Talk me through 'title problems'?

Moomintroll99

We're looking to buy a family home, in the happy position of being cash buyers.

Some of the properties we're looking at are for auction. This doesn't worry us too much in itself - we're from Australia, where most properties go for auction, so we're used to spending money on a survey and maybe missing out on auction day, deaing wtih dodgy auctioneers etc etc.

But a few people have mentioned potential 'title issues' with properties for auction and that's not something I am familiar with.

I'm just wondering what these might consist of? Are they things you can fix with a bit of cash/hassle? I mean I can imagine boundary disputes as one of them but what else might there be?

Obviously we'd get a lawyer to check it out properly if we decide we're serious about a property, but just want to get an idea of what kinds of title issues tend to come up and whether/how they can be addressed.

Thanks to any property geniuses who can advise.

CIARAN_BOYLE

Here's an article regarding potential issues

http://www.irishtimes.com/business/commercial-property/buyer-beware-to-avoid-distress-after-property-auctions-1.529871

AndrewJRenko

In broad terms, it means that you don't really know if you own the property, as the ownership of the current owner is unclear. The title deeds on our suburban property has papers going back a couple of hundreds years, showing who left what to who in their will and who sold what and when. If there are gaps in the papers, it is unclear who actually owns it.

I guess the worst case scenario would be that after you buy it, somebody comes along and says 'hey, I own that house and here's the paperwork to prove it' - but I don't think anyone could predict the possibility of this happening.

antoinolachtnai

Basically you need the advice of a solicitor before you bid. Title in Ireland can be a good bit more complicated than in Oz.

wordofwarning

A good example of a title issue is I know someone who brought a property during the boom. Their solictor warned them not to buy the property, as it would be impossible to sell in the future. Parts of the title were missing for decades. They brought it anyway(it is a long story) and got a mortgage on it.

That property was put into receivership and sold to a vulture fund. Despite the law stating each property needs to be sold individually in a receiver sale, some receivers bundled up a bunch of properties and sold them to a fund. The fund was getting them so cheap in a rising property market, they often did not do due diligence. A receiver has to go to a solictor to ensure that the property is suitable for sale. But if they were not following some of the rules, why follow any of them. eg getting a title checked for sale. A lot of them were sold as is

To cut a long story that house is now for sale again and the sale has fallen through twice already. The estate agent is selling it cash only. They are obviously hoping someone will not do their due diligence as the property appears to be cheap, but it is cheap as the titled is messed up.

Allegedly banks are not giving mortgages to former vulture fund properties, as they realise that the title is messed up on a lot of properties. A lot of solictor did not check titles or file paperwork etc, as they assumed most BTL investors would flip the houses within 2-3 years. Why file paperwork with the land registry or registry of deeds when the house will be sold within 18 months? That was the attitude of a lot of Solicitors.

Titles can be fixed, but it can be an extremely long and expensive process. A discounted house with a messed up title is false economy to me. I personally would run a mile for a house that is being advertised "CASH ONLY". You buy a banger for cash only, not a €500k house. If a vulture fund has a bought a ton of houses for cheap and wants to maximise their profit, a quick fix like fixing a title for tens of thousands more would have been done if it was a quick fix. But it is a slow and expensive process.

Victor

Note that auction is the exception in Ireland and tends to only be used for 'unique' properties (certainly over €1 million, but usually higher) or properties with problems.

Note that if you are the final bidder, there is no backing out and you are expected to have the deposit (typically 10%) and sign on the day. If you don't sign, the auctioneer can sign on your behalf. If you don't pay up the balance, you can be sued for the difference between your bid and the final sale price.

Moomintroll99

Hmmm thanks a lot, wise ones!

I do understand the auction rules I think - no backing out once the hammer falls etc. Have read plenty of online guides and have a lovely solicitor lined up to act for us.

But I don't understand how there can be 'parts of a title missing'. Or is that the old title deeds system where they were physical deeds scrawled on a bit of vellum or something? So the risk is that it could be hard to get the title sorted into the new title system because you can't prove old ma X didn't leave it to her son Y back in 1840 when cousin Z suddenly took possession of it?

Does that open a risk that Y's descendents rock up claiming ownership? Or just make bureaucratic pain as you try to get a title deed registration through the system? Or is it the kind of pain you only find when you attempt to resell and find no bank will lend to anyone else (not such an urgent issue as we're looking for a long term family home rather than a flipper).

What is the remedy for 'unclear chain of ownership' issues? Can you get some kind of court order overruling the ambiguity from 1840 or does it just stay ambiguous for ever?

I'm just trying to get my head around how much pain and what kind of pain might be involved, so I can do a bit of a pain algebra in my head and work out what might be worth it.

AndrewJRenko

I don't think you'll know how serious the title problem is until you go to fix it and see what you can find, which adds to the risk of the purchase.

It does create opportunities of buying low and selling high
http://www.irishtimes.com/news/locals-jointly-buy-dartmouth-square-park-1.973

but obviously this wasn't a family home he was dealing with.

seamus

Yeah you've got a pretty good grasp of things in terms of how stuff isn't properly sorted out.

It was the norm for many years (and still may be) for families to divide up plots of land between their sons without drawing up any proper documentation. John gets the bit in the corner and uses the 6 foot wide lane to get to his house, but the lane is actually half on Paul's plot and half on Pat's plot.

John's great grandson tries to sell up and the site drawing shows the plot and the laneway, but then he discovers that the laneway isn't his, that his septic tank is actually located on Paul's land, and that half of the garage is on Pat's land, which was sold to someone unrelated 50 years ago who is absolutely refusing to sell that section of his plot.

That's before he finds out that none of his ancestors properly transferred the land from great-grandfather John and they all just moved into the house when the previous owner died. So according to the legal documents the house belongs to a man who's been dead for 90 years.

Where it becomes an issue as a cash buyer is when you may try to get a mortgage on the property, do some building work or try to sell it on.
Or you may arrive home some day to find out that someone has dug up half of the land you thought was yours, but they equally thought it was theirs.

sandra_b

Does the same apply for the apartment with structural/fire safety issues? For example the apartment can be bought only by cash buyer. Banks are not giving mortgages because of the issues.
It is not known yet how much the works will cost, who will pay and when issues will be fixed.
If someone buys (in cash) are they going to have the problems to sell in the future, even when all the problems are fixed?

wordofwarning

Property ownership did not have to be registered until very recently with the land registry. In fact only a tiny percentage of houses/apartments in Dublin have detailed registrations with the land registry. You will often just be only able to find to find John Smith owns 123 High St and BOI has a charge on it in the registry of deeds. You won't have a detailed map of what land they own surrounding the property etc. You literally just have a record of they own the said property.

I know when the person with the botched title called the land registry and registry of deeds, they were told the property appeared as a maisonette which it was not. The records for the house was a mess. A title can be fixed but it is expensive and a long process. It could be years to resolve it even on a basic issue. The problem may have to involve the land registry.

Samuel T. Cogley

Moomintroll99 wrote: »

What is the remedy for 'unclear chain of ownership' issues? Can you get some kind of court order overruling the ambiguity from 1840 or does it just stay ambiguous for ever?

I'm just trying to get my head around how much pain and what kind of pain might be involved, so I can do a bit of a pain algebra in my head and work out what might be worth it.

There can be any number of things but an example from my side was that part of the land attached to my house is actually owned by the house next door. Now that only affects the side egress of my place but if an extension or something is built on land like that, the potential is that it may have to be demolished or damages paid. Generally the value of the land isn't the issue it's the legal fees which could be eye watering. Generally ambiguity is cured by adverse possession, issues tend to be more modern than 1850, but not necessarily.

The most common consequence - and generally why the house is at auction in the first place - is it can't be sold by conventional means. You might be grand to live there, but it may be difficult to sell.

Forgetting the land for a moment there could be some mad claim of residency on the place etc.

Victor

Another issue is adverse possession. Someone takes control of an abandoned site next to their own and incorporates it into the site. They build a house / factory / apartment building.

Years later, they go to sell it. It's likely nobody will come to claim it, but someone might.

There may be an inter-related issue with ground rents.

Afraid the question is as broad as asking "what types of illnesses are there" on a medical forum. The list of issues that can come up on a title check could fill a library.

Beanybabog

sandra_b wrote: »

Does the same apply for the apartment with structural/fire safety issues? For example the apartment can be bought only by cash buyer. Banks are not giving mortgages because of the issues.
It is not known yet how much the works will cost, who will pay and when issues will be fixed.
If someone buys (in cash) are they going to have the problems to sell in the future, even when all the problems are fixed?

That's not quite the same - it's not a title issue, the ownership etc may be all in order and the purchaser will have no problem registering their interest. If the problems are genuinely fixed there should be no problem selling in the future. That said, It's caveat emptor so if you buy it you're buying as is- so the problem might never get fixed and/or you'll stuck with a hefty bill

Spark Plug

If you have a concern about some aspect of the title talk to your solicitor about taking out title insurance