I bought a house off the plans in a new development and paid a deposit to the builder. The property isn't fully completed but the builder has now gone into liquidation. What legal recourse do I have against the builder to recoup the deposit?

Response
Payments of deposits to a builder or a builder’s solicitor have always been a cause of concern to purchasers and their solicitor. It has generally been accepted that the builder is entitled to receive the deposit and finance the development. It is important to note that, when a
deposit is paid to the builder’s solicitor, it must be paid over to the builder and taken into the builder’s cash flow. As such, if deposits are
handed over before a contract is entered into, the purchaser ranks as an unsecured creditor if the builder becomes insolvent. Most builders borrow large amounts to buy development land. This is financed by way of a mortgage/fixed legal charge in favour of a bank which
will rank as a secured creditor in an insolvency, so its debt will be given priority. Therefore, a deposit can be at risk until formal contracts are
executed unless the deposit is ‘‘subject to contract’’. Deposits should not be paid directly to a builder unless the builder is
guaranteed under the National House Builders Guarantee Scheme (also known as the Homebond scheme). This scheme provides cover for loss of deposit if the builder becomes insolvent. To ensure protection under this scheme, the deposit cheque should be made
payable to the party registered under the Homebond scheme, and a receipt should be obtained.
If paid to an agent, the purchaser should get written confirmation from the builder’s solicitor that the money is paid to the registered party.
If the builder is not registered with Homebond, the deposit should be paid to solicitors for the vendors pending completion of the sale.
The availability of Homebond protection is limited to money paid by the policyholder to the developer after the effective date stated on the
certificate of insurance, and covers up to half of the agreed contract price or €100,000, whichever is less.
If it appears that the total claims anticipated and paid in respect of any one developer may exceed a €2 million limit, Homebond may, at its
discretion, reduce individual claims from all affected policy holders by the proportion by which anticipated and paid claims are estimated to exceed the €2million indemnity.

• If a deposit is paid over to a builder that is not registered with

Homebond, it is unlikely that the deposit will be recovered, unless it is subject to a specific contract.
This article was published in the Sunday Business Post on
20th September 2009

I recently purchased an item which was heavily discounted during a sale. The item turned out to be non-functional.

I returned and asked for a refund. The shop assistant informed me that there were no refunds, exchanges or credit notes given on sale items and that this policy had been widely displayed on signs during the sale. Do I have any recourse?

Response
The Sale of Goods and Supply of Services Act 1980 stipulates that there is a condition that goods supplied under the contract are of merchantable quality. Goods are of merchantable quality if they are fit for the purpose for which goods of that kind
are commonly bought and as durable as it is reasonable to expect having regard to any description applied to them.
There is no such implied condition as regards defects drawn to the buyer's attention before the contract is made or if the buyer examines the goods before the contract is made as regards defects that examination ought to have revealed. If the goods fall foul of any of the aforementioned criteria, legislation grants the consumer the right to a repair, replacement or refund. Should the consumer hold a warranty/ guarantee, the consumer has extra protection. The consumer protections remain intact when the faulty good in question is a sale item.
It is an offence under the Sale of Goods Act for the seller to restrict/exclude your entitlements under the Sale of Goods Act by the use of signage. So in this instance, you are entitled to a repair, replacement or refund. You may have recourse to the Small Claims Court which can settle claims up to €2,000 for an application fee of €15. The National Consumer Agency is responsible for the enforcement of consumer legislation and a complaint can be made at http://www.nca.ie.

D.K. Ryan & Co., Roscrea, Co. Tipperary
This article first appeared in the Irish Independent on 28th July 2009

I own a small business and I have offered customers credit terms. I am plagued with non-payment. I’ll go bust if I can’t recover some money. What steps can I take?

Response
When all other means of collecting the debt have been exhausted (phone calls, reminder letters,
paying a visit to your customer), other than writing off the debt, the only recourse is to take the legal
route.
You should always seek to enforce your legal rights, if only to deter other potential bad debtors.
After an initial demand letter, the debt recovery process involves the issue of court proceedings in
the relevant court, depending on the amount involved. Once judgment has been obtained, you are
then in a position to enforce your judgment if it remains unpaid.
The following options will then be available to you.

•  Registration of judgment: this allows you to insert the details of the judgment in ‘Stubbs Gazette’ or trade journals, which may greatly affect your debtor’s credit rating.

•  Issue of execution order: this may lead to the seizure of your debtor’s assets.
• Judgment mortgage: if your debtor owns any property, you can register your judgment as a mortgage on their property and, in some cases, have the property sold to pay your debt.

• Instalment order: this involves the debtor appearing in court to give a statement of their means and the court making an order directing the debtor to pay the judgement by instalments.

Due to its sensitive nature, debt recovery can be difficult. Business owners know that at times they
need to be sympathetic; however, they also know that, if not retrieved, bad debts can cripple their
business.