Most dwellinghouses in Ireland are sold by Private Treaty. This means that the Estate Agent will advertise the property for sale and accept offers for it on behalf of the seller. When the highest bid has been received, the Estate Agent will then revert to the seller to ascertain whether they will sell the property for that bid.
Once the seller has authorized the Estate Agent to sell for an agreed price the Estate Agent will require the purchaser to immediately pay a “Booking Deposit” in order to secure the property. The Booking Deposit is usually about 5% of the value of the property.
No legally binding Contract at this point in time
It should be noted that the payment of a Booking Deposit creates no legally binding obligation between the seller and the purchaser. In effect, the payment of a Booking Deposit is a goodwill gesture by the Purchaser to show that they are willing to move to the next stage of the procedure. Despite the fact that the Purchaser has paid a Booking Deposit, the seller is still free to turn around and withdraw the property from the market or indeed sell it to some other party, although you should avoid this. This is known as “gazumping” and there is no law that prevents a seller from acting in such a way. That is, the Booking Deposit does nothing more than exert moral pressure on the seller to confirm the sale of the property to the purchaser at the price agreed. The Estate Agent would ordinarily encourage the seller to stick by the original “deal”.
After the payment of a Booking Deposit, the Estate Agent will notify the seller`s Solicitors of the deal by sending a Sales Advice Note to them, advising them of the Sale price and related details. A copy is generally sent also at that time to the purchaser`s solicitor. It is at this point that the transaction is known as “Sale Agreed”.
Issue of Contracts
The seller’s Solicitors will then issue Contracts for Sale and Title documents to the purchaser`s Solicitors and, provided those Contracts and related documents are in order (after the purchaser`s solicitor has investigated title), the purchaser will then sign those Contracts and pay a balance deposit: to bring the entire Deposit paid up to 10%.
Legally binding Contracts only when ……
Always bear in mind that legally binding Contracts do not come into existence until the following has happened:
- The Purchaser has attended with his solicitor to sign the Contracts in duplicate and paid a balance Deposit, to bring the total to 10%,
- The signed Contracts have been returned to the Seller’s Solicitors with the balance Deposit, and
- The Contracts have been signed by the Seller and one part Contract returned to the Purchaser`s Solicitors. That is, there is no legally bounding Contract in existence until it is signed by the Seller and returned to the Purchaser’s solicitors.
Purchaser`s Loan Approval
Before the purchaser` solicitor will allow their client to sign the Contract, as well as having investigated title to ensure that everything is in order, they will also want to ensure that the purchaser`s Loan Approval has issued, so that the purchaser will have the necessary funds to complete the purchase.
To learn more, both from a Seller`s perspective and from a Purchaser`s perspective, of the issues involved download our FREE Guides:
Guide to selling your House
Guide to purchasing your House:
For further information on Property Sales and Purchases you should contact:
Morgan McManus Solicitors