This old house

A new bill seeking to provide for a mandatory ‘seller’s legal pack’ is fraught with potential difficulties in terms of increased costs and inefficiencies, argues Lesley O’Neill

A private member’s bill – the Seller’s Legal Pack for Property Buyers Bill 2021 – is now before the Dail.

It seeks to establish a statutory procedure whereby vendors would be obliged to provide a ‘seller’s legal pack’ (SLP), which must be made available to prospective purchasers at the time of advertisement of a property, with the aim of ensuring that purchasers have all necessary legal information pertaining to the property at the outset.

The bill (at section 3.1) lists ten documents that vendors must provide and is supplemented by section 3.2, which lists a further 15 documents that the vendor can at his/her discretion provide.

Having regard to the compulsory nature of section 3.1, vendors would be obliged to provide the following documentation contemporaneously with the property being placed on the open market:

1) Law Society conditions/ contracts of sale,

2) Certified copy of file and file plan or root of unregistered title,

3) Architect’s certificate of compliance with planning permission,

4) Architect’s certificate of compliance with building regulations,

5) Copy of all planning permissions and building regulations documents,

6) Receipts for financial conditions,

7) Letter confirming roads and services, or evidence of rights of way and wayleave, including rights of access to, over, or affecting the property interest, fishing rights etc,

8) Local property history details,

9) BER certificate and advisory report certificate of discharge or exemption from the Non-Principal Private Residence Charge,

10) Report summary on planning search, judgment search, compulsory purchase order search, bankruptcy search, sheriff and revenue sheriff search, Registry of Deeds search, and company search.

Critical requirement

While the proposals are not ostensibly thought to be dissimilar to the present auction regime, whereby vendors’ agents routinely upload and disseminate an analogous form of legal pack, section 5 of the bill critically requires that the “documents included in the SLP must be dated no earlier than the date that falls one year before the first point of placing the property on the market for sale”.

This will mean that vendors will be required to procure, at their own cost, up-to-date certificates of compliance with planning permission and building control legislation, for example, which goes much further than general condition 32 in the present iteration of the Law Society 2023 General Conditions of Sale.

Section 5 of the bill also mandates that vendors provide an up-to-date complement of searches – the costs of which, again, will be borne by the vendor in advance of placing the property for sale on the open market.

Practitioners will also note the absence of certain other critical documents in section 3.1, such as MUD Act replies and, indeed, replies to requisitions on title, which will prejudice a full investigation of title.

Section 3.1 requires the potential engagement of five professionals – including solicitors, BER assessors, architects, and law searchers – as well as requiring engagement with the local authority, Revenue and, where applicable, the funder, again up front and at the vendor’s sole expense.

The ‘up-front’ SLP will not, however, be mandated where, for example, the sale comprises an open sale of mixed commercial and residential property, and will also not be required where the property is being sold without vacant possession – albeit practitioners will be acutely aware that prospective investor-purchasers consider the terms of an extant tenancy critical in terms of calculating net yield.

Efficiency and cost

While the bill speaks to the provision of the SLP as a step in making the conveyancing process ‘more efficient’, it may, as outlined above, increase both the vendor’s and purchaser’s costs in the engagement by the vendor of his/her ‘property service provider’ (auctioneer), who will be obliged to ensure that the SLP is provided.

It will also (in many cases) involve a separate cost to the vendor in terms of a release fee where title documents are taken up from a lending institution, and a further legal fee to the vendor’s solicitor (once engaged) in terms of the solicitor’s review of title and the preparation of the agreement of sale, which is the first mandatory document set out in section 3.1 of the bill.

This will, it is envisioned, lead to various form of pre-contract enquiries being raised in circumstances where no form of binding legal agreement even exists.

It is not unreasonable to expect that some proposed purchasers will engage solicitors to review the agreement for sale and the SLP before a formal offer is even made, which will of course lead to delays and add to the costs borne by purchasers in an already inflated market.

The SLP costs will all be borne by the vendor before the property is even placed on the market and will not be recoverable in the event the property is not sold.

Sunk costs

Dáil Éireann discussions on the SLP are currently confined to second-stage debate, but allude to the foregoing costs and support the contention that the SLP may lead to sunken costs where the sale falls through or where no purchaser appears.

While the Government in principle supports the bill, it has asserted (via Justice Minister Helen McEntee) that “there is a risk the bill as drafted could lead to increased conveyancing costs and delays, and even reduce the supply of properties coming onto the market”.

The discussions also refer to a similar form of SLP that was introduced In England and Wales in 2007, but which was suspended on the basis that it added to conveyancing costs and delays.

It is clear, therefore, that the bill requires further legislative scrutiny as it advances, as it “risks not achieving its overall intended purpose”.

Whilst IPAV has indicated that it is supporting the general scheme of the bill, it is difficult to conceive how the bill in its current guise will reduce delays when section 4 of the bill provides that the ‘property service provider’ shall advertise the property with the SLP, noting (as above) that input and documentation will in some cases be required from funders, solicitors, BER assessors, architects, law searchers, the local authority and Revenue in order to compile the mandatory SLP under section 3.1.

It remains to be seen whether the bill will be recommended at committee stage, but it is evident that efforts to “frontload the process to provide certainty and efficiency to all” will conversely increase both costs and inefficiencies.

It is imperative, therefore, that the challenges addressed in this article and those outlined in the second-stage debate are comprehensively addressed.

Lesley O’Neill is a solicitor with Blake & Kenny LLP, Galway