Monday, June 23, 2008

Buying Real Estate in Jamaica: Subject to Tenancy

As I had pointed out in an earlier post. The contract will usually state whether or not the property is sold with vacant possession. If yes the vendor must remove all persons and goods from the premises as the purchaser is entitled to possession. If the property is sold subject to existing tenancies however the purchaser is entitled to the rents and profits of the property apportioned as of the date of completion.

If the property is tenanted and the purchaser wants vacant possession, it is very important for him to be aware of the fact that unless the property is exempt under the Rent Restriction Act there are certain restrictions on a landlord/owner's right to possession of the premises as against a tenant. The landlord/owner who contracts to give vacant possession on completion is obligated to do so. He should therefore serve a notice in accordance with the Act but if the tenant does not leave in accordance with the notice, he must go further and obtain a court order for recovery of possession.

Many are of the view that the Rent Restriction Act is favourable to tenants. Some vendors, mindful of the potential delays and hassle of engaging in a court case, are therefore unwilling to offer vacant possession and prefer to sell subject to the tenancy.

In some cases too, the tenant gives assurances of their willingness to leave but then they renege as they too understand the benefits of residing in controlled premises.

On the other hand a purchaser who buys for investment purposes or who does not want to reside in the premises immediately may wish to keep the tenant. This purchaser should ensure that that tenant is one who honors his responsibilities, by making careful inquiries of the vendor/landlord of the terms of the agreement he has with the tenant and the extent to which the tenant has complied. It is that purchaser who after all will be the landlord on completion.

Wednesday, June 11, 2008

Co-ownership : Real Estate in Jamaica

Recently I had to deal with a situation where property was held by two people as tenants-in-common. They both died and it created some problems because the estates of both deceased proprietors had to be administered in order for the property to be sold.

Where property is held by more than one person they hold it mainly as joint tenants or tenants-in-common. Some people don't know the difference between the two and make uninformed choices or don't choose at all and "end up" holding it based on the whim of one of the owners or an adviser who did not advise.

Joint Tenancy

This is a rather intimate style of ownership. For this kind of co-ownership has what is called the four unities ie. unity of possession, unity of time, unity of title and unity of interest. The effect of this is that each co-owner is equally entitled to possess any part of the property, each acquires his interest at the same time and under the same document of title and each has the same interest in the land, in other words each joint owner owns the whole property. Out of this comes the primary, distinguishing characteristic of a joint tenancy: the right of survivorship. This right is simply that on the death of one joint owner the survivor(s) take the interest of the deceased. So the interest of the deceased does not pass under his will or an intestacy.

Tenancy-in-Common

In this scenario each co-owner has a distinct share in the property which has not yet been divided. So one says they hold property in undivided shares. The only necessary unity is possession. Each tenant is entitled to possess any part of the property since one can't point to which part is his share but they may hold 50% each or 60% to 40% or 30% to 30% to 40% and so on. In this case you will appreaciate that there is no right to survivorship. So when one co-owner dies his interest devolves according to his will or the laws of intestacy.

In light of the above you can understand why there is a presumption in law in favour of a joint tenancy. It makes it easier to manage. As you will appreciate if there are say three (3) co-owners and one (1) dies then the other two (2) become the owners of the deceased's interest. All that is necessary is for the death of the deceased joint owner to be noted on the title. In the case of a tenancy in common the deceased person's Will would have to be probated or a grant of letters of administration obtained if he died without a will (intestate) so that his heirs could inherit his share in the property. This can lead to significant fractions of interest in properties, delays, confusion and difficulties in conveyance.

One can understand however why some persons may wish to own distinct interest in land separate from their co-owner especially if they are concerned that they might die subsequent to their co-owner and they wish to leave something for their children in whom their co-owner may not be interested.

It is worthy to note that a joint tenancy can be severed and the same property can then be held by the same co-owners as tenants-in-common; moreover and we won't go into detail with this but even though you own property as joint tenants in law, you may hold as tenants-in-common in equity.

Wednesday, June 4, 2008

Death of the Registered Proprietor

There may be a situation where a purchaser seeks to buy real estate and discovers that the owner has died. There may even be a more difficult circumstance, that is, where the Vendor dies in the middle of the transaction.

Death before Contract

In the case where the Vendor has died prior to the execution of a contract for sale then the question is who is now the proper person to handle the affairs related to that property and if the property is to be sold who can sell same.

If the Vendor has left a will naming an executor then the executor can sell same but most lenders will require proof of the executor's office by requesting to see a grant of probate. Though an executor steps in the shoes of the deceased on death, this request makes sense and a prudent Purchaser who is paying cash without resort to a lender should follow suit. If not he runs the risk of entering into a contract with a "Vendor" who has no authority to sell and who cannot effect a transfer of the property.

If the Vendor has not left a will naming an executor than an Administrator being the deceased's personal representative is a person who could be authorized to sell. In this case the proof of authority is a grant of letters of administration.

In the above situations a lawyer will be able to guide a Purchaser as to the best way to proceed so that he does not fork out funds to pay a deposit to buy property from someone who is not authorized to sell.

Death after Contract

If the Vendor dies after the contract is signed by all parties and the deposit is paid by the Purchaser then the personal representative of the deceased ie. Executor or Administrator can complete the transaction.

There is a useful and interesting section under the Registration of Titles Act of Jamaica which provides that the Registrar of Titles may in his discretion make a vesting instrument, vesting land in a purchaser and issuing title in the name of the Purchaser where there is sufficient evidence of certain conditions namely:
  • the land has been sold
  • all the purchase money has been paid
  • the purchaser with the agreement of the vendor/his personal representative has entered into possession of the land
  • the land cannot be transferred to the Purchaser as the vendor/his personal representative is dead, absent from Jamaican or cannot be found or such circumstances exist to make it impractical to obtain the signatures of the vendor/his personal representative in a reasonable time.
If a Purchaser finds himself in the situation outlined above, it is recommended that he consult an attorney to make the necessary application to the Registrar of Titles so that he can obtain title in his name.