The complications of building a house where you don’t own the site

Legal advice for farmers

Dear Karen,

My father said I could build a house in the home place that he owns. I worked abroad for a good few years, and I have quite a bit of money saved, so I wouldn’t need a mortgage. I have planning permission, and my father has said to get on with the build, and that he will sort out the site transfer in time. I am planning to live in the house with my wife and two children. What would you advise?

Dear Reader,

It is a lovely opportunity to build on your father’s land. However, I could not advise you to proceed with building a house and expending large amounts of money, on land that has not yet been transferred to you.

I have dealt with situations previously where this occurred, and it led to great complications, especially if there is a family falling out. Even without a family fallout, it leads to complications.

The legal implications of these arrangements can often be overlooked, and can have significant consequences.

Many assume that it is possible to own a house or a dwelling, even if the land on which that house is built is owned by someone else.

Unfortunately, this assumption is incorrect.

The general rule is everything attached to land forms part of the land itself, and is owned by the owner of the lands. Despite the fact that the owner of the land may not have paid for it, the building is owned by the owner of the land, not you, who paid for it.

The other consequence of this is if your father passes away, the building will form part of his estate, and would be dealt with in accordance with his will.

If your father does not will it to you, it will pass to someone else, and that person might not be too willing to accommodate you in respect of placing the land and the house in your name.

If your father does not leave a will, the building may pass to your siblings, and not all of them may be in agreement with transferring to you. In addition, it may also lead to additional adverse tax implications which could have been avoided.

Another complication is if your father becomes of unsound mind, in time, and he does not have an Enduring Power of Attorney in place, then he will need to be made a ward of court before anyone would have the power to execute a deed to transfer the site into your name. This leads to further complications and legal costs.

If your father suffers from financial difficulty, the building will be available to his creditors. You will have paid for the building, even though you do not own it, but you could have a claim for compensation from your father which could be difficult or expensive to pursue, particularly if your father has other liabilities of his own, or has died or becomes mentally incapable.

The important message is that you need to be very careful if you want to pay for a building on land you do not own. You should seek legal advice before proceeding and sign an agreement with the landowner that will govern the rights and interests of all parties in the land and the building.

The best piece of advice I can offer is not to build until the site has been transferred to you.

Explain to your father it would be best to transfer the site first and then build as you would be spending a large amount of money and you need security for your wife and children (in the event that you die prematurely).

It is not a complicated transaction to transfer the site, and it will be far cheaper and easier to attend to it now rather than later, and you will be glad you did.

• Karen Walsh, from a farming background, is a solicitor practicing in Walsh & Partners, Solicitors, 17, South Mall, Cork (021-4270200), and author of ‘Farming and the Law’. Walsh & Partners also specialises in personal injury claims, conveyancing, probate and family law.
• Email: [e-mail] Web: www.walshandpartners.ie