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The Conveyancing Committee has received many complaints from members about the restrictive conditions that are being included in conditions of sale of properties being sold by receivers or mortgagees.

While the committee recognises the difficulties that solicitors acting for such vendors have in showing ideal title in such cases, largely because of the absence of appropriate documentation, which necessarily leaves them obliged to offer restrictive title, it does appear that in some cases the conditions being included are excessively harsh.

It appears that some solicitors, apparently under instructions from receivers or mortgagees, are including unnecessarily restrictive conditions in contracts for sale, some of which may be unlawful, others unenforceable, while others are not in accordance with good conveyancing practice and long-standing recommendations of the committee.

The committee is of the view that solicitors in such cases should offer the best title that is available and are reminded that, in preparing auction conditions, they should be aware of the rule in Holohan v Friends Provident ([1966] IR 1) that requires mortgagees and receivers to obtain the best price for properties, which would in most cases involve offering the best title that is reasonably available.

An example of a condition that is unlawful is one restricting enquiries as to whether title documents bear the correct stamp duty.

Those that may be unenforceable because courts are unlikely to grant decrees of specific performance of the contract include ones:

• Restricting the purchaser’s right to raise requisitions,
• Relieving the vendor or his solicitor from the obligation to explain acts on searches, and
• Refusing to disclose known latent defects in title.

Conditions that are not in accordance with good conveyancing practice or in conflict with Conveyancing Committee recommendations include ones:

• Refusing to provide the necessary tax numbers to enable the purchaser stamp the purchase deed, and
• Requiring the payment of a deposit to the receiver instead of the receiver’s solicitor.

Practitioners are reminded of the legal requirement for a vendor to produce a Building Energy Rating Certificate when a property is offered for sale (see the practice note published in August/September 2008 Gazette, p61) and that it is a legal requirement that, on the completion of the sale of a residential property, a discharge in respect of any NPPR or household charge and confirmation from Revenue’s Online System that there is no outstanding local property tax be furnished, unless an exemption or waiver applies where appropriate (see the practice notes published in the June 2013 and the January/February 2014 issues of the Gazette).

The parties should consider the issue of service charge arrears. A purchaser will want to ensure that these are discharged. A receiver may argue they are unsecured debts. This is a commercial issue to be negotiated between the parties, and ought to be agreed pre-contract.

Except in the case of units in multi-unit developments, or where very particular circumstances apply, it is inappropriate for the vendor to insist on a particular form of assurance being used or to prescribe that the vendor will settle the form of the deed of assurance unilaterally following exchange of contracts.

In individual unit sales, it is not appropriate for the vendor to require the purchaser to insure the property in sale prior to completion – such insurance may be extremely difficult to obtain.

The committee recognises that there are particular problems associated with General Condition 36, since neither the receiver nor the mortgagee may have any knowledge about the recent planning history of the property, and the knowledge may be vested in an uncooperative borrower. The committee recommends that a receiver or mortgagee should furnish to the purchaser all evidence and documentation relating to the planning status of the property that is in their possession. Likewise, the receiver should disclose and produce copies of all notices furnished by any competent authority, as well as details of any disputes relating to the property of which the receiver is aware, and details of any easements, rights or privileges that are known by the receiver to affect the property.

The committee recognises that, while it is appropriate for receivers to enter into contracts for sale, the conditions of sale will often provide that the mortgagee who appointed the receiver may sell as mortgagee in order that the purchaser take the property free from any encumbrances that rank after the mortgage under which the power of sale has arisen. A purchaser should not have a difficulty in this regard and should check to see if there are any such subsequent encumbrances.

The committee reiterates its previous general recommendation that, where a vendor’s solicitor is varying or excluding a particular general condition, the reason for its exclusion or variation should be disclosed.