Business

Only in Jamaica: why is my motor vehicle title taking so long to process?

TELL Claudienne

Sunday, November 05, 2017

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Dear Claudienne,

On July 17, 2017, I purchased a 2012 Subaru Impreza Anesis motor vehicle in Jamaica from MAX Advance Auto Zone Ltd through a loan from the Navy Credit Union located in the USA.

My difficulties started at the tax office when I asked them to add the Navy Credit Union to the title as the lien holder, because I wanted to send them the title until the principal is paid in full.

I am in the US Army. In the past I have purchased vehicles in various countries around the world, and it has never posed a problem to add the lien holder to a title.

In Jamaica, however, it has been an extremely arduous process. Although the purchase agreement shows the Navy Credit Union as the provider of the loan, and a copy of the cheque sent to the car dealership has been shown to the tax office, they have refused to add the Navy Credit Union to the title as the lien holder.

KK, my agent in Jamaica, has spoken to a supervisor at the tax office, but to no avail. The supervisor told KK that if a Jamaican bank was the lien holder it could be done, but since the bank was located overseas, “We cannot do it,” was the response.

KK was also told that it would take three months for the tax office to process the title.

Hoping that common sense would prevail, KK decided to speak to the manager. This time she was told that the Navy Credit Union would have to provide the tax office with a certification letter, and that processing the title could take up to six months.

In the other countries where I have bought a vehicle, the titles were normally processed in about three to four weeks. Please note that the Navy Federal Credit Union (The Navy Credit Union) has branches in all countries where the US military operates, and conducts business at all these locations.

I have asked the Navy Credit Union for a stamped letter or a statement as requested by the tax office, but they have refused. In every other country where I have done business, the loan agreement has been sufficient for the lien holder to be added to the title.

To further compound the problem, the cheque took 30 days to clear the dealership bank. In addition, although the tax office has not yet given me my title and therefore virtually owns the vehicle, I am still being required to pay the postage fee to send the title to the Navy Credit Union.

Since the Navy Credit Union has not received the title in the normal period of time, I have had to ask them to grant me a 30-day extension. Otherwise, my car loan on which I am paying 3.9 per cent interest would revert to an unsecured loan on which I would have to pay 7.9 per cent interest.

In order to justify my request for an extension, my agent KK asked the tax office manager for a written statement detailing the long process required in Jamaica to secure the title for a motor vehicle. However, the manager has refused to provide such a statement.

Please also note that I applied for a loan at a bank in Jamaica and it was approved. However, whereas the bank fee amounted to JA$195,000, in the USA it would be no more than US$25, and there would be an exemption from the fee if the borrower's credit rating is good.

I would greatly appreciate your help in this matter.

CC & KK

Dear CC

Tell Claudienne sent the tollowing e-mail to the Communications Unit of the Tax Administration Jamaica:

“Please clarify why the Navy Credit Union cannot be added to the title. Please clarify why the TAJ takes three to six months to process a title. Please clarify why the TAJ cannot give KK a written statement detailing the time it takes (3-6 months) to secure a title for a vehicle. Apparently the statement is needed for presentation to the Navy Credit Union.”

The TAJ Communications Unit sent the questions to the General Manager-Centralized Operations, Kingston Revenue Service Centre. She sent the questions to the Chief Tax Counsel, Advisory Service, Legal Support and Research Division.

The senior Legal Counsel, who stated the issue as “Whether a Loan Agreement executed in a foreign jurisdiction, where the currency is not expressed in Jamaican dollars, may be used to register a lien on a motor vehicle certificate of title in Jamaica”, responded to Tell Claudienne as follows:

“The Law and Analysis

I advise that a loan agreement executed in a foreign jurisdiction without more is insufficient to register a lien on a motor vehicle title in Jamaica.

REGISTRATION OF LIEN

A lien is defined as a legal right or interest that a creditor has in another's property until the debt is satisfied. A notice of lien is required to be presented to the Collector of Taxes, the body delegated by the Licensing Authority pursuant to Section 7 of the Road Traffic Act 1938 which states that

(1) “A Licensing Authority may for the purpose of the due discharge of functions under this Act delegate any of those functions to the Collector of Taxes or any other public officer.”

Reference is made to an e-mail dated 27th September 2017 where the writers CC and KK stated:

“I requested (sic) add the Navy Credit Union as the Lien Holder on the Title so in turn I can send the credit union the title.”

Section 5 of the ROAD TRAFFIC AMENDMENT (No. 4 ) REGULATIONS 1987 states:

(8) “Where a certificate of title is presented to the Licensing Authority together with the notice of a lien on the motor vehicle concerned, the Licensing Authority shall forward the certificate of title to the Motor Vehicle Central registry.

(9) The Motor Vehicle Registry shall upon receipt of

(a) the certificate of title ... or

(b) an application for the certificate of title.... note

the fact of such lien on the certificate of title issued in respect of the motor vehicle...”

In the instant case, a Notice of Lien was NOT presented to the Tax Administration (TAJ) at the time the motor vehicle certificate of title was applied for. Section D of the Application for Motor Vehicle Transaction dated 2nd August 2017 did not reflect any lien holders. Section E reflected the owner's name KK, TRN, owner's address and the insurers, General Accident. Consequently, only the particulars of the registered owner, KK, and the motor vehicle would be reflected on the motor vehicle certificate of title. It is submitted that the procedures applied by Natonal Motor Vehicle Registry in preparing this title is consistent with the provisions of the Road Traffic Regulations.

Where a lien holder now wishes to register a lien on the motor vehicle, they are required to present a notice of lien to the Commissioner General of Tax Administration Jamaica, and advise him that they currently hold a lien on the motor vehicle. The lien holder is also advised to provide the following particulars:

(a) Full name of the registered owner.

(b) Address of registered owner.

(c) Type of vehicle.

(d) Make.

(e) Year.

(f) Colour

(g) Body type

(h) Model

(i) Chassis No.

(j) Engine No.

(k) Licence No.

(l) Date of lien

(m) Amount of Lien in Jamaican dollars.

This notice is required to be signed by and dated by the lien holder and usually bears the official stamp of the financial institution.

LOAN AGREEMENT EXECUTED OVERSEAS

At a later date, it was indicated that enquiries were made in respect of registering a lien on the said motor vehicle title, using a 'loan agreement' that was purportedly prepared in the United States by Navy Credit Union. At the time of preparing this opinion, Tax Administration Jamaica was NOT in possession of a loan agreement, and therefore unable to speak to that document specifically.

Section 18 of the BANK OF JAMAICA ACT 1960 is instructive. It states that

“Every contract sale, payment bill, note, instrument and security for money, and every transaction, dealing, matter and thing whatever relating to money or the liability to pay any money which is made, executed, entered into, done and had, ACCORDING TO THE CURRENCY OF THE ISLAND and not otherwise UNLESS THEY ARE MADE, EXECUTED, ENTERED INTO, DONE OR HAD, ACCORDING TO THE CURRENCY OF SOME OTHER COUNTRY….”

It is submitted that contracts such as a loan agreement executed in Jamaica ought to reflect the currency of Jamaica unless they are executed in another country. In the instant case, a document would not be invalidated by virtue of the fact that it was executed outside of Jamaica and reflects a foreign currency. However, in order to rely on such a document in Jamaica, it must be adequately stamped at the Stamp Duty and Transfer Tax Division of Tax Administration Jamaica.

STAMPING DOCUMENT EXERCISING A CHARGE

The above mentioned e-mail also indicated that:

...the purchase agreement showing Navy Credit Union as the provider of the LOAN and the a (sic) copy of the check sent to the car dealership...”

This suggests that the purchase agreement is one that would seek to issue a charge over the motor vehicle. Where the lien holder desires to rely on such a document, it is required to be presented to the Stamp Duty and Transfer Tax Division of Tax Administration Jamaica for stamping.

Section 2 of the STAMP DUTY ACT 1973 requires that stamp duty be charged on certain instruments mentioned in the Schedule. In so doing, the Commissioner General would first need to make a determination as to the following:

(a) the type of document being presented for stamping

(b) the date of the document as well as..

(c) the amount of indebtedness or value on the instrument.

In this regard, where the nature of the document is an instrument being used as a further CHARGE or SECURITY on or affecting any estate or property, real or PERSONAL PROPERTY, stamp duty would be chargeable pursuant to the mortgage head of charge in the schedule to the Stamp Duty Act under the section mortgage.

Due regard also has to be had in respect of date of execution. Section 32 (3) (a) of the STAMP DUTY ACT states:

“The instrument, unless it is written upon duly stamped material, shall be duly stamped with the proper ad valorem duty before the expiration of THIRTY DAYS AFTER IT IS FIRST EXECUTED, or AFTER IT HAS BEEN FIRST RECEIVED IN JAMAICA”.

This means that stamp duties are levied based on the determined value. In addition, if thirty (30) days have passed from the date of execution of the document or from the date when the document enters Jamaica, penalties will be applied.

In order to assess the stamp duties payable in Jamaican dollars, the Commissioner General may apply the Bank of Jamaica weighted average rate and then apply it to the amount of indebtedness on the instrument. In the alternative, the applicant may opt to amend their document and express the value in the Jamaican equivalent. It is submitted that once the document has been adequately stamped, it may be relied upon in the Jamaican jurisdiction.

It is important to note, however, that notwithstanding the above provisions of the SIPP Act, the Road Traffic (Amendment Regulations) prescribe that a Notice of LIen should be presented to the licensing Authority in order to register a lien on the motor vehicle title.

REGISTRATION OF PERSONAL PROPERTY ON SIPP

The SECURITY INTEREST IN PERSONAL PROPERTY ACT of 2013 provides for the registration of an interest in respect of security interests or interests created by contract over personal property such as motor vehicles, pursuant to Part VII of the Act. The Lien Holder may take precaution in registering their interest, thereby giving constructive notice to the world, and thereby securing their interest.

CONCLUSION:

A loan agreement executed in a foreign jurisdiction, where the currency is not expressed in Jamaican dollars, may not be used to register a lien on a motor vehicle certificate of title in Jamaica.

RECOMMENDATION

We advise that the Lien Holder present the

(a) Contract or document seeking to exercise a charge or security over the motor vehicle for stamping at the Stamp Duty and Transfer Tax Division;

(b) Submit a notice of Lien to Tax Administration Jamaica, together with the motor vehicle certificate of title for their interest to be endorsed.

(c) Register their interest by way of notice on the Security interest in Personal Property Register.”

The Senior Counsel advised Tell Claudienne that on the C47 customs form that you completed, the Notice of Lien section was not filled out. If you had filled out that section, the authorities would have been alerted to the fact that someone had an interest in the lien.

She said that you can still complete and submit the application form for motor vehicle transaction to the Stamp office. PLEASE NOTE that on this form you must complete SECTION D entitled Lien Holders. You will need to get the Navy Stamp and you must also state the amount of the lien in Jamaican dollars. You can also supply this information in the form of a letter, the lawyer said.

On the matter of the motor vehicle title which you were told would take up to six months to process, we note that after Tell Claudienne communicated with TAJ on October 4, KK collected the title on Wednesday, October 23.

We wish you all the best.

Have a problem with a store, utility or company? Telephone 936-9436 or write to: Tell Claudienne c/o Sunday Finance, Jamaica Observer, 40-42 1/2 Beechwood Avenue, Kingston 5; or e-mail: edwardsc@jamaicaobserver.com. Please include a contact phone number.

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