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Five routes to a cleaner title search

20 Mar 2019 / conveyancing Print

Five routes to a cleaner, quicker title search

The Law Society has drawn attention to blockages in conveyancing architecture in a new policy document, as part of its March law reform agenda.

The document identifies four pieces of legislation that add cost to the conveyancing practice and suggests ways to simplify and speed up the process.

“These are small amendments that could have a big impact,” said a Law Society spokesman.

“The debate surrounding legal costs sometimes fails to accommodate an analysis or understanding of the extent to which the processes and structure of legislative compliance play a key part,” he said.

The more (unnecessarily) complex the system, the greater time and legal costs accrue for clients therefore the Law Society believes that a key goal for policymakers and the profession should be to advocate for a system of public and financial services that retain their effectiveness, while doing away with redundant or unnecessary procedures.

The policy document identifies “blockages” in the system, arising from legislation and proposes solutions.

Unpaid NPPR

Unpaid Non Principal Private Residence (NPPR) is a statutory charge on property and therefore must be investigated as part of title to ensure a buyer gets clear title and a lender gets a first charge (mortgage) on the property.

Every purchaser until 2025 will have to establish that there is no unpaid NPPR due by previous owners for any year 2009-2013 inclusive.

A certificate of exemption is increasingly difficult to obtain as proof of occupancy records are generally kept for only seven years by utilities.

The clearing of title for buyer and lender can be frustrated as different criteria are applied by different local authorities with inequality in the treatment of taxpayers.

The policy document suggests removing NPPR as a charge on property which takes it out of the conveyancing system, resulting in savings of costs and time.

The local authority can pursue unpaid NPPR as a debt against the liable party.  The document points out that in the current system, solicitor and local authority time and cost is unnecessarily incurred, which is disproportionate to any likely tax recovered.

Planning amnesty

At the moment, pre-1964 development benefits from a presumption of planning compliance.

Post-1964 development has no presumption of compliance.

Since planning compliance must be proved, every time a property is sold, the purchaser has to investigate planning going the whole way back to 1 October 1964.

This is repetitive, costly legal work. Local authorities cannot take enforcement action in relation to a breach of planning after between seven to 12 years. Yet, the relevant development does not become compliant – it remains as an unauthorised development.

In addition, this can give rise to architectural and engineering costs for clients in order to obtain a certificate of compliance with planning.

A planning amnesty after a certain period – say 15 years from time of construction – would speed up title investigation, thereby reducing costs to clients.

Unpaid LPT

Unpaid Local Property Tax (LPT) is a statutory charge on property and therefore must be investigated as part of title under section 123 of Local Property Tax Act 2012

There is no time limit on the charge on property and therefore no limit on look-back.  This situation is likely to become more burdensome as time passes, due to new valuation cycles.

Clearance rules applicable in each cycle will have to be assessed separately by the purchaser at every subsequent purchase.

Because of the increase in time spent on investigating this tax, there is an increase in the legal cost of conveyancing.

LPT should not form part of the conveyancing process, the Law Society document says.

LPT should be a charge against the individual and dealt with through self-assessment and through existing Revenue collection and enforcement options.

Help to buy scheme

Deposit monies paid by Revenue to a builder under the help-to-buy scheme that are not repaid to Revenue following a cancelled sale are a statutory charge on the site under Section 477C Taxes Consolidation Act 1997(as amended).

Where there is a cancelled sale, and the builder has not returned the deposit to Revenue, Revenue has a clawback by way of a statutory charge on the site.

A subsequent purchaser of the same site or their lender has no protection as there is no way they can discover from title searches that there is a statutory charge on the site in favour of Revenue.

This applies retrospectively, even after the site is resold to a subsequent purchaser.

It adversely impacts on title to the property and on a buyer getting clear title or a lender getting a first legal charge (mortgage) on the property.

If the statutory charge is removed, Revenue could pursue the builder as a debtor.

Alternatively, the Oireachtas could provide that the statutory charge would apply only when Revenue has obtained a judgment against the builder and registered it against the title. It is then easily discoverable by a buyer or lender doing the usual title search.

Unpaid fines charged against domestic property

Unpaid fines under the  Fines (Payment and Recovery) Act 2014 are a statutory charge on property owned by the person fined.

Buyers are required to carry out an additional search to ensure that title is clean.

The cost of search is payable to the sheriff or receiver of fines plus law searcher fee for additional search which adds to total cost for buyer.

If the charge is removed on the property, the matter could be pursued as a debt due.

The Sheriff could register an unpaid fine as a lis pendens against the property.

This would be discoverable on an existing standard title search without the need for an additional search in the sheriff’s office.

 

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