There is very little that can beat the excitement of moving into a new build home. After months of watching the building slowly progress, making choices about kitchens, carpets, tiles and all sorts of other decoration preferences, organising the mortgage and navigating the legal process, purchasers can finally relax on that new sofa and put their feet up. However, after getting the keys, there are still various legal matters that will need to be dealt with.
Registering the new house at Land Registry of Northern Ireland (LRNI)
If the house is brand new, it will also require a first-time registration at LRNI, creating what is known as a ‘folio’. This allows the LRNI to create a record of the ownership, along with details of any mortgage used towards the purchase and a map showing the boundary of the property. To start this registration process, a solicitor will need the new transfer deeds for the house signed by the developer and any management company. Arrangements for provision of these deeds should have been agreed as part of the new build conveyancing process.
Solicitors will provide purchasers with a copy of the folio and map once registration is complete (this may take a significant amount of time though, as the whole development will need to be formally mapped out before the property can be registered), and buyers should carefully check the map on receipt to ensure that it matches up with what they own and are occupying on the ground.
Registering the new build warranty with the provider
The solicitor would have let the purchaser know which insurance-backed warranty scheme is being provided by the housebuilder for the new home before completion of the purchase and will have checked that it is being offered by a scheme acceptable to the mortgage lender. They will also have ensured that the warranty provider has carried out any required inspection of the house, and that the cover for the house is confirmed before completion takes place.
After completion, the solicitor will ensure that the warranty for the new house has been accepted and registered. A copy of the insurance certificate will be provided to the purchaser and placed with the title deeds for the new house as well.
Obtaining the share certificate for the management company
In many new build developments (although not all) a management company will have been set up to look after any communal areas, such as shared parking areas or landscaped areas, once that developer has finished building all the properties.
The management company is a limited company, and its shareholders are normally the owners of the houses within the development. This means that it is those homeowners who have control over the decisions made.
Following completion, the solicitor will ensure that a share certificate confirming ownership of a share in the management company is issued and placed with the title deeds for the new house. This will allow the purchaser to demonstrate ownership of the share and facilitate transferring the share to any future new buyers should the house be sold.
The solicitor will keep the buyer updated with how these legal matters are progressing, although, it may be several months before everything has been completely finalised. The purchaser doesn’t need to do anything about this, as the solicitor will manage the process, but they should ensure that they note any further information or documentation sent to them by the solicitor, which is as important as the information received before completion of the purchase.
As well as the post-completion legal issues that the solicitor is dealing with, there are various ways that the purchaser can ensure that everything continues to go smoothly after completing the purchase.
Snagging inspections
In many cases, the builder may meet the purchaser at the new home for a completion inspection, which provides opportunity to identify any ‘snags’. A snag is a defect, often minor and cosmetic, picked up in the inspection of new build properties before the final handover. The existence of these minor defects does not legally permit the buyer to delay the purchase of the new home, but the written contract between them and the developer will usually require the builder to remedy such minor defects within a specified period of time. These minor defects are generally not covered by the new build structural warranty, so the buyer will need to rely on the builder to fix them.
So, this is an important time for the home buyer to read the new home warranty policy booklet. Obviously, it is hoped that there won’t turn out to be any significant defects in the new home, and in most instances there won’t be, but if there are any problems it’s important for the purchaser to be fully informed about what is covered. In some cases, the buyer may have to pay an excess on any claim made under the warranty, and the solicitor should have advised on this before completion.
It is advisable to examine the house carefully following the purchase and prepare a comprehensive list of any snags identified. A minor defect may be a sign of something more serious, so it is well worth taking the time to inspect everything properly. The buyer may be comfortable doing this themselves, and there is plenty of consumer guidance available online to help with this or, alternatively, they could consider engaging a surveyor specialising in snagging surveys. The appointed surveyor may also be able to help check that any snags identified have been remedied properly, possibly for an additional fee.
Any request to the builder to remedy these snags should be in writing, as it can help to have those written records available in case of any problems in getting the defects fixed. If the buyer is having difficulty getting the builder to engage, they should firstly follow the formal complaints process and, if that does not move matters forward, establish whether the new build warranty provider offers a dispute resolution service. If all else fails, the solicitor should be able to advise on the options available to enforce the terms of the building contract entered into between the home buyer and housebuilder.
Take an interest in the management company
The planning permission for a new housing scheme will normally require that provision is made for ongoing management and maintenance of the commonly owned and used areas.
In a development made up of houses, those areas might only include landscaped areas for communal use. For apartments, the commonly owned and used areas will include parts of the apartment building, such as a communal lobby, stairs and lifts, as well as a gym or swimming pool, or other desirable amenities.
As well as ensuring compliance with planning permission, it is also in the best interests of the residents of the new properties that the development is maintained and looked after once the developer has completed the scheme. As mentioned earlier, this will normally be achieved by setting up a management company, owned by the residents. In many cases, the developer will also have engaged the services of a managing agent to assist in carrying out the management company’s day-to-day operations. This can be very useful as a specialist managing agent will have experience in handling development operations that the homeowners may have not dealt with before, such as sourcing buildings insurance and ensuring that the management company’s filings at Companies House are up-to-date. The involvement of a managing agent also means that the residents don’t have the responsibility of having to organise meetings and keep lines of communication open among themselves to deal with organisational matters directly.
Nonetheless, homeowners should remember that they remain shareholders in the management company and should take full advantage to participate in meetings and have a say in how the development is being run. A development in which the residents are engaged and interested in has a far better chance of remaining a development in which they, and others, want to live.
Purchasers beware
So, while buyers may begin to relax once they’ve overcome initial hurdles, the above guidance highlights essential post-purchase considerations to ensure that homeowners can enjoy their new homes and avoid legal complications should they look to sell their property in the future.