Published on: May 14, 2012
Our guest speaker in May was John Murphy, an Examiner of Titles with the Property Registration Authority. The PRA combines with work of the Land Registry and the Registry of Deeds and is a state body which keeps records of land ownernship and transfer, for public use. Most apartment owners will only deal with the PRA once – when buying their apartment – but occasionally, there might be
First, some background.
There are two types of land in Ireland: registered and un-registered. Unregistered land is transferred by deeds and is handled by the Registry of Deeds in the PRA. There is no map telling you who owns what, there’s no up to date place to go for information, you have to examine all the relevant deeds and build up the information yourself. Thankfully with the advent of mandatory land registration (only in Dublin & Cork for now), it’s slowly going away.
The second (and more interesting) type is registered land. This is handled by the Land Registry part of the PRA. Each piece of registered land has a folio. This folio has a unique number, an owner, a description & map of what it contains and a list burdens. These burdens include any mortgages used to buy the land, any leases issued on the land and any judgement mortgages registered against the land owner.
When a developer builds an apartment complex, they acquire land on a folio held in their name. As they sell apartments on that land, they issue a lease between themselves, the management company and the new owner. This lease is registered on the developers folio and a new folio is created which represents the footprint of the apartment. In a multi-story building, the footprint is represented on a multi-story map. If you used a mortgage to buy the apartment, it will be registered as a burden on your folio.
When you sell your apartment, the purchasers solicitor will check with the PRA that the folio exists, that you actually own the land/apartment and that all burdens have been cleared. When the sale goes through, the state guarantees that the new owner has full and complete ownership of the folio. If anything happens later on, the state takes the blame for the mistake.
Judgement Orders & Mortgages
Like banks, anyone including management company’s can also record a burden on someones folio. This will show up if they try to sell their apartment and is a useful tool when someone refuses to pay their service charge.
First you need to follow the normal steps: send your invoice, send your reminder, apply interest (if you do that) and finally hire a debt collection solicitor and take them to court. Once the court rules that the person does actually owe you money and hasn’t paid, they issue a Judgement Order against them. This is a court document which simply states that they haven’t paid and must.
Why is this useful? Once you have your judgement order, you can register it with the PRA (Land Registry) as a burden on that persons property. This is called a Judgement Mortgage. If they try to sell their apartment, the purchasers solicitor will notice it and should block the sale until the debt is cleared.
It’s worth mentioning that Judgement Mortgages can be applied to any property owned by the debtor, not just the apartment that caused the problem in the first place. The downside to this is that you have to find their other properties (if they have any). You (or your solicitor) can search the PRA (Land Registry) database using the persons name but there are no other identifying details – just their name. This means that you could find land owned by the other John Smith and incorrectly register a Judgement Mortgage against them. In this case, the PRA have no way of knowing you’ve made a mistake and the innocent party can sue you for deframation. Be careful!
Well Charging Order
If you have a judgement order issued against someone and they still refuse to pay, you can go back to court and ask for a Well Charging Order. This is permission from the court to force a sale of their property and recover the proceeds from it. It seems like a great option for people who owe a large amount of money but it has some drawbacks:
* It’s very hard to get a Well Charging Order against a family home
* If the property is owned by more than one person and you have a Judgement Order against only one of them, you’ll only get a fraction of the proceeds. For a family home, the spouse will typically get half and the creditors share the other half
* Creditors are paid in the order that their mortgages were registered with the PRA. Typically this means that the banks mortgage is paid off first and then subsequent creditors paid in order. If the mortgage on the property exceeds the sale price, the bank take a hit and everyone else gets naught.
* Once the sale is done, even if not all the creditors get paid, all burdens on the folio are cleared.
Clearly, you’ll need to do some background investigation before doing this to make sure that there is equity in the property.
Why would the PRA be involved in parking? The answer is – they might not. Depending on how assigned parking spaces are transferred to apartment owners, one of three things will happen:
* A lease on the parking space is sold separately to the apartment. This space has its own folio created for it with the PRA – just like the apartment. The space can be sold independently of the apartment which can cause problems.
* Exclusive use of the parking space can be assigned to the owner but no lease will be issued. In this case, the PRA are not involved and the developer or management company remain the owner. Since no lease is issued, this will be mentioned in your apartment lease.
* In some complexes, apartment owners have the right to park one or more cars inside the grounds but not in any assigned space. Again, this will not be registered with the PRA and will be mentioned in your apartment lease.
If you’re trying to find out how owns a parking space (directors of management companies are sometimes unsure):
* Check with the PRA to see if it has its own folio and registered owner
* If not, check the folio for the land and then check each associated lease. During vesting, the developer must transfer a copy of all leases attached to the folio to the management company.
Vesting of common areas
Since October 2011, developers who still own the common areas of apartment complexes which are more than 80% sold, must transfer ownership to the management company. This involves drafting a deed of transfer between the developer and the OMC. It will describe all the land to be transferred (generally the structure of the building, the foundations, the roof, any underground parking, any surface parking and the curtilage). This will be done using both text and a map. It’s worth noting that the map is only there as a backup so you should check both.
During vesting, a solicitor should be hired to make sure it’s done properly. However, the directors or other residents of the complex should check the text and map to make sure that nothing has been (accidentally or otherwise) excluded.
Generally all the parking spaces will be transferred to the management company as well as all the revisionary rights. This means that when the 999 year leases on the apartments and parking spaces expire, the land will revert to the management company and not the developer.