How do I sell my property in Jamaica?

For some of us, this pandemic has presented an opportunity to buy property. But with the pandemic still raging a year later, others may be thinking, it's time to sell this property. Perhaps it's an Airbnb investment that has gone south, or you've decided to migrate to greener pastures, or you may have inherited property but you won't be returning home. Whatever your reason for selling, here are a few things to consider if you are selling property in Jamaica.

Get yourself an attorney.

I know, you are a highly intelligent human who does not need to pay a lawyer to do what you can figure out. Listen to me. Do not try to do this on your own. Negotiate the legal fees as much as you want but get yourself an attorney. A competent attorney will soothe your anxiety and guide you throughout what can sometimes be a very complex process.

You’ll see why as we continue.

What is the status of your Title?

In Jamaica, land falls in one of two categories commonly referred to as registered land or unregistered land.

But what does this even mean?

Registered land is property that has been registered under the Registration of Titles Act. At the risk of boring you, our system of registration is based on the Torrens System (adapted from Australia) which is structured to facilitate the registration of land in one primary document called the Register Book of Titles. Essentially, this system accounts for the recording of all transactions involving the land and therefore makes it easy to trace the history of the land and ascertain its status including ownership of the property.

Once your property has been registered, a Certificate of Title is issued and kept at the National Land Agency, commonly referred to as the Titles Office. A duplicate of this Certificate of Title is then given to the owner (or held by the mortgage institution if you used the property to secure your loan).

How do I know if I have a registered title?

If you have a document with the heading Certificate of Title under the Registration of Titles Act as well as a Volume and Folio number (Look at the top left-hand corner) then your property is registered.

So, what is unregistered land?

Simply put, unregistered land is land which has not been registered under the Registration of Titles Act.

Huh?

Okay. Let me explain a bit more.

Most of us from the rural areas are very accustomed to land without a registered title. This land is often passed down through generations. In most cases to support ownership, you may have a surveyor’s report or a ‘plan’, an agreement for the sale and receipt, 'tax papers' accompanied by the fact that you or your family members may have been on the same piece of land for many years. These all serve to establish what lawyers call a “good root of title”.

Provided it is not lost or with the bank, if you do not have a document with a volume and folio number, but instead have the 'plan' or 'tax papers' and other supporting documents, you most likely have unregistered land.

While nothing prohibits you from selling unregistered land, and in fact, this is commonly done especially in rural areas, it is strongly recommended that you take the step to register this property – a process known as first registration – before you sell or use the land as security to obtain a loan.

But let’s assume, you have a registered title.

What’s next?

Where is the title?

If you have the Duplicate Certificate of Title, then it’s highly likely that your property is free and clear of a mortgage.

However, if you can’t find the duplicate Title, it’s likely to be one of two scenarios:

• the mortgage institution has the Duplicate Certificate of Title as security for the loan against the property; or
• the Title has been lost.

The financial institution has my Title.

If your Title is being held by the financial institution, your attorney will contact them to obtain a statement of account of the outstanding balance. Following consultation with your attorney, you may decide to clear this balance immediately so the Title can be released. However, the more common course of action is that the financial institution will release the Title and discharge the mortgage subject to an acceptable undertaking from your attorney to settle the outstanding sum on completion of the sale.

I can’t find my Title!

If there is no mortgage registered against your title and you can’t find it, then you may have lost your title.

Don't panic.

Your attorney will instruct you to conduct a thorough search. If you are still unable to find your Title, then a Lost Title Application must be completed to proceed with the sale.

I have my Title. What’s next?

Look at you, being all responsible!

Your attorney will now obtain a search certificate from the Titles Office to ensure that no encumbrances or caveats are registered against the title, which may hinder or delay the sale.

Huh? Say that in English, please.

In other words, there are several things that could prevent you from being able to sell the property right away.

Let’s talk about them… and then some.

Is your name on the Title?

You may be tempted to scoff at this, but attorneys will tell you that clients often present titles that do not have their names, their correct names, or their current name.

Who are these people?

Let’s start with the most common scenario. The property is in your maiden name. Some of us purchased property before our marriage (or marriages). If your Tax Registration Number (TRN) is now in your married name, your attorney will also do an Application to Note Marriage to reconcile the name on the Title and the TRN. After all, we must convince all the various government entities that you are one and the same person.

Dead lef’

Another common situation is where you may have inherited the property, what we Jamaicans often refer to as ‘dead lef’. So, for example, your parents died leaving property to you, but no steps have been taken to administer the deceased estate. While it may be true that it is your property (you are who we call the beneficial owner), your attorney must first take certain steps to put you in a legal position to be able to transfer or sell the property.

Other common issues which may cause delays are:

• Your name is on the title but one of the owners is deceased. If this is the case, then your attorney will have to ascertain how the property is owned. If held jointly, they must first complete an Application to Note Death (a separate process with additional fees). If the property is held as tenants-in-common, then this gets even more complex, as the relevant Grant must first be obtained in respect of the deceased estate and then with the personal representative registered on transmission. This is also a separate process that will take some time to complete before you can move forward with the sale.

 

• One person wants to sell, but there are multiple owners of the property. If all the owners are alive, they will all need to agree for the sale to smoothly progress or you may have to obtain a court order to do so. A party or several parties refusing to sell will delay the sale.

 

• There is a tenant on the property – If you have tenants and you intend to sell the property and deliver it vacant, you will have to serve the tenant with a Notice to Quit. It is important to note that upon expiration of the Notice, you cannot forcibly evict the tenant if the tenant does not leave. You will need a court order to do so and your attorney will have to commence recovery of possession proceedings. You guessed it. This also takes time.

 

• A caveat is lodged against the title – Caveat is a Latin word meaning “let him beware”. In short, a caveat is an injunction or stop order which prevents or restricts any dealings with the Title. If a caveat is lodged against your title, it means that someone is claiming an interest in the land and the caveat serves as notice or warning to anyone trying to deal with the property. Now, there are several types of caveats but talk to your attorney who will explain in greater detail than I will bother you with. Suffice it to say, there are some caveats that will allow registration and others which will prohibit any type of dealing with the property until the caveat is withdrawn.

 

Restrictive Covenants

Thanks to a few recent judgments and trending tweets, everyone now knows that breaches to a restrictive covenant can be a very big deal.

But what is a restrictive covenant?

A restrictive covenant is an agreement or binding conditions that are registered against the Title and restrict the way that the registered proprietor can deal with his property. Generally, restrictive covenants are meant to uphold certain standards for all residents. So, the restrictions or restrictive covenants on the title are usually to prevent property owners from doing work or engaging in practices that could negatively impact or undermine the neighbourhood.

Truth is, once we buy property most of us make alterations or additions without paying much attention to these covenants.  However, you could quite easily be in 'breach’  especially where the addition was done without any parish council approval.

But people add on to their houses all the time, what’s the big deal?

A judge may not order you to demolish your home like in recent judgments, but you will have an issue where the purchaser intends to obtain a mortgage to finance the sale.   If the purchaser obtains a Surveyor's ID Report which reports a breach of a restrictive covenant or an encroachment, the mortgage institution will require a commitment that this breach or encroachment be rectified before proceeding with the sale. As it is the Vendor’s duty to pass good title, the onus is therefore on you to modify the breach or demolish the encroachment if it is prudent to do so.

This means an additional spend both in legal fees and other costs. The good news is you may not need to find this money upfront as the money for the restrictive covenant modification process is usually retained from the sale price.

How do I decide how much to sell the property for?

Like any fiscally responsible individual, I know you are always looking to save a buck or two. However, obtaining a valuation report is always useful in ascertaining the true market value of the property. It is truly the best way to ensure that your asking price is not too much or too little especially if you are not using a real estate agent.

So, are you saying I should use a real estate agent?

There are several advantages to using a real estate agent as they take the hassle out of you having to search for a buyer. An agent also provides the benefit of advertising, showcasing your property, helping you to ascertain comparable market value without necessarily having to obtain a valuation report, and conducting due diligence on prospective purchasers, among other things.

Of course, this comes at a cost as real estate agents usually charge a 5% commission for their services.

Vendors often do not pay attention to the fact that they are still required to pay this fee even if they subsequently find the buyer. Please read your contract carefully and if possible, try to negotiate this term (a lesser commission if you find the buyer?) before execution. Otherwise, you are contractually bound to pay the full commission.

You may not need an agent especially if you have already secured a buyer. Note though that the onus is now on you to conduct proper due diligence in respect of the prospective buyer including ensuring that they have a pre-qualification letter issued by a reputable financial institution.

Let's talk money. What is this going to cost me?

Ahh... the question on every client's mind. Everyone is most interested in fees, so let’s get to this bearing in mind that some fees may vary.

Item	Who pays	Fees
Transfer Tax	Solely by the Vendor	2% (sale price or value assessed by stamp commissioner)
Real Estate Broker	Solely by the Vendor	5% plus GCT
Stamp Duty	Usually shared equally by vendor/purchaser. Note however that this is in fact the purchaser’s sole obligation)	$5000
Registration fee	Shared equally by vendor/purchaser	.5% of sale price
Agreement for sale	Shared equally by vendor/purchaser	Varies but typically $100,000 may attract GCT
Attorney’s Fee	Vendor and purchaser each retain and pay their own attorney’s fees	3% of sale price (negotiable) may attract GCT
Letters of Possession	Shared equally by vendor/purchaser	Varies but typically $15,000 to $20,000 (may attract GCT)

Other fees may be incurred subject to the circumstances of the sale.

So, how much money goes into my pocket after the sale?

Let us start by clarifying that if the property is sold for $20M, you will not get $20M in hand on completion of the sale.

Calm down.

The amount of money you get after the sale will vary and is dependent on what had to be done before and during the sale. Remember all those fees above? Consider also that if there is a mortgage on the property, this will be ultimately deducted from the sale price and paid over to the mortgagee including the costs for discharge of mortgage.

Take comfort in the fact that your attorney is obligated to provide you with a Statement of Account detailing all deductions from the sale price. This will include all the fees listed above and other costs such as the settlement of any outstanding property taxes, outstanding strata fees, utility bills, etc. which the vendor is responsible for paying up to the completion of the sale and before granting possession of the property.

Carefully review your Statement of Account and do not be afraid to ask your attorney to explain any item you do not understand.

How long is all this going to take?

 Depends. 

The time to complete a sale depends on whether it’s a ‘cash’ sale or a mortgage transaction.

Cash Sale

A routine cash sale could arguably be completed within 30 days. This is me being terribly optimistic, however, as the Stamp office alone can take up to 4 weeks just to provide an assessment of the taxes then add another 2 to 3 weeks at the Titles Office for registration when you factor in the impact of the pandemic. I would say that a more realistic timeline for a cash sale is therefore 60 to 90 days.

Mortgage

A mortgage sale is most likely to take about 120 days (sometimes longer). If you have already read my article on buying property in Jamaica, then you know the Purchaser has several hurdles to jump to qualify for the mortgage before obtaining a letter of undertaking from the institution. This process takes, on average, between 30 to 45 days with the remaining period for completion.

Sigh. I live abroad. Do you really need me to do all of this?

Seriously, it’s not that bad. Your lawyer does most of the work and can courier documents for you to sign, notarize and return.  But the short answer is, no.  If you have a trusted family member or friend you may also provide them with a Power of Attorney to act on your behalf in dealing with the sale. Note, however, that this will also be at an additional cost and the Power of Attorney will need to be stamped, recorded and registered to be valid.

Whew!

I know, I know I have given you a lot to think about. See why you need an attorney? In summary though, here’s what you need to remember if you are selling property in Jamaica:

• Retain a lawyer
• Find your title
• Engage a realtor or be prepared to do the work
• Relax and be patient. Do not be stressed when there are hiccups or delays. Your lawyer will get you through those issues.
• Get paid (Remember not the full sale price – your lawyer will provide a statement of account)

See that wasn’t so bad.

Have you sold property in Jamaica before?

Let’s talk! What was your experience like?

 

Please note that while the writer is an attorney-at-law, this article is for general information purposes only and does not constitute legal advice.