Thinking About Buying Property?
Buying property is a serious investment and with any investment there may be risks that you need to mitigate. If proper due diligence on a property is not carried out, there is a chance that you might not get what you think you are paying for. To ensure your money is well spent, there are a few things you should know:
First, you should note that when you begin initial negotiations for the purchase of property, the onus is on the purchaser to ensure that this venture is legitimate and that proper due diligence in respect of the property is carried out.
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 vendor is the actual owner. This can be done by purchasing a copy of the Title from the National Land Agency (“NLA”) and comparing the two. It is recommended that the title is reviewed by an attorney-at-law who will be able to assist with highlighting any inconsistencies, mortgages, caveats or other encumbrances on the face of the title. Your attorney should also do a caveat search at the NLA which will identify equitable interests claimed by third parties which may not be endorsed on the title or apparent from a visit to the land.
You may want to visit the property to inspect as best as possible the actual condition of the land or the building and to check if someone is currently renting the property or if there are squatters. 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. You should also be aware that the permitted use of the land will be dictated by the Development Order covering the area. You should hire 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 also 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 assist with the purchase.
If you plan to build or make additions, it is recommended that you seek advice as there may be approvals you need from the local parish council or other government authorities.
It is best to engage an attorney who can give you specific advice in relation to the due diligence you need to carry out before committing your money. The need to have your own attorney is absolutely crucial to ensure that your interest as the Purchaser is protected. You should not depend on the Vendor’s attorney alone as you are not their client.
Despite potential risks that may arise when buying property, 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 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.
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.