Have you been tempted trying to buy a property at a repossession- type auction?

Have you thought about what makes these auctions different – apart from an expectation that prices will be lower?

There are certain key differences that must be clearly understood if you are to avoid significant problems for yourself when buying in this kind of environment.

Who is  the Seller?

One of the key issues is who in fact will act as seller. Is it the Bank that holds the mortgage or is it a receiver?

If  it is a receiver then that person acts as agent of the legal owner. The receiver, as agent of the legal owner has more limited powers than the bank acting under it’s mortgage.

For instance, if there is a judgement against the property apart from the mortgage held by the bank who appointed the receiver, the receiver has no power to avoid the effect of that other judgement. In those circumstances, you run the risk of buying a property that is still affected by another judgement.

On the other hand, if the bank that holds the mortgage acts as seller, then that bank under statutory powers, can effectively prevent the sale of property being affected by any other judgement.

Risks – the Contract

The standard Contract for Sale which is recommended for use by the Law Society of Ireland will be very substantially changed  to render it more favourable to the seller. In particular, the usual warranties that a seller is required to give to a buyer are likely to be be deleted. This is because most Receivers don’t have any detailed knowledge of the property involved and will not incur the cost of obtaining it.

As you can imagine, the Law Society and its member solicitors, over many years,developed a standard Contract for Sale in a format that tried to provide fairness to both sides. To substantially change the standard Contract by deleting clauses that are designed to achieve that fairness means that you as a buyer are far more exposed to risk.

Because very few standard warranties are being given, the old adage of “Buyer beware” becomes very important. The burden falls to you as the buyer to make a very full enquiry about the property – planning, access, drainage, condition, relations with neighbours etc.

Risks – early commitment

The very fact of buying at auction means that you must ,if successful , sign a Contract and pay a deposit there and then. That gives you no opportunity to have your solicitor investigate the title or the conditions of sale with a view to giving you clear advice as to the risk involved.

Quite often, solicitors will be consulted by clients after such an auction when the client feels he has achieved a bargain price. However it can off  become apparent  very quickly that if it looked to good to be true, it is in  fact too good to be true! You as buyer can find yourself with some serious problems.

Help Yourself!

Hopefully you can now see how important it is that you choose the correct solicitor to handle this type of transaction for you. Previous experience and knowledge of debt management, enforcement and the technical rules about buying from receivers or banks, is an essential skill. We at Neil J. Butler & Co. have been doing this type of work for approximately 30 years and have developed the expertise to protect you.

There are bargains but they need  to be well managed.

Help yourself to bag that bargain by having us on your side !

Contact us on

0504-24173 ; neil@njbutler.ie ; www.njbutler.ie

Thinking of buying or selling your home?

While the Dublin economy has been energised for some time now , it is only recently that we  in rural Ireland are seeing the beginnings of change.

In my Practice , I see people who are finally able to consider getting on the property ladder , as there are houses being brought to the market by Banks ; by people who are in discussions with Banks or others who are simply in trouble and are looking for a way out.

While there is some pent-up demand , there is also a big obstacle in the way Banks who have loans on premises  that are in arrears , take so long to make decisions when asked to consent to sales. That is a real problem at a human level – it is taking up to 9 months to get a decision.

Buying or selling your home is a big decision – some might even call it brave.

There are some useful points in the following Article from the Irish Times…

Eoin Burke Kennedy – Irish Times May 27 2014

The housing market, too, is showing signs of recovery. Property prices across the State were up 7.8 per cent in the 12 months to the end of March, according to the Central Statistics Office, with the capital recording a year-on-year bounce of 14.3 per cent.

Property transactions The price rises are not confined to Dublin – data shows they have started to spread across the State. The number of property transactions are increasing significantly year on year – although they are still well below the 4 per cent turnover threshold expected from a normal functioning market.

According to The Irish Times-owned Myhome.ie, transaction levels rose right across the country in 2013. Counties that reported a strong rise in transactions include Leitrim (up 57 per cent to 350 sales; Carlow (up 41 per cent to 376); and Cavan (up 55 per cent to 500).

And the banks appear to be back in business to some degree. The value of mortgage lending rose by 72 per cent on an annual basis in the first quarter of this year, with 3,425 mortgages, worth €568 million, drawn down.

A survey by the Irish Brokers Federation and PricewaterhouseCoopers has shown that activity in the Irish mortgage market rose by 66 per cent in the first quarter, the highest increase since 2010, and the first year-on-year growth since 2006.

Banks are still taking a cautious approach and looking for a solid track record of savings. Their primary considerations now are repayment capacity if interest rates rise. Lenders are also focusing on the level of outstanding borrowings would-be customers have, but they claim to be lending.

Problem mortgages When it comes to housing, and mortgages in particular, much of the talk has been about those struggling to pay mortgages or trapped in negative equity. However, there is another cohort who need solutions, even if they have equity in their homes and can pay their debts. People in this group are trapped because they will lose their tracker mortgage – whereby the interest rate they pay is tied to European Central Bank rates and can’t be changed by banks – if they move.

A person with a €350,000 mortgage paying interest on a tracker mortgage at a rate of 1.5 per cent has monthly repayments of just €1,207. If they sell, lose their tracker and take out a mortgage of the same size at a rate of 4.5 per cent, the monthly repayments climb to €1,773.

Banks have finally started to do something about this log-jam. A couple of months ago, Permanent TSB brought a new product to market allowing tracker holders to sell and buy and keep their tracker – sort of. Bank of Ireland, Ulster Bank, AIB, EBS and KBC Bank are offering similar products or plan to do so.

There are caveats. PTSB applies a 1 per cent margin on an applicant’s existing tracker rate so if they are on ECB+1 per cent, it will increase to ECB+2 per cent, for a total interest rate of 2.25 per cent. This is two points less than the best variable rate loan on offer.

And these products can be time-limited too. Bank of Ireland and Ulster Bank will offer the lower tracker for just five years only, after which people have to switch to a variable or fixed rate. It is too early to tell if the new deals will amount to much. However, if they succeed in allowing people to sell up and move on, then the “next big crisis” of too much demand in too few areas leading to another property bubble could be still be averted.

By Neil Butler