��Ʒ����������ҹ����

The Local Government (Household Charge) Act 2011 was enacted on 19th December 2011, having been first announced by the government on budget day on 6th December 2011. The Law Society was not consulted on how the Act might affect the conveyancing process in practice and, regrettably, had no opportunity for input.  

See below for a brief synopsis of the Act and its implications for practice.

• Section 3 of the Act provides that in 2012 and each subsequent year the “owner” (as defined) of a residential property shall pay an annual household charge to the relevant local authority. This charge has been set at €100 for 2012. 
• Section 4 sets out a list of exemptions and waivers. Section 9 deals with applications for certificates of exemption or certificates of waiver. 
• Section 5 requires an owner who is liable to pay a household charge, or who is entitled to a waiver from payment of a household charge, to make to the relevant local authority a declaration of liability or a declaration of waiver, as appropriate. Where the owner is exempt from payment there is no requirement to make any declaration to the local authority. This section also allows for payment of the charge in a single payment or by instalments. 
• Section 6 requires an owner who is liable to pay a household charge, or who is entitled to a waiver from payment of a household charge, to provide information to the relevant local authority as would allow it to prepare and maintain a database of residential properties in the State.  This section does not apply to those owners who are exempt from payment of the charge.
• Section 7 provides for payment of a late payment fee and late payment interest.
• Section 8 provides that any unpaid charge, late payment fee or late payment interest due shall be a charge on the property to which it relates (and therefore would fall within the remit of General Condition 8 (c) of the General Conditions of Sale 2009 Edition). As against a bona fide purchaser for value or a mortgagee the property shall not remain charged after the expiration of a period of 12 years from the date upon which the amount owing fell due.
• The provisions of Section 9 mean in effect that certificates of waiver and certificates of discharge will be required in connection with sales of residential property.
• Section 10(1) provides for the issue of a receipt in writing for payment of the household charge, an instalment of the charge, late payment penalty or late payment interest. Where there has been payment in full of a household charge, all related late payment fees and related late payment interest, Section 10(2) provides for the issue of a certificate of discharge confirming payment.
• Section 10(3) provides that a vendor shall pay the household charge, any late payment fees and any late payment interest that relate to the property before completion of the sale. This means that, while it is possible to pay the charge in instalments if the property is retained by the owner in the relevant year, any outstanding charge on the property and any related late payment fees and interest must be discharged in full prior to completion where the owner is selling the property.
• Section 10(4) provides that on or before completion of the sale the vendor shall give to the purchaser a certificate of discharge, a certificate of exemption or a certificate of waiver, as appropriate for each year in which the household charge applied since the date of the last sale. 
• Section 10(5) provides that such certificate shall as against a bona fide purchaser for value or mortgagee discharge the property from liability for any household charge, late payment fee or late payment interest due for each year in which the liability date(s) to which the certificate relates fell.
• Section 10(6) makes it an offence for a person to contravene Section 10(3) and any such person is liable on summary conviction to a class C fine (up to €2,500).
• Section 10(8) provides that “vendor” includes inter alia in relation to a residential property an agent of the owner of the residential property who receives the proceeds of the sale or part thereof on behalf of the owner, or who provides legal advice to the owner in connection with a voluntary or below market value transfer of the property. This means that a solicitor and/or auctioneer (as agents of a vendor) are liable under Section 10(6) if found guilty of an offence under this section on summary conviction to a class C fine if the charge is not paid prior to completion of a sale.
• The definition of “sale” in Section 10(8) includes inter alia the transfer of residential property by the owner to another person for no consideration or consideration significantly less than the estimated market value. The provisions relating to a sale in Section 10 therefore also include a voluntary transfer and a transfer below market value.

Because the Act provides that the household charge is a charge on the property to which it relates, solicitors should, on or before closing a transaction, seek confirmation of whether the property in sale is liable to the charge, and if so, obtain a certificate of discharge of the statutory charge on the property to place with the title deeds. If it is claimed by the Vendor that the property is not liable to the local authority household charge, the purchaser’s solicitor should seek confirmation of this by way of either a certificate of exemption or a certificate of waiver, as appropriate. The vendor’s solicitor should also keep a copy of the relevant certificate as evidence of the instructions of the client as it may be of assistance should the solicitor later be prosecuted under Section 10(6).  

A new item will be added to the Non-Title Information Sheet attached to the standard contract for sale OR a new requisition will be added to the next edition of the Law Society’s Objections and Requisitions on Title. In the meantime, solicitors acting for purchasers should raise the matter at pre-contract stage OR by raising an additional requisition on title, so as to ensure that a certificate of discharge will be available at closing. 

The charge is not an item that is apportionable under the standard contract for sale.  If the parties agree to apportion the charge, this should be dealt with by way of special condition in the contract for sale.

Section 19 of the Act amends various sections of the Local Government (Charges) Act 2009 (which dealt with non-principal private residences) including inserting a new Section 8A which transposes certain similar provisions of the 2011 Act into the 2009 Act so as to provide that -

• a vendor’s failure to pay the NPPR charge under the 2009 Act before completion of the sale is an offence carrying a class C fine on summary conviction, and
• the definition of “vendor” as including an agent of the owner who receives the sale proceeds or part thereof on behalf of the owner or who provides legal advice to the owner in a voluntary or below market value transfer.

This means that a solicitor or auctioneer receiving a deposit or booking deposit on behalf of a vendor in the sale of a non principal private residence become liable to conviction of an offence and payment of a class C fine if the sale is closed without the amount of any outstanding charge and arrears, and late payment fees having been paid to the local authority.

As the above is only a brief synopsis, practitioners are advised to read the Act in full so as to fully familiarise themselves with the new legislation.

Conveyancing Committee