Deciding to purchase a property, whether by yourself, with your spouse or otherwise is a significant decision that cannot be taken lightly. You can either end up with the property you love or the heartbreak of unfulfilled promises. To ensure your money is well spent, there are a few things you should know:

Consult Before Signing any Documents or Making any Payment

Firstly, it is recommended that you should only sign an agreement for sale and pay the deposit after your attorney has reviewed it, conducted the necessary due diligence (discussed below) and advised you on your obligations and steps which will lead to completion of the sale. When you begin initial negotiations for the purchase of property, the onus is on the buyer to ensure that this venture is legitimate and that proper due diligence in respect of the property is carried out.

If the property is being bought “pre-construction” (ie you are buying land, usually in a scheme of development, with the agreement that the developer will construct an deliver a pre-designed home/unit on completion), then you can expect the agreement for sale to be specialised and to have many more obligations for both parties as well as a longer timeline before the transaction is completed. For these types of agreements, it is best that you check the track record of the developer which may be accomplished simply by asking your attorney-at-law, an architect, real estate agent or other trusted professional who works in the real estate industry. A few questions to ask yourself are (this list is not exhaustive):

• Is the developer well established and reputable?

• Has construction of other units begun?

• Does the developer have previous successful development projects?

• Does the developer have the required governmental approvals necessary to complete the project and can the approvals stand up to scrutiny?

• Is there any sensitivity about the type of development in the area, whether it is an environmental sensitivity (eg prone to flooding/landslides) or a social sensitivity (eg the neighbours are against high-rise developments)?

• Is the developer licensed by the Real Estate Board?

• Are there any news articles in which developer is in controversy?

• Are there any pending lawsuits against the against developer in court?

Due Diligence — Check the Ownership

The certificate of title (the title) is the legal document which indicates ownership of registered land, and this should always be checked to determine if the seller is the actual owner. If the seller is not the outright owner of the property, then careful checks will be needed to determine the type of interest the seller has in the property which enables him to complete the sale. For instance, the title may be in the name of someone who has died and the seller may be his child, and his name is not (yet) on endorsed on the title — the seller, however, may have a grant of representation from the court in the deceased’s estate as well as other important documents which will enable the seller to complete the sale at the appropriate time.

Checking the ownership can be done by purchasing a copy of the original title from the National Land Agency (NLA) and checking the endorsements noted on it. And if there are other important documents necessary to complete the sale (eg grant of representation, transfer tax certificate), these should be requested from the seller or his attorney. The title and any other accompanying document should be reviewed by your attorney-at-law who will be able to assist with identifying any inconsistencies, mortgages, caveats, or other issues which could affect the completion of the transaction. Your attorney should also do a caveat search at the NLA which will identify registered equitable interests claimed by third parties which may not be endorsed on the title or apparent from a visit to the land.

Visiting the property

Most agreements for sale will contain a provision that you have inspected the property and that you are buying it “as is”. Such a provision simply means you must “take what you get” and therefore it is highly recommended that you visit the property to inspect it and, as best as possible, determine the actual condition of the land or the building. A property visit can also reveal whether someone is currently renting the property or if there are squatters and if there are, your attorney would need to ensure that agreement for sale addresses such issues clearly.

You should also keep in mind your intended use of the property as there may be restrictive covenants on the title which specify how the land can be used which could affect your plans for the property such as expansions. You should also be aware that the permitted use of the land will be dictated by the development order covering the area which has several implications for persons planning to do a development.

Surveyor’s Identification Reports

It is recommended that you engage a commissioned land surveyor to conduct a survey of the land and provide a surveyor’s identification report. This report will pick up any breaches of the restrictive covenants on the title and any other issues such as use class, and easements which affect the rights of the owner of the land. If a breach of the restrictive covenant is detected, you will need the services of an attorney-at-law to apply to the courts to modify or discharge that covenant. This is especially important if you are obtaining a mortgage to finance the purchase.

If You Did Not Follow the Steps Above — the “Bona Fide Purchaser”

Despite potential risks that may arise when buying property and the heartbreak it could come with if you did not follow any of the steps above, the law in specific circumstances will protect a purchaser who has bought a property in good faith. The law refers to this person as “bona fide purchaser for value without notice” and this person is protected against a third party who claims an interest in the property you bought on the ground that the vendor sold the land with a fraudulently obtained title.

Under the Registration of Titles Act, a bona fide purchaser is not required to ascertain how the vendor has been registered on the certificate of title because the title of a property is indefeasible. The courts have made it clear that the bona fide purchaser’s interest is safe unless it is shown that the purchaser was (i) involved in the fraud or (ii) had notice of the fraud or (iii) the registrar of titles was involved in the fraud. It is important to note here that for this protection to work, you would have needed to see the title. If you failed to ascertain the validity of the title or the vendor’s identity and it turns out the vendor did not own the land, then you may not be afforded the protection of a bona fide purchaser.

If you want to protect against real estate heartbreak when you purchase property, you should seek the advice of an attorney-at-law who can guide you through the steps outlined above as well as the other issues which may arise when acquiring property.

Antwan Cotterell is an associate at Myers, Fletcher & Gordon in the Property Department. He can be contacted via Antwan.Cotterell@mfg.com.jm or myersfletcher.com. This article is for informational purposes only and does not constitute legal advice.