I have made a few posts about property law in The Bahamas; each designed to give information about various different aspects of property law - from renting to owning. This post elaborates on the actual procedure when entering into a conveyancing transaction. It may seem a little daunting, however, the majority of what is set out below is what a Bahamian property lawyer would have in mind when representing you as a vendor (seller) or a purchaser (buyer).
----------
Conveyancing: Contracts for the Sale of Land
The process by
which estate in the land or interest in the land is transferred from
one party to another is commonly referred to as conveyancing. It
ordinarily involves two stages – the contract stage and the
conveyance stage. I will deal particularly with the contract stage as
this is the stage the Vendor or Purchaser will tend to be more
actively involved and therefore should have some basic knowledge of
for his or her benefit.
The contract for
sale of land officially marks the commencement of the sale and
purchase transaction (the signing of the contract by vendor and
purchaser is what creates the legal obligations and binds the
parties).
The contract must
be signed by or on behalf of each party, and if a document is
incorporated by reference, such as a plan, the document which
contains the reference to incorporation is the one to be signed.
Therefore, as long
as all the provisions and specially agreed terms are in writing and
signed by both parties (what is known as “exchange of contracts”)
there is a valid contract.
A typical contract
will deal with two things – the first being the particulars of
sale, describing what is being sold and the second being the
condition of sale, describing the terms upon which the property is to
be sold . Bahamian property legislation generally provides for
certain implied terms where they are not expressed in the contract.
Note however, that any unusual terms of the sale for example, that
the purchase price is to be paid in instalments;
such an unusual term must be contained in the contract of sale.
The terms that are
implied under the Bahamian property legislation are those terms which
are necessary to give effect to the contract and allow the contract
to proceed to completion, such as time for completion, the title to
be shown, whether any deposit is payable, the position in the event
of delay, to name a few..
In dealing with
the contract of sale, it is always vital to bear in mind that the
rule in land transactions is “let the buyer beware”, which means
that the purchaser is required to inspect the property to determine
the condition of the property. This rule however, does not extend to
latent title defects, as the vendor is required to adduce such title
as is required by the contract. There is an obligation to
disclose any latent title defects to the purchaser in advance of
exchange of contract. If not, the purchaser can rescind the
contract for failure to make good title. A latent title defect
is one which could not be discovered by reasonable examination of the
land and includes (but is not limited to) restrictive covenants,
mortgages where the mortgagee is not a mortgagee in possession and
leases where the tenant is not in possession and underground
easements such as pipelines.
In order to avoid
any possibility of an argument over patent or latent defects of
title, it is sound conveyancing practice to set out in the contract
all those title encumbrances subject to which the property is to be
sold.
The vendor’s
full name as shown in the title deeds together with the current
address must be stated with sufficient clarity. Ensure also
that there is no error in the purchaser’s name.
The estate in the
property which is held by the vendor must be sufficiently stated (for
example, whether the estate is freehold or leasehold).
The description of
the property should be clear from the title. If selling a
portion of the land it is important to properly describe the portion
being sold in the deeds. A survey plan is always beneficial for
these purposes. If a plan is used, it can be either "for
identification only or the property can be stated to be "as more
particularly delineated" in the plan. If the plan is
expressed to be for identification purposes only, then the plan will
not be deemed to form an integral part of the description of the
property and in the event of conflict between the verbal description
and the plan, the verbal description will prevail. If however,
the property is "more particularly delineated," the plan
prevails in the event of such a conflict. It follows that this
formula should not be used unless the plan can be properly relied
upon. The plan should always be drawn up by a duly licensed land
surveyor.
Remember that
there may also be certain rights which attach to the property (for
example the right to an easement of drainage or light or passage over
or under a neighbour’s land. This is technically part of the
description of the property and could be added here. The
Bahamian property legislation deems such rights (or “appurtenances”
as they are called) to pass with the land even if they are not
specifically set out in the deed. Make sure that your conveyance
refers to the land “TOGETHER WITH all appurtenances thereunto
belonging”.
Title to the land
must also commence with a good root of title going back at least 30
years in accordance with the Bahamian property legislation. On
exchange of contract, the vendor is required to prove to the
purchaser that he can convey what he has agreed to convey.
Encumbrances
subject to which the property is to be sold must be sufficiently
stated (for example, easements, restrictive covenants, tenancy
agreements etc.) It is important that your contract (and your
conveyance) sets out that the vendor sells and conveys “as
beneficial owner”. The result of this is that there are
covenants given by way of a full title guarantee, namely, that the
vendor covenants that he:
(1) Has the right
to dispose of the property as he purports to (good right to convey).
(2) That he will
at his own cost do all he reasonably can to give the person to whom
he disposes of the property the title he purports to give (further
assurance).
(3) That he is
disposing of the property free from all charges and encumbrances
(monetary or not) and from all other rights exercisable by third
parties other than those about which that person does not know and
could not reasonably be expected to know (freedom from
encumbrances).
Most
real estate sales in The Bahamas are contracted on a gross basis.
The
vendor will pay:
- The real estate agent’s commission (if an agent is involved)
- Their own legal fees - typically 2½% of the gross contract price.
- ½ of the Government Stamp Tax - see Government stamp duty on Conveyances below.
The
purchaser will pay:
- 10% of the purchase price upon signing of the sales agreement as a deposit, with the remainder due at closing together with all other applicable closing costs.
- Their own legal fees - typically 2½% of the gross purchase price.
- ½ of the Government Stamp Tax - see Government stamp duty on Conveyances below.
- Recording fees (generally $4.50 per page, however some different rates apply to specific documents) on the conveyance and other closing documents which need to be recorded.
- Payment of the Investments Board permit under the International Persons Landholding Act (if applicable).
Stamp
duty is payable on Conveyances in The Bahamas as follows:
- Up to and including $20,000 - 4%
- From $20,000.01 to $50,000 - 6%
- From $50,000.01 to $100,000 - 8%
- From $100,000.01 to $250,000 - 10%
- Over $250,000 - 12%
Stamp
duty is generally shared equally (50/50) by the vendor and the
purchaser.
This post is not intended to constitute a legal opinion. It is always advised that you seek the representation of a Bahamian property lawyer when purchasing property in The Bahamas. If you require specific advice, you may contact a Bahamian property attorney by clicking here.
No comments:
Post a Comment