Buyer Beware

Caveat Emptor translated means “Let the Buyer Beware”. Aware of what exactly though in relation to the purchase of land?
When someone embarks on the purchase of property it can be the most exciting and accomplished endeavour they take on. Regrettably, this process of owning this wonderful investment can quickly become a nightmare for lack of knowledge.
There are precautionary steps one should take before, during and after the process, all of which work to protect the purchaser from the possible ills that may come with the transaction. Let us examine a few of these precautions.
Verify the ownership and right to sell the parcel of land before paying the first dollar you or your attorney should obtain a copy of the title. A title for land is a public document and a copy may be obtained from the Office of Titles. It will show the location of the property and the names of the proprietors of the land. A look at the last Transfer noted on the title will confirm if the person claiming to be owner/ seller of the property is actually the owner of the land. If he is not the owner then he must produce a Power of Attorney duly stamped and recorded in Jamaica or registered at the Titles Office to be able to legitimately sell the property.
If the registered proprietor is deceased then the purported Vendor must have the relevant Grant of Representation from the Court to act on behalf of the estate of the registered proprietor in the sale. If the title reflects two owners on title ascertain that both are alive and if one is dead be aware that the surviving joint tenant will have to note the death of the deceased joint owner before the property can be sold to you.

ENCUMBRANCES ON THE FACE OF THE TITLE
The title will also reflect the encumbrances on the title such as restrictive covenants, mortgages and caveats. These encumbrances can also affect the ability of the Vendor to sell the property.

CAVEATS
While the title will usually detail all the registered mortgages it is not so with caveats. Any person who claims to have a proprietary interest in land and who believes that his interest is at risk, can lodge a caveat against the title in relation to that property to prevent the registration of any dealing in the title. Examples of dealings are transfers or mortgages. The person who lodges a caveat is called a Caveator. Before a purchaser’s name can be registered on the title, the Caveator’s interest would first need to be resolved. The presence of a caveat on the title is often not noticeable from looking at the face of the title. A Title search is therefore necessary to determine whether there are any caveats and if so to verify the nature of the caveat.
Outside of a caveat search the existence of a caveat does not come to light until a dealing [usually a transfer] has been submitted to the Registrar of Titles and usually it is discovered at the point when the sale is about to be completed.
At this point the efforts to have the caveat removed will have implications for the transaction at hand and can delay the successful completion of a sale and where the caveat cannot be resolved it can result in the cancellation of the sale if the caveator and the registered owner cannot resolve the claim. Resolution becomes less likely where the registered owner has absolutely no knowledge of the interest claimed by the caveator or indeed the caveator himself. In those instances withdrawal of the caveat becomes less likely hence the sale would effectively have to be aborted. The resolution of a caveat often involves litigation which can be protracted and this can be disastrous for a purchaser who is relying on mortgage financing to purchase the property.

RESTRIVE COVENANTS
In most if not all instances where a purchaser is getting a mortgage to finance the purchase, the mortgage institution will require the presentation of a Surveyor’s Identification Report. This report will show whether there are any irregularities in relation to the boundaries on the ground whether in relation to distance of building to boundary and whether there has been any encroachment on the land.

When someone purchases a property through cash, it is often tempting to forego the Surveyor’s Identification Report. This is however unwise as even in a cash sale it is in the best interest of the buyer to obtain a Surveyor’s Identification Report soonest so that the breach can be remedied by the seller.
The cash buyer especially must beware of this because if a survey report obtained after the sale shows a breach it will then be his sole responsibility to remedy the breach at his expense. Once becoming aware of a breach however the parties are free to make their own conditions of sale and agree on how the breach is to be rectified.

PAYMENT OF MONEY
When doing any financial transaction, it is always important to be cautious and vigilant when making payment of large sums. On the commencement of sale, a deposit is usually required by the Vendor. In the climate of our housing market today persons will sometimes find it difficult to secure the deposit that is needed. Even when they have successfully done so, it is often a challenge to find funds out of pocket for the Valuation and Surveyor’s Identification Reports, their half costs and fees also expenses of the purchase.
The deposit is primarily used as an advance payment to settle the statutory taxes and duties such as stamp duty and transfer tax. These must be paid to the Tax Administration Department and the proof of payment endorsed on the Agreement for sale before the purchaser’s name is registered on the title. Out of exuberance, a prospective purchaser may pay a deposit to the Vendor directly who in turn would use that sum to his personal benefit. This often times would occur when both Vendor and Purchaser are not represented by an Attorney and neither party understands what is involved in the process of selling and buying land.
To advance the matter the purchaser will now need to identify additional funds to pay as a further payment to satisfy those taxes and many may not be able to do so. The transaction will then be in jeopardy and the Vendor would probably not be in a position to refund the purchaser his initial deposit which is a situation that can easily lead to violence.

The most important take away is that it is in the best interest of both parties to seek their own independent legal advice and retain the services of an Attorney who can guide the process and protect your interest.
It is hoped through this article that when making that most important decision to purchase property you will be informed and therefore will avoid some of the nightmare experiences which can occur because of lack of knowledge.
Nicole Sappleton is a Partner at Karene N. Stanley & Company Attorneys-at-Law and an . Email feedback to nsappleton@knscolaw.com.
adjunct Lecturer at the Mico University College. She may be contacted at nsappleton@knscolaw.com