Buying And Living in a Multi-Unit Development Property in Ireland
2. Buying a Unit
2.1 Introduction
When purchasing a unit such as an apartment, the legal documents you sign set out the terms and conditions by which ownership of the unit is transferred to you.
As the legal transfer of property is a complex and specialised process, in general, each party appoints a solicitor to represent them.
There is no fixed rate for solicitors' fees, so shop around before picking a particular firm.
Conveyancing describes the legal work done by the buyer's solicitor and the seller's solicitor in the property sale. If buying by auction, remember that you will also need a solicitor before the auction to check the contract and the properties title documents.
In conveyancing documents, the buyer is usually referred to as the Purchaser and the seller as the Vendor.
The legal documents used to transfer ownership of the property set out the details of what the buyer and seller have agreed to do, the conditions governing this agreement and the remedies and consequences of either party not meeting the terms of the agreement.
The contract to buy a unit will set out the terms and conditions of your ownership of your unit, your part ownership of the common areas and the conditions of your membership of the management company.
It is essential that you understand from the outset what these terms and conditions mean and what your rights and responsibilities are.
The documents you sign to purchase your property contain legally binding obligations and mean that you cannot "opt out" of any of the terms and conditions.
For example, if the contract states that you will pay service charges and become a member of the management company, you cannot opt out of these obligations.
It is therefore very important that you always ask your solicitor to examine and explain the terms and conditions of your individual contract, to ensure that you fully understand how they apply to your particular circumstances.
The following is a brief overview of some key conveyancing terms which purchasing a unit may raise.
However, it is essential that you seek legal advice before entering into a contract to purchase, as the information outlined below may not address the specific purchase circumstances of a particular unit or development.
2.2 Leasehold and freehold ownership
The ownership rights associated with buying a unit, such as an apartment, are generally not the same in legal terms as buying a house.
In Ireland, most houses are owned freehold, which essentially means that when you buy them, you acquire legal ownership of both the property and the land on which it is built.
Multi-unit development properties, such as apartments, are generally owned as leaseholds, which means that you own the property, but not the land on which it is built.
In such cases you cannot own your apartment outright, or "freehold" in the same way as you might own a house. The freehold of the land will generally be owned in the first instance by the developer who will generally transfer it to the management company.
Leasehold ownership means that the property is owned for a specified number of years, after which ownership reverts (theoretically at least) to the freeholder (land owner). In a multi-unit development, each owner will hold a "lease" on his or her apartment.
The terms of the leasehold will be set out in your contract to purchase.
Leaseholds in multiunit developments tend to be very long leases (perhaps as long as 999 years) which you can sell on to a new owner when you wish, or leave behind in your will.
Your solicitor should explain to you how they apply to your particular circumstances and explain in plain English what you own and the terms of ownership.
2.3 Ownership and maintenance of the common areas
If you are buying off the plans, ask your solicitor if the planning permission requires that a management company be set up.
Your contract to purchase should set out who owns the common areas and who is responsible for maintaining them.
In cases where the developer still owns the common areas, the documentation will set out the conditions under which ownership of the common areas will be transferred to the owners through a management company.
The legal documents you sign to purchase your unit may outline for example that it is the developer (acting through the management company) who owns the common areas and is responsible for management of the development.
In such cases the developer decides on the services that will be provided, who will provide these services (the developer may appoint a managing agent to act on their behalf) and the price that service charges will be set at.
The legal documents may state that these responsibilities should pass to the management company when the transfer of the common areas takes place.
The contract for the sale of the reversionary interest to the management company is the document which makes this legally binding.
As there is no standard process for transfer of ownership of the common areas, it is important that your solicitor explains to you what the terms and conditions with regard to transfer of ownership of the common areas are and the current/future role of the owners in the management company.
2.4 Standard contract for the sale of property
A contract is an agreement between two or more parties that is enforceable by law.
Contracts may differ in many ways and there are no hard and fast rules governing what terms should be in a contract.
Anyone involved in a contract should be clear about what their obligations are under the terms and conditions of the contract.
Your solicitor should help you in this regard. In the event of a dispute between the parties, the contract is the critical legal basis for resolution.
The standard contract for the purchase of property most widely used is the standard conditions of sale contract published by the Law Society of Ireland. This contract binds the parties to the property transaction.
It is designed to ensure that there is a fair balance of rights and obligations between buyer and seller. The standard contract specifies things such as the agreed purchase price and the completion date.
On receipt of contract, your solicitor will examine its terms and conditions. Before signing, take time to read the contract through and ensure that your solicitor explains the terms and conditions to you so that you fully understand what they mean.
If you do not understand any words or the meaning of the term is unclear, always ask for an explanation.
While the standard contract uses a set format and contains standard clauses, it may also contain additional specific terms and conditions specific to your property purchase. These are known as the "Special Conditions".
Your solicitor should inform you as to what the meaning of any of the relevant special conditions are. The contract for sale may include the building agreement contract. In such instances, the contract is actually a "contract for sale and building agreement".