22 November 2010 by Clodagh O'Hagan
From 1st December 2010 certain commercial undertakings will be prohibited by law under Statutory Instrument 366/2010 - Solicitors (Professional Practice, Conduct and Discipline Commercial Property Transactions) Regulations 2010. From the commencement of the Instrument please note as follows:
*Undertakings, as defined, include procuring a discharge of a commercial property loan, giving a certificate of title, procuring title deeds or paying stamp duty in connection with a commercial property transaction or registering a commercial property title or mortgage.
In essence the lending institutions will now appoint their own solicitor to act on their behalf in commercial loan transactions. To avoid a full investigation of title the lender's solicitor may seek a Certificate of Title from the borrower’s solicitor.
A solicitor may still provide a lender with a Certificate of Title but it is not appropriate to furnish a Certificate of Title where a full investigation is being carried out by the Lender. The Law Society recommends that a Certificate of Title is given only where the borrower’s solicitor’s liability in the transaction does not exceed the minimum PPI at the time the certificate is signed (currently €1.5m).
The Law Society has precedents available on its website that comply with the Statutory Instrument and strongly recommends that only the following documents that should be used where appropriate:
There are 3 likely commercial transactions:
Residential property undertakings and giving an Accountable Trust Receipt are not affected by the new Statutory Instrument.
It is advisable to read the wording and definitions of the Statutory Instrument to see whether it affects a particular transaction and to take into consideration the purpose of the loan as well as the nature of the property being offered as security. In particular note dwellings purchased exclusively as buy-to-let properties or holiday homes/private dwellings if the dwelling forms part of security for a commercial loan may come within the commercial property transaction definition.
For further reading see Commercial Mortgage Lending Booklet 2010 Law Society of Ireland
Further Information:
Please contact Clodagh O’Hagan - cohagan@mckr.ie - Tel: +353 1 670 2990
