A legal guide to buying your home
At Dermot G. O'Donovan Solicitors, we understand that, while buying a home can be a very exciting time, it can also be a stressful one. We aim to assist clients in whatever way we can to make the process of buying a home as stress free as possible.
When buying a home, there are a number of things that you should be aware of:
Before you decide to buy
Before you decide to buy you should review your budget to find out how much you can afford to borrow and pay back in your monthly mortgage repayments. You should make sure that you have enough to cover all of the costs involved in buying a home, for example, legal fees, insurance and stamp duty. The amount of money you can get as a mortgage loan, and the amount you need as a deposit are governed by Central Bank lending limits.
When you secure a property
When you find a property that you want to purchase, you will be asked to pay a booking deposit to the auctioneer who is acting for the seller. This sum is usually in or around €5,000 and is fully refundable if the purchase does not proceed. The auctioneer will need the name and address of your solicitor. The auctioneer will write to your solicitor advising that the sale has been agreed and your solicitor will write to the seller’s solicitor for Contracts.
At this stage also, you must inform your lending institution that you have secured a property. Once you have satisfied all the bank’s requirements, the bank will issue a loan offer to you and will also send a loan pack to your solicitor. They will also send out a valuer to do a valuation of the property.
Before signing Contracts
Loan conditions: It is imperative that you are fully satisfied that you are in a position to comply with all of the conditions on your loan approval (to include the obligation to secure life insurance cover) before you sign contracts. If you find yourself unable to satisfy your loan conditions after you have signed contracts you will nevertheless be legally compelled to complete the sale or have any deposit paid forfeited to the seller. You also run the risk that the seller could sue you to compel you to complete the sale.
Structural Survey and Boundary check: It is very important that you have an engineer/architect carry out a structural survey on the property before signing Contracts. The motto “Buyer Beware” applies, which means you must satisfy yourself that the property is free from any structural defects.
Your engineer should check to see if any extensions or developments have been made to the property and also confirm that the planning status of the property is in order. He/she should check the boundaries of the property and confirm that these are the same on the ground as set out on the title map. He/she should also check if the property is in an area prone to flooding or subsidence or other similar risks.
Be sure that any engineer/architect that you engage to carry out a structural survey has full professional indemnity insurance in the event that he/she misses something.
Once your solicitor has checked the legal documents and has received replies to any contract enquiries raised, you can then sign the Contract and loan documentation. At this stage, you will be required to pay the balance of 10% deposit on the purchase price. For example, if the purchase price of the property is €250,000 and you had paid €5,000 to the auctioneer as a booking deposit, then you will have to pay €20,000 on the signing of the Contract. When you sign the Contract and pay the deposit, both the Contract and deposit are sent to the seller’s solicitor for the seller to co-sign the Contract. When the Contract has been co-signed by the seller, then there a binding contract in place.
What happens before you get the keys?
Once Contracts have been signed by both parties, your solicitor and the seller’s solicitor will complete all other legal matters. Your solicitor will also start the process of drawing down funds from your lending institution to close the sale. When the funds are to hand, then your solicitor will advise the sellers solicitor that they are in funds and in a position to close the sale. The seller’s solicitor will then send all closing documentation to your solicitor and, if all is in order, your solicitor will transfer funds to the seller’s solicitor and will also carry out searches against both the seller and you to ensure that no judgements/bankruptcies or debts are registered against you or the seller.
Once the searches are clear, then your solicitor advises the sellers solicitor that they can release funds. Then your solicitor will call you to tell you that the keys to your new home can be collected from the auctioneer.
About the author: Margaret Irwin is an Associate Solicitor in our Property Unit and can be contacted at firstname.lastname@example.org