ownership housing association
This system is unique to Northern Ireland and is designed to help those who are struggling to get on the property ladder.
Co-ownership essentially means that you buy a share of your home (anywhere between 50- 90%) and co-ownership agree to purchase the remaining share. You then pay rent on the remaining share
You can still obtain a mortgage for your share of the purchase price.
You can increase your share in the home anytime after you become the owner.
Buy to let
A buy to let property is a property which is purchased for the sole purpose of renting it out to third parties
If you a purchasing a buy to let property you will need a specific buy to let mortgage
A buy to let mortgage is similar to a normal mortgage however there are a few differences
The amount you will be able to borrow will be based on the rental income of the property – rental income must equate to 125% of the annual mortgage payments
The interest rates for these loans will be higher
You will need to have a 25% deposit
Most buy to let mortgages are “interest only”, which means that you don’t pay anything off the lump sum borrowed each month, but at the end of the mortgage term you will repay the capital in full.
Purchasing a buy to let property is extremely risky and for this reason many banks will not offer buy to let mortgages to first time buyers.
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