Step by step – Real estate transaction in Jamaica
THE FOLLOWING steps are common to most real estate transactions in Jamaica:
EXECUTION OF THE SALE AGREEMENT
Purchaser signs agreement and pays a deposit, which is usually 10 per cent of the purchase price, but may vary, depending on the terms agreed on by the parties. Vendor signs agreement.
PAYMENT OF TRANSFER TAX AND STAMP DUTY
Agreement is sent to the Stamp Office for the value of the transaction to be assessed. Vendor’s attorney pays assessed transfer tax (five per cent) and stamp duty (four per cent) and registration fee (one per cent). These amounts are usually paid from the deposit. Agreement is stamped.
MORTGAGE FINANCING (OPTIONAL)
This step is taken when the purchaser is obtaining a mortgage to finance the purchase. Purchaser completes mortgage application. Purchaser gets letter of commitment for loan. (This may take 45 to 60 days from the date the vendor signed the agreement, but will vary, based on the terms of the agreement). Mortgagee’s attorney issues letter of undertaking to the vendor’s attorney for loan proceeds to be paid.
ACCOUNT FOR PURCHASE MONEY AND EXECUTE TRANSFER DOCUMENTS
Vendor’s attorney prepares statement of account for the purchaser and instrument of transfer and sends them to purchaser’s attorney.
Vendor’s attorney receives letter of undertaking from purchaser’s attorney for shortfall.
Purchaser signs transfer. Vendor signs transfer. Vendor’s attorney sends transfer for cross-stamping at Stamp Office.
TITLE TRANSFER AND MORTGAGE REGISTRATION
(i) Mortgage-financed sale Vendor’s attorney sends registrable documents (i.e., transfer endorsed by stamp commissioner and title) to mortgage company’s attorney. Mortgage company’s attorney prepares mortgage documents for signing by the purchaser. Mortgage documents, transfer and title are sent to the Office of Titles for registration.
(ii) Cash sale
Vendor’s attorney sends registrable documents to Office of Titles.
UPDATE TITLE
The Registrar of Titles updates the title by noting the transfer to the new owner, purchase price and mortgage (if any).
HANDOVER OF MONEY AND KEYS
Purchaser’s or mortgage company’s attorney pays the balance of the purchase price and other fees to vendor’s attorney.
Vendor’s attorney gives letter of possession (and other letters to utility companies) and title to purchaser’s attorney. (In a mortgage-financed sale, title will be retained by the mortgage company).
Vendor’s attorney prepares final statement of account for the vendor, settles any outstanding bills and pays vendor the net proceeds of sale.
If everything goes according to plan, a cash sale may be concluded within 30 days and a mortgage-financed sale usually within 120 days.
There are pitfalls that can occur during real estate transactions which can be avoided by a prudent purchaser. I will highlight some of those in next week’s article.