Builder has not filed Tax Returns: Should I buy?

[Bricriu]

I'm considering buying a new house, but my solicitor informs me that the builder has not filed Tax Returns since 2008 (for year 2007); it is in a rural estate, and only 5 out of 15 houses have been sold (seemingly those 5 buyers were not too worried by the building company's lack of Returns. The estate will have a management Company. My engineer has looked at the house and says it is well-built and in perfect conditon (it was built in 2008

My solicitor says that the building company could be struck of anytime for not making Returns, and if any structural problems arise that there might be no company to claim from. It is under a 5 year structural guarantee, but as we have seen with Homebond and Pyrite, these guarantees can mean nothing.

Also, the management Company is still in Builder's hands, and no Returns have been made for that since 2008 either.

The price of the house has been reduced greatly to sell.

Would I be silly to buy? Thanks for any advice.

 

[T McGibney]

I think your solicitor must be talking about the builder's CRO returns, as they would have no right to access the builder's tax return records. Perhaps the builder is now operating as a sole trader?

Has your solicitor explained to you why they brought this issue to your attention?

Is the management company in place and are its CRO returns in order?

 

[Bricriu]

Thanks T McGibney. Solicitor said builder had not filed Tax Accounts; she can ascertain whether this had been done or not by going on line to Reveneue or Register of Companies sites.

Management Co is in place but owned by builder, not house owners (i.e. it won't be transferred until all houses have been sold). No Returns have been made for Management Co. since 2008 either

 

[T McGibney]

Thanks T McGibney. Solicitor said builder had not filed Tax Accounts; she can ascertain whether this had been done or not by going on line to Reveneue or Register of Companies sites.

This doesnt sound correct. Individuals' and businesses' Revenue records are not available to the public, online or otherwise.

No Returns have been made for Management Co. since 2008 either

This is a serious issue.

 

[mercman]

Well if the house is well built and your engineers don't have any issues I really can't see where your problem is, especially as you've bought at a knock down price. In the times we're living in at the moment and most new built homes are on the market from builders gone west or a liquidator. These liquidators aren't going to give you a guarantee.

The Tax affairs of the builder should be of no concern to you. If you purchase goes through your solicitor will have to ensure that the property has a clean title and is free of charge whatsoever.

The Management Co affairs are less importance in a scheme of houses where there is no commonality in the case of Insurance. Drive around the scheme and see what condition the grounds are in. Otherwise call to the residents in place already and ask them if they have any problems with the builder.

Did you ever consider that the solicitor might have a flea in his ear and has fallen out with the builder. How do you know the solicitor has his own Tax affairs in order as many in that profession are in bother at the moment.

 

[bertie1]

If the management company has not filed it is a problem . In a gated development , you may own the house but assests like common areas and access to your house cannot be transferred to the residents if the management company is struck off. It is going to cost the residents a lot of money to sort out afterwards. The day you buy is the day you sell. If you have to sell in a hurry it will cause a problem

 

[Bricriu]

Thanks for advice everyone.

If the management company has not filed it is a problem . In a gated development , you may own the house but assests like common areas and access to your house cannot be transferred to the residents if the management company is struck off. It is going to cost the residents a lot of money to sort out afterwards. The day you buy is the day you sell. If you have to sell in a hurry it will cause a problem

Bertie1, why will it 'cost the residents a lost of monwy to sort out afterwards'?

 

[onq]

it is in a rural estate, and only 5 out of 15 houses have been sold (seemingly those 5 buyers were not too worried by the building company's lack of Returns.

I'm going to ignore the peripheral concerns about company returns.
Other posters seem to have adequately addressed these.
Your other concern when buying property is location.

- A building suffers wear and tear and depreciates.
- A location in a sought after area grows in value over time.
- This is the fundamental misunderstanding in evaluating property.

A "rural estate" is a contradiction in planning terms Bricriu and with teh best will in teh world, 15 houses sounds like a mid-size cul-de-sac, not an estate.

It sounds like an estate built remote from other neighbourhoods, shops, public transport, schools and amenities.

If that is so, it will be far down the list of priorities to either establish new or maintain existing support infrastructures.

With only a third of the units sold since 2008, and with many of those owners probably in negative equity, I would be very waring of buying.


ONQ.