The Irish Times has reported Treasury Holdings v O’Kennedy (Dublin Circuit Court).

Treasury Holdings succeeded in its proceedings against Mary O’Kennedy. She failed to complete the purchase of an apartment from Treasury. She also failed to “engage” with Treasury, from which we can only surmise she did not properly defend the proceedings. Consequently we can only assume certain things;
1. She lacked the finance to buy, due to the collapse in the market providing mortgage finance; or
2. She sought to avoid completion because the market value was now less than the purchase price;
3. She was a “consumer”. She would, therefore, have had the benefit of the provisions of S.I. No. 27/1995 European Communities (Unfair Terms In Consumer Contracts) Regulations, 1995. Of course, if a proper defence is not advanced in the proceedings that benefit, if any, would be wasted
4. Her contract had a standard loan approval clause. Contracts for the purchase of property of the value of this apartment would normally contain a loan approval clause. If Ms. Kennedy was relying on drawing down borrowed finance to fund the purchase, that loan approval clause was a vital term her solicitor would require to be inserted before she signed the contract. There is no difficulty accessing suitable terms for such a clause; the Law Society of Ireland has published one (December 1979).
5. There is a problem however with most mortgage loan approvals; they do not guarantee the actual provision of the money. They are subject to conditions and the offer of finance can be withdrawn before drawdown.
6. The Law Society clause is slightly odd in its terms. It contains the words;

“…the loan approval is conditional on a survey satisfactory to the lending institution or a mortgage protection or life assurance policy being taken out or some other condition compliance with which is not within the control of the purchaser the loan shall not be deemed to be approved until the purchaser is in a position to accept the loan on terms which are within his reasonable power or procurement”

Arguably, the phrase “accept the loan” must mean “accept the money” as opposed to “accept the offer of money”.
7. There is, nonetheless, the possibility of the purchaser having a loan approval clause and a loan approval and being left without the money and with the liability under the contract.
8. Worse than that, developers often demand the deletion of the loan approval clause after the issue of the loan approval letter to the purchaser. (They refrain from returning the contract, signed by the developer, having received it signed from the purchaser). Deletion should be resisted.
9. A solicitor would be wise to get the agreement of the purchaser in writing to the deletion of the loan approval clause and wiser still to tell the purchaser in writing that the contract is no longer conditional and that he or she will be required to complete even if he or she cannot obtain a mortgage.
10. That aside, it is not wise to put up no defence to the developer’s proceedings seeking specific performance of the contract.

It is surprising that NAMA’s business plan has overlooked the possibilities of souvenir land sales.

These are created when tiny plots of land are provided with their individual land title. The title document will be a Folio from the Land Registry Registry (oops, sorry; Property Registration Authority) and a certificate like an illuminated manuscript. (We are good at that kind of thing).

The UK has taken this very seriously and so should we. The benefits are many. It will give employment to solicitors (a very good thing), to the PRAI staff, to cartographers, to town planners (maybe).

It could be the solution to the disposal of many white elephants, like the Irish Glass Bottle site in Dublin’s docklands. It is an “ideas” proposal.

(Did Mr. Cowen ask for ideas?)

Solicitors acting for land/building purchasers deliver “Requisitions on Title” to the vendors. The requisitions are direct questions addressing a range of issues of possible concern. Now that there is little or no conveyancing to be done it would be best to look at the process now and again to keep it fresh in the mind of the profession.

So, what to answer if asked,

Given its position, please confirm that the property has never suffered from flooding.”

Well, in this case HERE the reply was:-

Our clients confirm that the property has never suffered from flooding during their 14-year occupation.”

The sale closed and the purchasers found that the Thames river (at the bottom of the garden) flooded the property.

The purchasers have sued the vendors; the case is ongoing.

In cross-examination the vendor emphatically denies misleading the purchasers; he meant “the building” when he referred to “the property”. The building had never been flooded; just the garden, and that less than claimed by the purchasers.

So, Irish conveyancers, my reply to that purchaser’s requisition would have been:-

this is not a requisition on title”

On receipt of rejoinders my reply would have been:-

purchasers should make their own enquiries”.

We in Ireland have a precedent for this case and consequently practitioners should wake up when they see the reference to “the Vendors…say…..” in replies to requisitions.

Vendors often say more than their prayers.

I have written on the subject of standard contracts HERE and HERE.

The most valuable standard contract most often encountered in ordinary life is the one used by solicitors for the sale and purchase of a house. It is the work of the conveyancing committee of the Law Society.

It is the work of many people over many years. It embodies the experience gleaned from many thousands of transactions.

No solicitor will readily depart from the scheme it represents. It contemplates that the Vendor will hand over the title deeds and the key of the property in return for the purchase money. The desire of the purchaser to get possession and the desire of the Vendor to get the purchase money is what drives the transaction.

To hand over the key beforehand is to hand over possession. If a purchaser gets possession before parting with the purchase money there is a great temptation to evade or delay the handing over of the purchase money, at least until it suits the purchaser.

Thus, a prior representation that the Vendor will hand over the key before the closing of the transaction will not be complied with. It will be reneged on.

This is not a breach of agreement; the agreement is in the contract. If provision is not made in writing that possession will be furnished prior to the closing, there will be no obligation to do so.

Many civil relationships are based on law. If you go to MacDonalds for a snack, a legal relationship underlies your visit. When you buy the snack you form a contract. When you enter the premises you get the benefit of law on occupier’s liability.

The relationship between a mortgagee and a mortgagor is replete with law to regulate the rights and obligations of the parties.

It was a strange idea, therefore, to think of divorcing a mortgage from the right to receive the mortgage repayments. This was the net effect of “pooling�? home mortgages and selling them as, essentially, investments.

That wheeze, as we now know, also meant the “investors�? no longer knew the details of the mortgagor and whether he/she could make the repayments. That meant that very bad credit risks could be, and were, passed on as “investments�?, resulting in the US sub-prime mortgage crash.

The investors are now discovering that they cannot prove they “own�? the mortgage, not being the original mortgagee and not having a legal chain of title to the mortgage.

In short, they lack the evidence showing their right to seize the secured property.

In Ireland, until relatively recently, a mortgagee would receive the title deeds and the executed mortgage in exchange for the mortgage money. It would register the mortgage and schedule the title deeds and place them in a strongroom of some kind.

Now, the practice is to have the solicitor for the mortgagor also act for the mortgagee. That solicitor will be obliged to register the mortgage and schedule the title deeds and, in due course, send them to the mortgagee.

As we now know (and always knew from experience elsewhere) what ought to happen and what actually happens are not necessarily the same thing.

That is and was foreseeable. Even the effect of Murphy’s Law would ensure a deviation from the desired outcome. There are therefore, good grounds for asking if any “investment�? managers have lost their jobs for arranging (with the assistance of solicitors’ representatives) this unwise relationship with solicitors?

In “Unforgiven�? Gene Hackman’s character, “Little Bill�? taunts Richard Harris’ character (“English Bob�?) with the true story of how Bob killed “Two Gun�?. Two Gun, on seeing the drunken Bob approaching him in the saloon, drew too fast and shot himself in the foot. (Little Bill insists on referring to Bob as the “Duck of Death�?). The Duck then shot Two Gun while he was incapacitated.

Improbable as it would seem, it is possible to find analogy for Two Gun’s mistake and predicament in conveyancing. (“Conveyancing�? is the lawyers’ term for the process of buying and transferring ownership of land and buildings).

Contracts for conveyance normally provide for a date to close the transaction. This date is, usually, aspirational.

On the passing of the closing date,, a party wishing to compel the other party to close, serves a Notice to Complete. This Notice will expressly make time of the essence. This means that the recipient of the Notice will be in default (have breached the contract) if, on the expiry of the period of time limited in the Notice for completion, the conveyance is not closed.

The Supreme Court (on appeal from the High Court) in Tyndarius Ltd. v O’Mahony [2003] IESC decided that a party serving such a Notice while himself not “ready willing and able to close�? had committed a repudiatory breach of contract and that the other party (the defaulting recipient of the Notice) was entitled to recover his deposit.

Don’t move too soon!

The Conveyancing Committee is comprised of working solicitor members (working in private practice) brought together by the Law Society of Ireland to give guidance, and set procedures, in the resolution of questions that may arise in conveyancing transactions. Conveyancing is what lawyers do when transferring or mortgaging land or buildings.

The members are unpaid for their work. They are, of necessity, deeply involved in conveyancing practice and, of course, earn their living from doing so. They tend not to belong to the category of solicitor who seeks election to the Council of the Law Society.

The Conveyancing Committee oversees the production of the various editions of the Law Society General Conditions of Sale. These form part (hopefully) of every conveyancing sale transaction.

It also oversees the production of the Law Society’s Requisitions on Title. These form an indispensable check-list of questions to be answered by the vendor or mortgagee in a conveyancing transaction.

The Conveyancing Committee is an important body; its work is known to the legal profession (and the judiciary) but unsung in public.

I have a soft spot for the Committee, having found no response to my assertion to colleagues that Professor Farrand cracked jokes in his book “Contract & Conveyance�?; dry jokes, admittedly.

It’s lonely, being a conveyancer.