This page is a guide for sellers on what they need to know before selling their property to allow the transaction run as smoothly and effectively as possible from a legal perspective. It is important that you are ready to sell when the opportunity arises.
Things to consider:
- Is the buyer a first-time buyer with mortgage approval in place?
- Will the buyer have to sell his property first to purchase yours?
- Is the buyer a cash buyer or will they have to get a mortgage?
Steps to take:
If there is a mortgage on your property then, title documents will be held by your bank. The title deeds are required to allow a contract of sale to be drawn up in anticipation of negotiating a sale and in turn, this prevents any delay from selling the property once the sale has been negotiated.
Any extensions or alterations to the property should be made known to the firm of solicitors selling at the outset so they can review the title deeds to make sure all appropriate Certificates of Compliance with Planning Permission and Building Regulations are held with the title documents.
Any house built after the 1st October 1964 requires planning permission. All planning documentation should be held with your title deeds but should be reviewed as soon as you decide you are going to sell to make sure that the paperwork is in order. If it is not, this will give you an opportunity to get the appropriate paperwork in order by engaging an architect or engineer as appropriate and your solicitor will assist you in setting out exactly what is required.
It is important that a seller deals with any issues relating to alterations of the property because if they do not, it may result in a loss of sale.
Selling the Property
Selling the property through an estate agent, who may sell it at auction or by private treaty. A reserve can be set for a house at auction, so it will not be a worry that a house will be sold too cheaply.
The production of a BER Certificate is compulsory since the 1st of January, 2009. It applies to all property either being sold or rented. This certificate must be presented to a purchaser by the seller or the seller’s agent. A BER certificate is valid for up to 10 years from the date of its issue, however, if a building is altered or an extension is built, a new BER may need to be obtained. BER assessors issue Building Energy Rating Certificates, which are registered by Sustainable Energy Ireland. A list of BER assessors can be found on Sustainable Energy Ireland’s website.
Once title deeds have been received by a solicitor, they will then begin to draft a contract for sale. This will include the following:
- The details of the parties to the contract.
- The purchase price and the deposit.
- The closing date.
- The contract will also list the title documents and planning documents.
The contract also has a number of standard conditions which a solicitor explains to the client upon consultation and any special conditions that need to be inserted to put the purchasers specifically on notice of any issue are set out in the special conditions.
Issuing of Contracts:
The vendor’s solicitor will issue contracts to the purchaser’s solicitor. There may be pre-contract queries raised by the purchaser’s solicitor and this would be common and the vendor’s solicitor will keep the vendor informed of any queries that are raised and any queries which may require the vendor’s assistance.
The vendor will only be asked to sign contracts after the purchaser has signed contracts in duplicate and paid over the balance of a 10% deposit (an additional booking deposit having been paid over to the auctioneer). Once contracts are then signed by the vendor and one part returned to the purchaser’s solicitor, the contracts become binding and both parties are legally obliged to proceed with the sale/purchase.
A binding agreement is now in place.
Requisitions on Title
Requisitions on Title are raised at the same time as the draft Deed being prepared by the purchaser’s Solicitors. There are 44 Requisitions on Title which have many sub-queries. These queries extend beyond title issues. These requisitions give the purchaser further information in relation to the property in accordance with the terms of the contract of sale.
Closing and Receiving the Keys
The closing of the sale takes place in the offices of the vendor’s solicitor unless otherwise agreed. It is not necessary for the vendor to be present usually. Any contents that are not to pass with the property as set out in the contract of sale should be removed from the property.
Once the purchaser’s solicitor is satisfied with all of the title documents, the purchaser’s solicitor will furnish the balance of the purchase price and the vendor’s solicitor will release the keys of the property to them. If the property was subject to a mortgage, this will be redeemed immediately out of the sale funds.
All contents not included in the contract of sale should be removed before the closing date.
It is necessary that you give your utility providers notice of your change of address and make sure that the meter has been read before you move out. This can be done on newaddress.ie you should also cancel your building insurance and change your TV licence.
The costs involved are usually: solicitor’s fees, auctioneers fees and bank-related matters (mortgage).
Other charges that may or may not apply Capital Gains Tax, Service Charges (Commercial Property), Rates (Commercial Property), Residential Property Tax.
Receipts of all the above should be kept as they are the easiest and most time-efficient method of proving that all costs relating to the property have been paid up in full.
Capital Gains Tax
This only applies where you are selling a property that is not your main residence. If the property you are selling was your main residence for the entire period of ownership, then you do not have to pay Capital Gains Tax.
Currently, CGT is payable at 33% on the profit made by selling a property. It is the seller who pays CGT, not the purchaser. The gain is the difference between the price you paid for the property and the price you received when you have sold the property. Example: a property was purchased for €100,000 in 2001, it was then sold for €200,000 in 2006, the amount that capital gains tax is payable on is €100,000 because that is the increase on the purchase price (the profit) the rate of capital gains tax is – 33% of the €100,000 (the profit). The CGT payable is €33,000 if the house sells for €200,000.
Local Property Tax (LPT)
LPT is a charge to the property owner, not the tenant, unless you have entered into a lease in excess of 20 years or if you have an exclusive right of residence in a property for life or for a period of 20 years or more or hold a life interest in a property you will be liable to pay LPT. A receipt for LPT will need to be furnished to the purchaser when you are selling your property. If you own a residential property on 1st May 2013 you are liable to LPT for 2013. Therefore, if you sell your property after 1st May 2013 you are liable to LPT for 2013 and the liability is payable in full for the year at the time of the sale. For each year after 2013, the date will be on the 1st of November in the preceding year.
Non-Principal Private Residence Charge
The Non-Principal Private Residence Charge is a charge that was introduced in 2009 and which ended again in 2013 and resulted in a sum of €200 per year being paid for second properties, however, it is a charge that still effects properties today and evidence of its payment, discharge or exemption needs to be provided when selling. If the payment has not been discharged, you are required to pay a penalty of €20 per month per outstanding year.
If NPPR applies to the property for every year and has never been discharged then the sum now due is €7,320.00.
Septic Tank Charges
In 2012 a new registration and inspection scheme was introduced for domestic water treatment systems such as septic tanks. If your property has a septic tank you must register with your local authority. For persons buying houses it is important that it is checked whether or not:
- There is a septic tank on the property or not,
- Whether the septic tank has been registered and the registration fee paid.
It is important that the above steps are carried out as effectively and efficiently as possible as there can be many small issues that take time to resolve even in the clearest and cut of sales. Whatever your property requirements we at MW Keller & Son Solicitors LLP Waterford can help you with practical and legal knowledge. Please contact us for more information or any queries that you may have.