Selling property in Jamaica requires a property owner to exercise diligence during the entire process. It is always prudent to have a registered title before a decision is made to sell. The National Land Agency is the only body in Jamaica that can issue a registered title. A surveyor’s identification report or a valuation report is not a registered title. The seller must ensure that he/she has the right to dispose of the property.

Often, we find that people in rural areas of the island enter into an arrangement with purchasers to sell land without a registered title — this has been a practice since time immemorial.

However, this is not a recommended practice since a previous generation could have sold a part of the said land or given it to another person by way of last will and testament, or the square footage of land that the owner believes he/she owns could be inaccurate, among other reasons.

A Surveyor’s Identification Report is not enough to prove ownership. Lands without registered titles are referred to as unregistered land, therefore it is recommended that the beneficial owners ensure they consult an attorney or the National Land Agency to have the necessary applications made to obtain a registered title before sale.

SITUATIONS THAT

Examples of situations that can prevent a sale from being completed where the seller is a beneficial/registered owner are as follows:

1. The title is registered to the property owner and a deceased individual;

2. Ownership is derived by inheritance, and the deceased’s estate must be administered;

3. The joint owner wishes to sell, and the other party refuses to sell;

4. A caveat is placed against a registered title;

5. A minister has endorsed a right of first refusal provision as a restrictive covenant on a registered title;

6. The property owner has failed to pay property taxes.

VALUATION OF PROPERTY

Once ownership is determined, the seller should obtain a valuation report to determine the market value.

This step is often ignored because of the added expense. However, knowledge of the true market value is important to ensure that the property is not being undersold or that the price determined by the seller is not overstated.

A property sold for an overstated sum can delay a sale in cases where the buyer is obtaining a mortgage. Additionally, it can also result in the parties paying excess transfer tax and stamp duty to the Government.

ADVERTISING PROPERTY

A seller can choose to obtain the services of a real estate broker — who usually charges five per cent of the sale price for services — or list the property in the newspaper of choice, or choose other means of advertising.

If the owner chooses to carry out the listing independently, then he must ensure that the prospective buyer is in a position to buy. Not all buyers can afford to purchase or can qualify to obtain a mortgage. Therefore, the vendor must ensure that the buyer has a pre-qualification letter issued by a reputable financial institution before deciding to sell.

DURATION OF A SALE

The time taken to complete a routine sale transaction usually ranges from 30 to 120 days, depending on whether it is a cash transaction or mortgage. The duration of the sale must be a condition in the Agreement for Sale contract.

GOVERNMENT TAXES AND REGISTRATION FEES

All parties have the responsibility of paying taxes and registration fees in property sale transactions. A vendor is solely responsible for paying transfer tax, whereas all parties must share the stamp duty and registration fees equally. If the vendor has an existing mortgage, the stamp duty on the discharge of mortgage is solely the vendor’s responsibility.

BREACHES

Every property in Jamaica is registered under the Registration of Titles Act, which outlines all the restrictive covenants. Therefore, property owners should ensure that they inform themselves as to what the various covenants are before they carry out improvements on their land and/or building.

A property owner should:

1. obtain a Surveyor’s Identification Report before constructing any retaining wall, fence or verandah, or performing any other type of improvement

2. submit a building plan to the parish council in the area where the property is located, if considering a new addition to the original structure.

Once a decision is made to dispose property, a duty of care is owed to the purchaser to pass good title. Any type of breach is a defect in title and should NOT be the responsibility of the purchaser to modify. Therefore, the cost to rectify any type of breach is solely at the cost of the vendor.

The buyer should not be forced to accept a defective title unless there is an agreement between the parties to do so. Acceptance of such a breach can cost the buyer hundreds of thousands of dollars to rectify.

A breach of any covenant requires an attorney to make an application in court, and this is done at an additional cost.

Encroachments are a different type of breach and occur when the seller’s land falls outside the registered boundary or the neighbouring boundary trespasses on the seller’s property. If not rectified on discovery the sale can be severely delayed or cancelled, especially where the buyer is obtaining a mortgage.

Rectification of encroachments are usually costly, therefore the buyer should investigate the cost before acceptance.

Venice Williams-Gordon is an attorney-at-law. She can be contacted at vwilliams@ lswlegal.com.