IMAGINE paying millions of dollars for a home, only to find out years later that you still can’t get the title. According to real estate and conveyancing attorney Benjamin Fraser, that’s a situation some buyers end up in because they fail to verify whether the seller can legally transfer ownership before signing a sales agreement.

“We’ve seen several scenarios where property is legitimately owned by a family member but they are beneficiary owners, meaning they are not yet the legal owners — their names don’t appear on the title,” Fraser said while addressing the Jamaican Diaspora at the Caribbean Investment Showcase in Toronto, Canada, over the weekend.

Fraser said one of the most common issues he encounters involves clients seeking legal assistance years after purchasing a property because the seller is unable to provide good title, often leaving buyers in limbo after they had already paid a deposit and other associated costs. One of the biggest red flags, he said, is buying from a beneficiary of an estate that has not yet been settled. While the individual may be entitled to inherit the property, they cannot legally transfer ownership until the estate has been administered and the title is in their name. According to Fraser, this situation is particularly common among members of the Diaspora who inherit family property but try to sell it before settling the estate, to avoid the associated legal costs.

“I strongly advise you, if you are dealing with someone who wants to sell their parents’ or grandparents’ land, who is deceased, and they have not settled the estate to give you a clean title, ensure that you wait until they have done what they are supposed to do,” he said.

Who can legally sell you property?

Good title can generally be given by a sole registered owner, all surviving joint tenants acting together, or a tenant in common selling his or her individual share. However, buyers should understand exactly what they are purchasing. While a tenant in common can legally sell a share of a property, buying a one-third interest in an apartment may not be practical. A share in a large parcel of land that can later be subdivided may be more workable, although buyers should still seek legal advice before proceeding. He added that buyers purchasing units in new housing developments should not be alarmed if an individual title has not yet been issued when they sign the sales agreement. In many cases, the title for the specific unit is still being processed as part of the development and will be issued later.

Don’t skip legal representation

Fraser also urged buyers not to cut corners by trying to complete a property transaction without legal representation. While some jurisdictions allow real estate transactions to close quickly without an attorney, Jamaica’s conveyancing process is far more involved. Cash purchases typically take about 60 days to close, while transactions financed through a mortgage can take at least 120 days and often longer.

“In that period, several scenarios can play out where you need independent counsel and so I say, don’t try to save the cost of not paying an attorney the two to four per cent by going through that transaction alone,” Fraser warned.

He also cautioned against buyers and sellers using the same attorney, saying each party should have independent legal counsel. Likewise, while realtors, mortgage officers, and financial advisers each play an important role in the home-buying process, they should not be relied on for legal advice. For buyers — particularly those living overseas — he stressed the need to ensure someone they trust physically visits the property before any money changes hands, noting that property scams continue to affect buyers around the world. Buyers paying cash should also consider getting a survey, despite the additional cost. A survey can confirm that the land is not being encroached on and that no structures have been built in breach of restrictive covenants or building codes.

Why a valuation matters

Getting a valuation before signing the sale agreement is equally important.

While vendors are free to set their own asking price, financial institutions will only lend based on a property’s market value.

“A $25-million property could be listed, and someone asks for $35 million,” he said.

Without a valuation, buyers may not realise they have agreed to pay well above market value until they apply for a mortgage. If the bank values the property lower than the agreed purchase price, they will have to find the difference themselves or risk the sale falling through. The valuation should be done after an offer has been accepted but before the sale agreement is signed, as it gives buyers the opportunity to renegotiate if the property’s market value comes in below the agreed price. He also reminded buyers that the deposit is generally up to 10 per cent of the purchase price, with any additional payments relating to transaction costs.

Using a $35-million property as an example, he noted that the cost of preparing the sale agreement could range from about $56,000 to just over $101,000. In addition to the purchase price, buyers should also budget for transaction costs, including attorney’s fees, which typically range between two and four per cent of the property’s value. Stamp duty is fixed at $5,000 and shared between the purchaser and vendor, while the registration fee payable to the National Land Agency is 0.25 per cent of the sale price.

Read the fine print

Buyers are also being reminded to carefully read the title before completing the purchase. The title contains restrictive covenants outlining what owners can and cannot do with a property, and those restrictions should be considered alongside the reason for buying the home. Although restrictive covenants can be modified, the process can take a year or more and cost at least $700,000 in legal fees. Discovering after completion that short-term rentals, pets, extensions, or other plans are prohibited can leave owners with an expensive asset they cannot use as intended.

FRASER…I strongly advise you, if you are dealing with someone who wants to sell their parents’ or grandparents’ land, who is deceased, and they have not settled the estate to give you a clean title, ensure that you wait until they have done what they are supposed to do.