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Ulster Bank creates hassle for property transactions – June 2017

The Irish Law Society recently reports some issues that Ulster Bank are creating for customers and their solicitors. Their actions are viewed as being outside normal conveyancing practice.

In property purchases, Ulster Bank has introduced a requirement by way of a loan condition that second-hand dwellings built in the 10 year period preceding the loan must be covered by HomeBond or an equivalent cover.

It was not a universal requirement across the lending industry over the past 10 years to have HomeBond or equivalent cover in relation to new housing, particularly self-builds. It was also acknowledged that many companies in the market previously offering this type of structural protection cover were not writing new business at various stages during the past 10 years. The Law Society concluded that, as it was not the standard industry practice in the past 10 years for new dwellings to have HomeBond or equivalent cover, it is an onerous and unrealistic requirement to expect that all second-hand dwellings built in the last 10 years would have such cover for the remainder of the 10 year term.

The Law society had also observed that Ulster Bank is treating the above loan condition as a matter of title for the solicitor to deal with, which it considers is incorrect on the basis that it is not a title issue and therefore not a matter for a solicitor’s undertaking or a certificate of title.

It has also been brought to the attention of the Conveyancing Committee of the Irish Law Society that Ulster Bank says its “current protocol in sales of property with regard to release of deeds is that copy deeds are to be issued to facilitate the drawing up of contracts with original deeds being issued at closure of sale”.

This matter was referred to the Committee by a solicitor whose clients were under direction by the bank to sell their property, which was in negative equity, but who could not obtain the original deeds from the bank on accountable trust receipt (ATR). The initial correspondence from the bank to the solicitor indicated that the original deeds would be released to the solicitor on receipt of net proceeds of sale.

The Committee expressed the view that the original title deeds should be released to the purchaser’s solicitor on ATR in advance of the sale. The Committee is clear that the original deeds are required in order to prepare a contract for sale and that the above conforms to standard conveyancing practice.