The Apartment With a Fire Safety Problem

A booking deposit paid to an auctioneer before contracts are signed is not usually a binding contract deposit. In Irish practice it is paid to the auctioneer as agent to take the property off the market, and it is generally refundable if the purchaser decides not to proceed, unless the receipt expressly says otherwise. No contract exists until the parties sign and exchange contracts. The auctioneer must account for it. The purchaser should write immediately demanding return of the €3,000 and state that no contracts have been signed. If the auctioneer refuses, she can complain to the property services regulator or seek legal advice. The booking deposit is different from the 10% deposit that would be payable on signing; that contract deposit may be forfeited if the purchaser later defaults. She should not confuse the two.

Before contracts are signed, the purchaser cannot compel the vendor to fix the fire safety defects or reduce the price. The vendor is free to refuse and the purchaser's remedy is to walk away. The vendor must not misrepresent the position, but Irish conveyancing is broadly caveat emptor on physical defects; the purchaser's engineer has found the problem. The fire stopping and missing certificate affect the common areas, which are owned by the management company, but they still affect marketability and the lender's willingness to fund. If the purchaser signs without protection, she takes the risk of the defects and may be unable to draw down the mortgage. She could negotiate a special condition requiring the vendor to procure a fire safety certificate or a management company repair plan, or to retain part of the price until the works are done. If the vendor refuses, she should not sign.

The solicitor should obtain the management company's accounts, sinking fund statements, insurance policy, fire safety certificate and engineer's report; raise formal requisitions; and ask the vendor to disclose all correspondence with the management company. The solicitor should advise the client in writing of the risks: no sinking fund, missing fire certificate, defective fire stopping, and possible future levies. The lender's requirements must be checked before signing. If the client wants to proceed, the contract should include a condition precedent, such as production of a satisfactory fire safety certificate and lender's approval, and a retention to cover repairs. The booking deposit should be recovered if the client decides not to proceed. The solicitor should not allow the 14-day deadline to pressure the client into signing without protecting her position. If the vendor will not cooperate, the safe advice is to withdraw.