What is the ‘Seller’s Legal Pack’?
The “Seller’s Legal Pack for Property Buyers Bill 2021” is a proposed law due to be debated in the Dáil in September 2023. It is an attempt at improving the home buying and selling process by introducing a Seller’s Legal Pack that must be made available up front when a property is put on the market.
..when a Seller of a property places the property on the market, a set of legal documents (the “Seller’s Legal Pack”) shall be compiled and advertised with the property and made available to potential buyers, such documents ensuring that buyers have key information relating to the property and ensuring the conveyancing process is more efficient.
-SELLER’S LEGAL PACK FOR PROPERTY BUYERS BILL 2021
The contract documents for the sale of a property are drawn from a number of different sources. The Seller’s Legal Pack documentation, can be thought of as two parts – the Contracts of Sale document and the ancillary documentation, relating to the physical property.
1. Law Society Conditions/Contracts of Sale
2. Technical opinion and sign-off documentation relating to
- maps and boundaries
- planning and enforcement
- building regulations
- building energy rating
- Wayleaves, services and other rights and obligations
The usual process to date, has been for solicitors, once instructed by their client to prepare contract documents, to gather this information from various sources as quickly as possible. In addition, the solicitors are tasked with determining the quality of the technical documentation they have gathered, and are unable to reliably do so in many cases. This is an imperfect process and is the root of the problem the bill seeks to address.
By defining what goes into the Seller’s Legal Pack, and ensuring that the pack is up to date (no more than a year old and, that no material change has been made to the building), the quality of documentation provided to buyers up front will be improved. However, solicitors on their own will not be in a position to deliver the robust documentation, and early involvement and partnership with Engineers and Surveyors is required.
Engineers and Surveyors are best positioned to to ensure that it will be acceptable to buyers. They can request and retrieve much of the documentation through the same channels as solicitors, but are also able to professionally assess it to ensure that it will be acceptable to buyers, rather than having a solicitor retrieving and having to make a call on whether they are accurate and still valid.
At the very minimum it is prudent to carry out an on-site technical assessment of the existing documentation. Thiis will avoid the delays that are all too common when a buyer’s solicitor is unsatisfied with the initial contract documents, creating unnecessary stress for buyer and seller alike.
We welcome the new proposed Seller’s Legal Pack legislation. Engineers and Surveyors are best placed to gather and assess the bulk of documentation required for sellers and identify the gaps up front.
NIAMH RYLE, FOUNDER, HOMECHECK
Background to the Legislation
The motivation behind this bill stems from widespread frustrations within the real estate industry. According to an Institute of Professional Auctioneers and Valuers (IPAV) Conveyancing Survey conducted in 2020, many property professionals, including auctioneers, are dissatisfied with the lengthy delays associated with property transactions. On average, it takes about ten weeks from the initial agreement to purchase a property until the signing of the sales contract, followed by an additional six weeks before the sale is finalised. This has led to the IPAV to sponsor this new bill.
Efforts have been made in the past to address these issues, including a “pre-contract investigation of title” system promised in 2019. However, these attempts have not fully resolved the challenges faced in property transactions. The IPAV believe this new bill seeks to provide a comprehensive solution, but the Law Society, representing the solicitors feels that the issue is more complex, and their concerns are likely to be voiced in the Dáil and Seanad debates.
Key Objectives of the Seller’s Legal Pack:
1. Reducing Deal Failures: The pack aims to minimise the likelihood of property sales falling through, offering more certainty for both buyers and sellers.
2. Preventing Unfair Tactics: It intends to curb practices like gazundering (lowering offers) and gazumping (higher competing offers) that can disrupt the buying process.
3. Simplifying Procedures: By aligning with public and online property auctions, the bill seeks to streamline the transaction process.
4. Ensuring Saleability: Properties will undergo pre-sale checks to confirm their suitability for listing.
5. Enhancing Seller Protection: Sellers will face fewer legal risks, resulting in a smoother process.
6. Accelerating Transactions: The majority of legal formalities will be completed upfront, reducing overall transaction time.
Apart from these advantages, the bill promises increased transparency, reduced stress, and a more efficient home buying and selling process. It recognizes the significant investments made by individuals in the form of non-refundable costs like surveys and legal fees and aims to safeguard these investments.
Once this legislation is enacted, property sellers will be required to compile a Seller’s Legal Pack and make it available when listing their property for sale. This additional requirement is not expected to significantly increase the overall expenses associated with the sale, as it will cover common queries raised during the buying process.
The Legal’s Opinion
While auctioneers and estate agents feel that avoidable delays are frequently caused by vendors (sellers) presenting incomplete or out-of-date legal documentation to buyers with whom they have agreed a sale, the legal industry has a differing opinion.
The delay often observed between a property becoming sale agreed and the issuance of draft contracts and title documents to the buyer is attributed to various factors. Typically, sellers engage solicitors after finding a buyer and obtaining a clear survey. Subsequently, it takes time for lenders to release the title deeds to the seller’s solicitor, a necessary step for progress in the sale.
Solicitors believe that while the bill’s intentions are well-meaning, there are concerns that it might not fully grasp the practical dynamics involved. Buyers and sellers generally prefer a cautious approach to incurring costs. Forcing sellers to bear material costs upfront could potentially hinder a healthy property market.
The Law Society of Ireland’s conveyancing committee holds that alternative solutions are needed. With two specialized groups dedicated to conveyancing reform, the Law Society is actively pursuing more effective strategies.
While the conveyancing timeline constitutes a smaller portion of the overall property transaction timeline, there’s a consensus that an electronic conveyancing system (ECS) could accelerate the legal aspects. The envisioned ECS involves a completely electronic process, from contracts to the transfer of title, with real-time updates to public registers reflecting ownership changes.
Unfortunately, the complexity an ECS, due to the complexities involved, from legacy systems, to the interia of the various stakeholders – and the poor track record the state has in delivering such systems – means it remains a pipedream for the moment. In the meantime, a compulsory Seller’s Legal Pack is a sensible and measured means of improving the conveyancing process.
Crossing The Final Bridge – The Pre-purchase Survey
The Seller’s Legal Pack legislation should ensure that the seller provides the buyer with all of the necessary information to conclude the transaction with one exception – the Pre-purchase Survey.
Traditionally, it falls to the buyer, not the seller to engage the Engineer or Surveyor to carry out a survey determining the condition of the property. Naturally, buyers are more likely to purchase a property based on a report that they commissioned themselves rather than one commissioned by the seller. However, this means the survey is carried out after the sale has been agreed, and while infrequent, sales can fall through, and sale prices can be renegotatiated at this late stage.
The Seller’s Legal Pack bill explicity provides for the option of a Pre-purchase Survey being included in the Pack by the seller, and while buyers may be reluctant to accept a report paid for by the seller, they would benefit from the earlier provision of the report. Concerns around impartiality should be addressed by making them aware that much of the documentation their solicitor receives in the contract documents, such as opinions on planning and building compliance, and BER reports is from these same professionals, and provided via the seller.
What it means for Home Buyers
Many properties that are advertised as ‘For Sale’ on Daft, MyHome and in Estate Agent websites and windows are effectively, unbuyable at this point in time. This isn’t because there is an issue with the property itself – but because what the documentation related to the property says, and the physical property don’t match, or is out of date. By ensuring that the correct documentation exists and has been checked by an Engineer/Surveyor and Solicitor, prior to advertising the property as For Sale, this should prevent buyers wasting valuable time, money and energy on such properties.
What it means for Sellers
Seller’s solicitors will regularly provide the documentation that is to hand in the initial contract documents, with the expectation that a request for additional technical opinion from an Engineer or Surveyor will come from the buyer’s solicitor if they are not satisfied. Given that this process starts in the weeks after the buyer and seller have agreed the sale, the potential for delays and collapsed sales is clear.
By ensuring that the buyer’s solicitor can review and accept the documentation before the two parties go ‘sale agreed’, the chances of buyers pulling out are greatly reduced, and will provide for a far less stressful process for sellers.
Contact HomeCheck today at firstname.lastname@example.org, to find out how our Engineers and Surveyors can help put together what you need for your sale.
HomeCheck offer all the necessary services to sellers and their solicitors to support the Sellers Legal Pack, and will be launching a HomeCheck Sellers Pack in the coming weeks.
We are eager to hear from Estate Agents and Conveyancing Solicitors who are interested in partnering with us to deliver a joined-up service to sellers.