We are buying a house and near the end of the process, but our solicitor has noted that the architect’s opinion on compliance references four planning conditions in the schedule that have been submitted but are still awaiting confirmation from the council. These all relate to the common areas, not the house itself, but he feels he must qualify the certificate of title. My question is, will we still be able to draw down the mortgage if the title is qualified, and/or is there any title indemnity we could provide to the bank to cover any perceived risk?
Samantha Geraghty writes: Although your query is not entirely clear, I am deducing that the architect has qualified his certificate of compliance with planning permission in respect of four particular conditions which he is unable or unwilling to certify compliance with. You state that these particular conditions refer to the common areas of the development.
Your solicitor is obliged to bring any potential defect on title to the attention of your lender in advance of drawing down your loan cheque by way of qualification and the lender will then decide if it is willing to accept this property as security for your loan or not.
Saleability
In general terms it is not unusual or uncommon to qualify title to a lending institution. It will usually accept qualifications provided that they are unlikely to impact on:
(a) The saleability of the property; (b) The market value of the property; or (c) The enforceability of security.
If the conditions you refer to relate to the common areas only and provided that your solicitor is satisfied that you have the necessary easements, rights, and privileges in respect of those common areas, it is likely that your lender will accept the qualification and allow your solicitor to draw down your mortgage.
If the qualification relates to a more serious issue that is likely to impact on one of the three headings specified above, then you could offer your lender a title indemnity bond. This is an insurance policy that insures the lender. Not all defects are insurable. Your solicitor would have to make a proposal to an insurance company that provides such a product.
However, if the issue is of a more serious nature, your solicitor will advise you to consider whether or not you should proceed with the transaction at all. If the title to the property is not acceptable to your lender now, it is unlikely to be acceptable to someone else’s lender if you decide to sell the property in the future. It is important that your solicitor ensures that you have acquired “good marketable title” in accordance with Law Society accepted standards.
Your solicitor is also likely to advise you to carry out a planning search to ensure the planning authority has not issued any enforcement notices or issued proceedings in respect of the four conditions that have not been complied with.
Samantha Geraghty, is a partner at P O’Connor & Son, solicitors, poconsol.ie
