House Sale Contract Query

Bella86

Hi

I am currently buying a house from a receiver on behalf of bank, our solicitor asked about about update on issuing of contracts and received a letter back from bank Solicitor stating
"Contracts are drafted and we await our clients instructions confirming the position regarding VAT in order to issue the same.  We will forward contracts as soon as we have out clients instructions."

Does anyone have any idea what this means?  and generally how long would this take?

Grawns

They need to confirm that they don't need to charge vat on the agreed sale price. Was this a commercial premises or a new build?

Bella86

No its not a commercial property and it isn't a new build it is a second hand house.  The developer owned the house and went bust.  The house is approx. 10 years old and has been lived in.

antoinolachtnai

Bella86 wrote: »

No its not a commercial property and it isn't a new build it is a second hand house.  The developer owned the house and went bust.  The house is approx. 10 years old and has been lived in.

I can see why the solicitor wants clarification. From a vat point of view it may arguably be considered a new house and if so vat is payable on part of the price. They need to figure this out before their solicitor can proceed. It should not make any difference to the price you pay. You really need to talk to the seller's agent and to your solicitor about how long they think this will take.

4ensic15

antoinolachtnai wrote: »

I can see why the solicitor wants clarification. From a vat point of view it may arguably be considered a new house and if so vat is payable on part of the price. They need to figure this out before their solicitor can proceed. It should not make any difference to the price you pay. You really need to talk to the seller's agent and to your solicitor about how long they think this will take.

If the developer claimed VAT in the build and this is the first sale, there could well be VAT chargeable.

Bella86

4ensic15 wrote: »

If the developer claimed VAT in the build and this is the first sale, there could well be VAT chargeable.

Thanks everyone for comments... I'm sale agreed 7 weeks now and no contracts and this is what is holding them up. My solicitor said there isn't much they can do as the bank is the client all they can do is press the banks solicitors. Anyone know what else I could do and if I should pull from sale?

antoinolachtnai

You should talk to the receiver's estate agent. The agent has the same interest in you, i.e., get the sale done.

It could honestly drag on for a bit. The reason is that the VAT issues may be entwined with the former owner's own settlement with Revenue. Revenue have the first call on proceeds from the sale, so this is a big issue.

I would keep looking in case something else comes up. But it might still come through.

(Even if VAT is chargeable, I would not expect that you would have to pay it. This is because residential property is almost always sold with a price tag that includes any VAT. I would expect the receiver will absorb the VAT. The receiver will not be upset about having to absorb it, because this is not the receiver's own money. They need to have conducted a thorough process, but they are just being paid a fee.

In my experience, the thing that really buggers up these sales is if the original owner of the property objects. I was trying to buy an apartment from a receiver a few years ago. I knew I was banjaxed when I figured out who the clown was who had originally owned it and read about his shenanigans in the Four Courts.

If it really is just the VAT issue then it shouldn't be too difficult to resolve.

One item of good news - if there is VAT involved, this may have a (good, i.e. downward) impact on the amount of stamp duty you have to pay. But your solicitor is the person to talk to about that.

Bella86

antoinolachtnai wrote: »

You should talk to the receiver's estate agent. The agent has the same interest in you, i.e., get the sale done.

It could honestly drag on for a bit. The reason is that the VAT issues may be entwined with the former owner's own settlement with Revenue. Revenue have the first call on proceeds from the sale, so this is a big issue.

I would keep looking in case something else comes up. But it might still come through.

(Even if VAT is chargeable, I would not expect that you would have to pay it. This is because residential property is almost always sold with a price tag that includes any VAT. I would expect the receiver will absorb the VAT. The receiver will not be upset about having to absorb it, because this is not the receiver's own money. They need to have conducted a thorough process, but they are just being paid a fee.

In my experience, the thing that really buggers up these sales is if the original owner of the property objects. I was trying to buy an apartment from a receiver a few years ago. I knew I was banjaxed when I figured out who the clown was who had originally owned it and read about his shenanigans in the Four Courts.

If it really is just the VAT issue then it shouldn't be too difficult to resolve.

One item of good news - if there is VAT involved, this may have a (good, i.e. downward) impact on the amount of stamp duty you have to pay. But your solicitor is the person to talk to about that.

Thank you for that detailed response. I believe the owner of property was a developer who had all his properties taken off him by CAB nearly 8 years ago.. I don't know if he can have the option to reject object as they were legally taken off him but again I can be wrong.

I really hope it doesn't hold up the sale our solicitor said it shouldn't take long but you never know what that mean's. .

antoinolachtnai

Keep in touch with the agent. The agent will likely know more than your solicitor will (although he may not be willing or able to tell you everything he knows).

CeilingFly

I wouldn't be overly concerned as receiver sales can be cumbersome.
I had one myself four years ago (holiday home) and it took 4 months before contracts came, but after that it was very quick.

In my case the original bank had sold the distressed lians to a German fund who's contact was based in UK, receiver based in Dublin and solicitor in Cork and property in Kerry.

It took about 2 weeks to get any questions answered as the receiver and bank contact saw it as an inconvenience. But once contracts were sent, they wanted completion immediately.

Bella86

CeilingFly wrote: »

I wouldn't be overly concerned as receiver sales can be cumbersome.
I had one myself four years ago (holiday home) and it took 4 months before contracts came, but after that it was very quick.

In my case the original bank had sold the distressed lians to a German fund who's contact was based in UK, receiver based in Dublin and solicitor in Cork and property in Kerry.

It took about 2 weeks to get any questions answered as the receiver and bank contact saw it as an inconvenience. But once contracts were sent, they wanted completion immediately.

What was the hold up with your contracts? The bank is UK based, the receiver is UK and solicitor Dublin house in Meath. In total how long did it take for sale to go through?

CeilingFly

Bella86 wrote: »

What was the hold up with your contracts? The bank is UK based, the receiver is UK and solicitor Dublin house in Meath. In total how long did it take for sale to go through?

I don't think it was anything specific, just it was a minor transaction and something they'd prefer not to be doing and it wasn't any sort of priority for them.
Our offer was accepted in November and sale went through July 1st after.

Bella86

I just have been speaking with the estate agent and they said they have spoken to the receiver and they have instructed there solicitor to include a special condition in the contract in relation to the VAT.  I know I will have to wait to get contracts and for my solicitor to go over but what does this mean?

antoinolachtnai

It probably means they have decided how they are going to sort it out and that all will be well. But you need to have your solicitor explain to it.