1. Q. What is the purpose of the Real Estate Board?
A. The Board was established under the Real Estate (Dealers & Developers) Act 1987 to ensure that all persons who practise the business of Real Estate, that is, Dealers, Salesmen and Developers, maintain an acceptable standard of professionalism.
2. Q. How does the Board ensure the performance of Dealers and Salesmen?
A. This is done by:
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Maintaining a Register of Dealers and Salesmen who apply for registration meet the academic requirements needed to practise real estate business and meet the fit and proper criteria established by the Act; |
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Issuing annual licences to those persons listed in the Register, and who wish to practise real estate business following payment of the prescribed licence fee to the Real Estate Board; |
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Board Inspectors visiting the offices of Dealers to ensure that proper records are maintained, including clients' accounts; |
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Ensuring that courses in real estate are available to persons who wish to enter the profession or enhance their professional qualification. |
3. Q. How does the Board ensure the professionalism of Developers?
A. This is done by:
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Registration of each scheme to be undertaken by developers of land intended for sale, that is, land to be subdivided into lots of six units and over on the basis of approvals obtained from a local planning authority: Kingston & St. Andrew Corporation or Parish Council; |
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Monitoring activities of developers once registered, to ensure that all deposits paid to the developer for units in a scheme are placed in a Trust Account maintained in an authorised financial institution. Withdrawal of funds prior to completion of the scheme by the developer is only permitted under certain conditions. |
4. Q. I am a registered Developer undertaking a town house scheme of 12 units. I have taken deposits from 3 persons amounting to $9m. I understand that I need to register a charge before I draw down on the money from the bank. Can you explain this to me?
A. If you intend to use deposits taken under contracts as part of scheme financing, prior to withdrawal of funds from the Trust Account (up to 90% of deposits), you must register a charge in favour of the Real Estate Board on the Registered Title to lands subject of the scheme. This is done at the Registrar of Titles office. This charge is effectively a Mortgage, and will therefore carry a number. The charge will be in respect of all monies received under contract, and can only be removed by way of a Release signed by the Chairman and the Secretary of the Real Estate Board, upon their satisfaction that you have fulfilled all the conditions of your contract with the purchaser.
There is no cost to register the charge and a sample of the charge is in the Real Estate (Dealers and Developers) Act.
You must present a copy of the charge when registered to the bank holding the Trust Account, together with a Certificate from a Quantity Surveyor certifying the value of the work done, prior to withdrawal of funds.
5. Q. I intend to buy a house advertised by a real estate dealer. What do I need to do?
A. You should consider engaging the services of an attorney-at-law to ensure that your interests are fully addressed. In any event, you should ensure that the vendor of the house is in a position to transfer Title to the property upon completion of the sale. Once this has been ascertained, you will need to enter into an Agreement for Sale. The vendor's attorney usually prepares this agreement for the signatures of the vendor and the purchaser. Upon execution of the Agreement, the purchaser is usually required to pay the vendor a deposit of 10%; the Agreement may require a further payment of at least 5% to facilitate the payment of Stamp Duty and Transfer Tax chargeable on the transaction. The balance of the purchase price is usually payable on completion.
After signing the contract it would be wise for you to lodge a caveat against the title to protect your interest. You should also consider insuring the property, as risk will pass to you once the Agreement for sale is executed and stamped, unless otherwise stated.
6. Q. The owner of the land I am buying has suggested that for convenience I use his attorney-at-law. Is this advisable?
A. This is not advisable. To avoid conflict of interest you should employ your own attorney-at-law to whom you should refer the contract for sale which is usually prepared by the vendor's attorney. This is also to ensure that your interests are fully protected.
7. Q. What are the costs involved in a real estate transaction?
A. Costs involved by a purchaser on a transfer of property amount to approximately 4.75% of purchase price, broken down as follows:
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Stamp Duty of approximately 3% of purchase price (shared by purchaser and vendor equally); |
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Registration fee of approximately 0.5% of the purchase price (also shared by the purchaser and vendor equally) payable to the Registrar of Titles, 23 1/2 Charles Street, Kingston. |
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Recording fee if unregistered land, a nominal sum; |
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Legal fees for acting for a purchaser in the transfer of a Title range from 2% to 3% of the purchase price, exclusive of General Consumption Tax of 15%. Please note that each party has to pay his own attorney's fees for the transfer; |
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Additional legal fees are often incurred in respect of the preparation of the Agreement for Sale and preparation of the requisite TR 1 Forms (to effect change of ownership on the Tax roll), letters to the utility companies, and letter of possession. |
Please note the Transfer tax of 4% of the market value of the property is borne by the vendor.
8. Q. What is the standard commission paid to a real estate dealer on property sales?
A. The standard commission is usually 5% of the sales price. This is paid by the vendor together with General Consumption Tax of 15% payable on that commission.
9. Q. I will be requiring mortgage financing to assist me in completing a purchase of real estate. Where can I source some financing?
A. The most common source of financing is a building society mortgage loan, so you might start off by contacting a building society. In this regard, the Building Society Association of Jamaica, 17 Belmont Road, Kingston 5, should prove helpful.
Financing is also available from insurance companies, commercial banks and merchant banks. Commercial banks may also grant purchasers interim financing to facilitate completion of the purchase while other funding is being sought. If a purchaser is obtaining financing, additional costs will be incurred, as the purchaser will be responsible for the legal fees for preparation of the mortgage, documentation and Stamp Duty, of approximately 6% of the loan amount. This is generally referred to as the closing cost.
10. Q. I will be requiring mortgage financing to assist me in completing a purchase of real estate in Jamaica. What are the costs related to the mortgage financing?
A. The costs will be:
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Commitment Fee: 1%-3% depending on the Financial Institution; |
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Stamp Duty on mortgage and copy mortgage: $1.00 per $200 of loan amount, plus 25% of this figure, plus a further sum of $110; |
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Registration Fee: 0.5% of loan amount, but reduced to half this amount if mortgage is to be registered simultaneously with transfer. |
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Legal Fees: 1% to 2% of loan amount plus General Consumption Tax of 15% on legal fees. |
You should check with a mortgage financing institution to verify the above. You will need to get a Valuation Report from a professional Appraiser. The Real Estate Board can supply you with the names and addresses of persons licensed to do appraisals, but before selecting one you should ascertain from the mortgage granting institution if he is listed on its Panel of Appraisers.
11. Q. Six months ago, I paid over to the vendor's attorney the balance of purchase money due on the house I bought. Why cannot I receive the Title?
A. You should ascertain from your attorney-at-law the precise reason preventing transmission of the duplicate Certificate of Title in your name.
A sale transaction depending on its complexity may take approximately 1 to 4 months from the signing of the Agreement for sale to completion. Completion usually takes place when the balance of the purchase money is paid to the vendor in exchange for the duplicate Certificate of Title, duly endorsed in the name of the purchaser in the case of a registered title. In the case of a common law title, completion is dependent on exchange for all deeds and documents relating to the ownership of the property, and the executed deed of conveyance.
12. Q. What is a Caveat?
A. A caveat is a document lodged with the Registrar of Titles by a person claiming an interest in land registered under the Registration of Titles Act or Registration (Strata Titles) Act. Its objective is to prevent the registration of any change in the proprietorship or of any dealing with the property unless such dealings are made subject to the purchaser's interest. The Registrar of Titles may also in his own right lodge a caveat. You should contact the Registrar of Titles, 23 1/2 Charles Street, Kingston, or your attorney-at-law for more detailed information.
13. Q. What are Transfer Tax and Stamp Duty?
A. Transfer Tax is a payment to the Commissioner of Stamp Duty at the rate of 4% of the sale price or value for which the property is transferred. Transfer Tax is borne by the vendor, but it is the purchaser who is required to pay over the Tax to the Commissioner, and recover the amount from the purchase price.
Stamp Duty is calculated at a rate of approximately 3% of the sale price for which the property is transferred. The purchaser and vendor usually share payment of Stamp Duty equally. Please not that a conveyance of land is required to be stamped within 30 days after it is signed to avoid penalty. The penalty for late stamping is quite substantial. If an Agreement for Sale is not stamped, it cannot be admitted in Court as evidence, in the event that either the vendor or the purchaser wishes to use it for the enforcement of the Agreement.
You should contact the Commissioner of Stamp Duty, 111 Harbour Street, Kingston, for more detailed information.
14. Q. The land I intend to buy only has a common law title. What is the implication of this?
A. Registered Titles: Regarding land that is registered under the Registration of Titles Act, an original and a duplicate Certificate of Title are issued. The original Certificate is field at the Office of the Registrar of Titles, 23 1/2 Charles Street, Kingston P.O., and the duplicate title is retained by the proprietor of the land. The Registration of Titles Act authoritatively establishes title by declaring under a guarantee of indemnity that ownership is vested in a named person, subject to the encumbrances noted on the title.
Common Law Titles: A common law title exists where the land has not been registered under the Registration of Titles Act. Proof of ownership is established by possession and/or documentation. Unlike a registered title, the owner of land subject of a common law title must prove to a prospective purchaser his right of title by instrument or facts establishing ownership. Each time property, subject of a common law title, is transferred, a new conveyance has to be prepared and recorded at the Registrar General Department, Central Village, Spanish Town P.O., within three months of its execution. The process of recording gives notice to third parties of the purchaser's ownership.
15. Q. I am buying a lot of land in a subdivision scheme. What would you advise m to do before I enter into a contract and pay down on the land?
A. You should engage the services of an attorney-at-law to peruse any Agreement for Sale as prepared by the vendor. In any event, prior to purchasing any property, a prospective purchaser should always do the following:
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Determine if approval has been granted by the relevant Parish Council for the subdivision of the land, and the date of approval; |
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Obtain a Surveyor's Identification Report on the land. This is to ascertain whether the boundaries of the land on earth agree with the land described in the Registered Title. The report should also state whether any restrictive covenants have been breached; |
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Obtain a Valuation Report from a professional land appraiser. This is to determine if what you are paying for the land represents true value. |
16. Q. I bought the property on which I am now living. It has no Registered Title, and I am worried about this. How do I obtain a Title?
A. It is estimated that approximately 55% of land in Jamaica remain unregistered, so your situation is not unique. First, you could check with the Registrar General Department, Central Village, Spanish Town P.O., to ascertain whether a common law title for your land has been recorded there.
You can register the land yourself, but you should consider seriously engaging the services of an attorney, for purposes of getting a Registered Title, will need to:
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Get the property surveyed by Commissioned Land Surveyor who will prepare a survey diagram, which he must send to the Survey Department, 23 1/2 Charles Street, Kingston, where it will be checked and approved; |
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Complete an application form to bring land under the Registration of Titles Act, obtainable from the Registrar of Titles, 23 1/2 Charles Street, Kingston, and have it stamped at the Stamp Office, 111 Harbour Street, Kingston; |
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Obtain a Statutory Declaration that you are the owner of the land; |
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Obtain two supporting declarations from persons who have known about the existence of the land for at least 13 years; |
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Obtain other supporting documents acceptable to the Registrar of Titles that can show a history of ownership, such as Purchase Receipts, Common Law Title and probated Will Tax receipts; |
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Get a current Tax Payment Certificate. |
All the above documents, along with the Surveyor's diagram, must be submitted to the Registrar of Titles, where you will be required to pay a fee. The diagram will be referred to the Survey Department to ensure (a) that the land has not been registered previously, and (b) that the boundaries do not encroach on any other land.
The documents will then be sent to the Referee of Titles for approval.
Advertisement must appear in a daily newspaper at least once per week for three weeks. Seven weeks after the publication of the first advertisement, the Registered Title can be issued after the final fee is paid to the Registrar of Titles, based on value of the land.
17. Q. I need to buy a house. Who should I contact?
A. Contact a licensed Real Estate Dealer and outline precisely the type of property you need; number of bedrooms, location preferred, land size, etc. There are 314 Licensed Dealers currently practising real estate business throughout Jamaica. The Real Estate Board, 1 Surbiton Road, Kingston 10, Telephone: (876)926-9748-9, 960-9287,920-2950 Digicel: 391-9937 or e-mail: info@reb.gov.jm Fax: 926-0010 will supply you with the names and addresses of all Dealers licensed to practise up to March 31, 2010 for a fee.
From the advertisement of a development scheme proposed for a north coast location aimed at persons wishing to retire in Jamaica, I note the following;
"Phase I...will have a total of 24 plots divided into two areas of 12...plots in Phase II development, ten 1/6 acre plots will become available for 2-Bedroom homes".
18. Q. Is the development as advertised considered acceptable? Recently Jamaicans are reporting some bad experiences with real estate developers.
A. This clearly is a development scheme as defined under the Real Estate (Dealers & Developers) Act. All developers of schemes of six units and over must be registered with the Real Estate Board, prior to commencement of construction, advertising and prior to entering into contracts for sale of units.
The Real Estate Board has no record of registration of this developer. There is no evidence that he has a Registered Title to the land, or that he has obtained approval from the local planning Authority for the parish in which the land is located. The Act further requires that all advertisements relating to development schemes must clearly contain the following information:
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The total floor area of each type of building unit in the scheme; |
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The sale price of each type of building unit; |
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The precise location of the land and its physical features; |
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The estimated time of commencement and completion of the scheme; |
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Whether contracts for purchase of units in the scheme include an escalation clause; |
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When and from whom approvals for the scheme were obtained; |
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When and Where the plans and drawings may be inspected; |
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The composition of the walls, flooring and roof of each building; |
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The name and address of the developer of the scheme. |
This scheme if advertised in Jamaica would be in contravention of the law, and would expose the developer to substantial fines. As a cardinal rule, all buyers should beware that does not fulfill the above requirements. You should therefore avoid dealing with the promoters of the scheme until they comply with the above requirements.
19. Q. Two years ago I signed an Agreement with a developer to buy a town house in a development scheme for four million dollars. I am now informed in a letter from the developer that the town house will now cost me seven million dollars. How can this be fair when the price stated in the contract, which we both signed, is four million dollars?
A. This is a perfect example of the maxim 'caveat emptor' - let the buyer beware.
Yes, the price agreed at the time of signing of the contract is four million dollars. However, you also agreed in the contract to pay the escalated price as certified by a Quantity Surveyor, following completion of the town house.
The relevant section of the contract states in part: "In the event that the cost for construction of the town house ...is increased to the builder as a result of increased wages, or materials or any additional costs due to stoppage of work or as an increase of interest charges paid or payable by the builder to the financial institution or party providing finance or increased costs arising from the devaluation of the Jamaican dollar or in the building industry or as result of variations approved by the architect or quantity surveyor or engineer the amount to be paid hereunder for the town house shall be increased by such amounts and the owner within seven days of being notified by the builder shall pay in cash to the builder such increased costs...A Certificate from an Architect or Quantity Surveyor or Engineer as to the amount of such increases shall be final and binding on the parties hereto...".
You might consider, nevertheless, contacting the developer to ascertain at which point in time the calculation of escalation commenced, and what percentage of construction was completed up to that point.
20. Q. I bought an apartment ten months ago. I have received a summons to pay six months maintenance fees ($10,000) said to be owing to the Strata Corporation. I was not told about maintenance fees when I bought the apartment, I was only told about monthly mortgage payments. Can you explain what maintenance fees are?
A. Maintenance fees are quite separate from mortgage charges. Maintenance fees represent charges which go towards a fund to meet monthly expenses for running the common property of an apartment complex, and to meet the payment of annual insurance premiums for the building containing the apartments. The Registration (Strata Titles) Act requires that following registration of a Strata Plan with the Registrar of Titles showing the amount of Strata lots, all proprietors (i.e. registered owners) effectively become a body corporate, which is required to perform some eight (8) functions, including maintenance and management of the common property and payment of insurance. To do this, the corporation must by law:
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appoint an Executive Committee made up of apartment owners appointed by them at an Annual General Meeting; |
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establish a fund sufficient to maintain the apartment complex in good order. |
The common property is held by the owners as tenants in common, by way of shares proportional to the unit entitlement of their respective lots.
Maintenance fees are worked out on the basis of an annual budget prepared by the Executive Committee and approved by owners at the AGM, and are a legal charge applicable to each apartment owner. Please not that the Executive Committee is required by law to keep proper books of account in respect of all monies received and spent for the inspection of apartment owners.
You should ask your Executive Committee to explain the basis of your monthly charges in context of expenditure, and the annual audited accounts, also required by law.
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