Sale of Real Property
The process of transferring ownership of property is known as conveyancing. Only a Practising Solicitor may
- prepare and draw documents relating to the transfer of real or movable property;
- procure or attempt to procure the execution by an Irish citizen or document relating to real or movable property outside the Republic of Ireland and the United Kingdom;
- make an application or lodge a document for registration
- taking instructions or prepare documents for grant of probate or letters of administration..
This restriction applies to doing any of the above either directly or indirectly in expectation of a fee, gain or reward. There is no restriction in a person doing conveyance on his own behalf or behalf of a friend, provided that no fee is charged. Persons undertaking conveyancing while in the employment of a practising solicitor and under his supervision, are exempted from the prohibition.
Provision was made under the Building Societies Act 1989 act allowing for the possibility that Building Societies might provide conveyancing services. Regulations were not made under the power to implement this possibility. There were proposals under the legal services act for other categories — by which other categories of persons may be licensed to provide conveyancing services.
Formerly solicitors’ fees were largely determined by legislation and orders made under it. In the last 30 to 40 years, the area has been deregulated so that conveyancing fees are a matter of negotiation between solicitor and client Fixed conveyancing fees are likely to contravene the Competition Act.
Solicitors are subject to considerable regulation in relation to the conduct of legal business, many of which are of great practical importance in the context of conveyancing. Solicitors must maintain a separate client account, in which client money must be deposited. There must be both a separate client account at a regulated credit institution and memoranda accounts in the solicitors’ books of account. They must be reconciled periodically.
Solicitors give undertakings in the course of a conveyancing transaction. It is serious professional misconduct, for a solicitor to fail to comply with an undertaking. An undertaking is enforceable, by direct application to the court under a summary or short form procedure.
The system of undertakings is necessary in relation to the monetary aspects of the purchase and sale of property and remortgaging. In residential conveyancing, the buyer’s solicitor commonly gives the undertaking to apply the mortgage monies to buy the property and deliver a good title for the buyer and a valid mortgage. If the seller has an existing mortgage, his solicitor will undertake to discharge and redeem it. borrower’s financial institutions. See the chapter on the system of undertakings residential mortgage cases.
It is generally impermissible for the same solicitor to act for both seller and buyer. There will usually be a conflict of interest which will prohibit the solicitor acting for both, as an ethical matter. This general principle has been supplemented by Regulations effective 2013 which effectively prohibit a solicitor for acting for both parties in most conveyancing transactions.
The 2012 Regulations includes a transfer of property including a sale, lease and gift. There are some limited exemptions for transfers of family homes, transactions between associated companies and trustees, in which subject to certain conditions, a solicitor may act for both parties. However, he must not act if there is, in fact, a conflict of interest in the circumstances.
Most residential property is sold by a private treaty. In this case, an agreement in principle is reached for the sale, generally between the auctioneer/estate agent and the buyer. The auctioneer/estate agent represents the seller. The heads of terms set out the key commercial terms of the proposed transaction. The auctioneer/estate agent usually takes a booking deposit. This is usually a non-binding payment, which is held on trust by the auctioneer/estate agent for the buyer.
It is possible for a contract for the sale of land to be entered informally and indeed inadvertently. Once the requisite conditions exist, then there will be a contract. If there is a document in writing signed by the person against whom it is to be enforced setting out the key terms, price, parties, property, then there will be a legally binding agreement.
The vast majority of residential property sales are completed through estate agents/auctioneers. Auctioneers and estate agents deal with all kinds of real property. Some specialise in residential property. Others sell both residential, commercial, investment and agricultural property. In larger firms, there are separate departments dealing with various types of properties. The same broad principles apply to the sale of contracts, in the case of both residential and commercial properties.
Almost invariably, the auctioneer or estate agent specifically confirms that there is no binding contract. Certain standard language is used to deny the existence of a contract. This is desirable as the buyer might otherwise be obliged to buy the property, without any investigation of the necessary issues.
If the buyer and seller deal privately and sign any document, no matter how informal containing the key details of the sale, then there may be a binding contract. In some cases, one or other party may seek to enforce which the other party seeks to deny the alleged contract so that legal proceedings may result.
Modern Code I
Formerly, there was a distinction between estate agents and auctioneer licensing. The older estate agency and auctioneer legislation has been recently repealed and a modern system of regulation has been established by the Property Regulation Authority Act 2012. All property service providers must be registered under the Act, with the Property Regulatory Authority.
The Code of Practice for Property Service Providers regulates auctioneers and estate agents in the provision of services. There exist a non-judicial complaint and dispute resolution procedure. There are systems of sanctions and discipline, for breach of the Code. The Code is in the nature of “soft” law similar to the financial services sector codes.
Property Service Providers must avoid conflicts of interest. Where the property service provider identifies a conflict of interest, he must inform the person concerned as soon as possible. He may only act if the person consents to him so acting. Property Services Providers must provide separate client accounts, in which client money is held. The client monies collectively may be held in a separate account at a bank, provided that it is specifically designated as such. Memorandum client accounts must be held for each client.
Modern Code II
The Code provides for certain disclosure requirements. Where the property service provider also provides financial services, the obligations applicable under financial services legislation and Codes of Practice also apply. A property service provider must report all offers to sellers, made by a potential buyer or customers. Their dealings with sellers (their clients) and buyers are regulated. They must provide certain information relating to both buyers and sellers.
Property Service Providers must ensure any information supplied, either in advertising or in response to a request is correct and accurate, not misleading and does not represent the investment potential of the property. They must make available to customers or potential customers the following information, where it is supplied by the seller;
- Terms of sale; including what has been offered, the area of the property and the site;
- Architect plans and skill drawings including supplementary plans as to systems
- Details of alterations
- Details of insurance claims arising out of structural damage, copies of guarantees and warranties relating to the property
- Details of Protected status
- Details of the energy rating of the property.
Where the property is part of a multi-unit development, the Property Service Provider should confirm to the customer that the development is managed by a management company, give the contact details, indicate that a service charge will be payable, that it may increase and that sinking fund contribution will be required.
Solicitors are subject to extensive regulation in their dealings with clients. There is an obligation to provide a terms of business letter containing information in relation to a host of matters including fees, the basis of fee-charging and complaints to procedures. See the separate section on the regulation of solicitors.
Auction Sales I
A sale by public auction is fundamentally different to a sale by private treaty. Unless the contract otherwise provides, there is a legally binding contract when the property is knocked down at auction, to the highest bidder. The form of contract is immediately signed. If the buyer does not sign, the auctioneer has the authority to sign it.
Because the buyer is bound immediately after the auction, it is critical that he deals with all the pre-contract issues mentioned in subsequent chapters, in advance of bidding at the auction. He agrees unconditionally to take the property as offered on the terms of sale, by being the highest bidders. It is therefore critical, that the prospective bidder undertakes a physical survey, satisfies himself with the title, the terms of sale and his ability to raise the finance to complete the purchase.
If the reserve price is fixed in advance of an auction, the property may be withdrawn if the reserve is not reached. A seller may reserve the right to bid at the auction, provided this is disclosed. In this case, he can participate in the auction including as bidder. The right must be reserved in the contract. The presence of “puffer” will render the auction legally invalid unless the conditions clearly reserve the right. Provisions of this nature are commonly found in the general conditions of sale.
Auction Sales II
The advertising of an auction does not oblige the seller or auctioneer to hold an auction. The property may be withdrawn at any time before the sale. Indeed, many properties are commonly bought on the eve of the auction. A bidder at an auction becomes bound once his bid is declared to bid the highest bid. He may retract his bid up to that point.
A bid made at an auction is generally interpreted as an offer to buy, rather than the acceptance of an offer to sell, made by the vendor or through his agent the auctioneer. The knocking down or falling at the hammer is generally the acceptance of the bid. However, if a reserve has not been reached, there will be no binding contract. The standard conditions of sale give the auctioneer power to deal with disputes in relation to bids. He can determine whether a bid was communicated, heard or is effective.
A sale may be invalidated if the integrity of the auction process has been interfered with, by the seller or indeed the buyers. Although the seller may reserve the right to bid, other practices may undermine the integrity of the auction. The seller must not inflate the price by fraud or misrepresentation, for example, that false bids are genuine.
Bidders may make agreements between themselves not to bid in an attempt to secure a favourable price. However, where bidders act fraudulently and interfere with the integrity of the auction, such as by making misrepresentations and false remarks about the property, the process may be invalidated.
After the auction, the buyer will be expected to pay the deposit immediately and sign the purchase contract. Therefore, he must have sufficient funds to make this payment. The deposit will be specified by the contract and will commonly be 10 per cent.
Court sales are relatively unusual in Ireland. Special procedures are provided by the court rules for sale through the Examiner’s or County Registrar’s office. See the section on mortgages and court sales.
Entitlement to Commission
The earlier legislation prohibited attempts to pass the auctioneer’s fees on to the buyer. The question of entitlement of auctioneer’s fees depends on the terms of the contract with the seller. The level of auctioneer’s fees is a matter of negotiation in the free market. Formerly, particular percentages were commonly charged. This would generally be considered inconsistent with modern competition law, which prohibits price fixing.
Generally, the auctioneer must procure a buyer, who must be ready willing and able to complete the purchase. If the buyer fails to complete, other than by the seller’s willful default, the auctioneer will not generally be entitled to his fee. However, the matter will be governed by the terms of the auctioneer’s terms of business.
An auctioneer may agree that he is the sole agent. In this case, he may be entitled to a commission if he is the effective cause of sale, even if he does not procure the particular buyer. The sole agency agreement prevents the seller from depriving the agent of his commission by selling through another agent. He may be able to sell himself, consistent with the agreement, depending on its terms.
The entitlement to commission has been formulated in various ways in different cases. Ultimately, it will depend on the language in terms of business as supplemented by the Code of Conduct. An entitlement may arise, for example, on securing an offer, introducing a person who signs a contract or introducing the purchaser who is ready willing and able to buy.
Building Energy Rating Certificates
European Union directives have introduced the requirement for Building Energy Rating Certificates in the sale and letting of residential and commercial property and the sale of a newly built property. A BER certificate and advisory report must be furnished. The legislation established a system of accredited BER report providers. The Sustainable Energy Authority of Ireland maintains a register of BER assessors.
The requirements of the Regulations apply to most buildings except protected structures, national monuments, industrial buildings not intended for human occupation over extended periods, where the installed heat capacity is less than 10 W/m2. Certain temporary buildings and certain other stand-alone buildings with floor areas less than 50 square metres are also exempted.
BER certificate is required to be produced by persons commissioned to the construction of a new dwelling. The certificate must certify compliance with the building energy regulation part of the building regulations.
A person who offers a new or second-hand dwelling for sale and any agent acting on his behalf in connection with the offering must produce a printed copy of the BER cert in the prescribed format and the accompanying advisory report in relation to the dwelling, to any person expressing an interest in purchasing or taking a letting of the property.
Where a new dwelling is under construction and is being offered for sale on the basis of plans and specifications, a printed copy of the provisional BER certificate must be furnished to persons expressing an interest in purchasing the property or dwelling. On completion, a printed copy of the BER and the final form of the certificate must be furnished.
Where a person must produce a BER certificate and advisory report, they warrant that it corresponds with the actual BER record and certificate.
A person who commissions the construction of a non-residential building or offers sale or let it must provide a BER in the relevant format for nondomestic properties together with the accompanying advisory report. Similar provisions apply where it is sold off the plans. A provisional BER certificate must be furnished together with a final format on completion.
A person who offers for sale or letting a dwelling and any agent on his behalf must ensure that the energy performance indicator of the current BER certificate for the dwelling is stated in the advertisement relating to the sale and letting of the property. In the case of non-domestic properties, equivalent obligations apply. The manner in which the rating is to appear is specified by law.
A building control authority (the council as building control authority) authorised officer may demand from the owner or agent on behalf of the owner, evidence required to show compliance with the legislation. It may demand from the owner or his agent a printed copy of the BER certificate, in which event, it must be produced within 28 days.
After 9, January 2013, public bodies must secure and display a valid display energy certificate in the format prescribed. It must be displayed in a prominent place visible to members of the public in a “large building” as defined. A large public building is one with a useful area of more than 500 square meters, (reduced in 2015 to 250 square metre) A public building frequented by the public and occupied by a public body more than 500 square meters is deemed a large public building. The owner or agent of a large building must display a DEC.
The regulatory authority is Sustainable Energy Ireland. It regulates BER assessors.
References and Sources
Law society of Ireland: Conveyancing 9th Ed Brennan et al.
Investigating Unregistered Title- Magee 2012
Irish Conveyancing Law- Wylie & Woods 4th Ed 2019
Irish Conveyancing Precedents- Laffoy
Irish Conveyancing Statutes – Wylie 2020 6th Edition:
eConveyancing and Title Registration quantity
Complex Conveyancing Law Society PPG Hession 2nd Edition
Registration of Deeds and Title in Ireland – Deeney 2014
Conveyaning Handbook 28th Ed. Silverman et. al (annual)
A Guide to Conveyancing Residential Property by Alan Stewart
A Practical Approach to Conveyancing (22nd ED) Robert Abbey and Mark Richards
A Practical Approach to Commercial Conveyancing and Property 5th Ed Robert Abbey
Property Services (Regulation) Act 2011
An tAcht Um Sheirbhisi Maoine (Rialail), 2011
Property Services (Regulation) Act 2011 Commencement Order – Part 10 SI 520 of 2017
Property Services (Regulation) Act 2011 (Commencement) (No.2) Order 2012
Property Services (Regulation) Act 2011 (Commencement) Order 2012
Property Services (Regulation) Act 2011 (Establishment Day) Order 2012
PSRA Statutory Instruments
Property Services (Regulation) Act 2011 (Minimum Standards) Regulations 2020 – SI 564 of 2020 / Plain English Version
Property Services (Regulation) Act 2011 (Maintenance Of Professional Competence Of Licensees) (Amendment) Regulations 2020 – SI 348 of 2020
Property Services (Regulation) Act 2011 (Professional Indemnity Insurance) (Amendment) Regulations 2020 – SI 161 of 2020
Property Services (Regulation) Act 2011 (Section 95) (Extension Of Licences) Regulations 2020 – SI 162 of 2020
Maintenance of Professional Competence of Licensees Regulations – SI 576 of 2017
Qualifications Amendment Regulations – SI 456 of 2015
Qualifications Regulations – SI 181 of 2012
Client Money Regulations – SI 199 of 2012
Compensation Fund Regulations – SI 183 of 2012
Professional Indemnity Insurance Regulations – SI 182 of 2012
Licensing Regulations – SI 180 of 2012
Regulatory Impact Analysis
RIA Legislative Amendments Major Sanction June 2017
RIA Legislative Amendments Compensation Fund June 2017
EU Directive 2005/36/EC – Recognition of Professional Qualifications
EU Directive 2006/13/EC – Services in the Internal Market
Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (Competent Authority and State Competent Authority) Regulations 2016
Multi-Unit Developments Act 2011]
Public Sector Materials; Statutes and Cases in italics are reproduced as public sector material. See the Legal Materials link in the footer.