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How to Purchase Land

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By Ravi Nanga

THE purchase of a property is usually one of the most important and expensive investments most persons will undertake.

In order to ensure that the process goes smoothly and your investment is protected it is important to understand the basics of such a transaction.

Again, the majority of persons will normally undertake a mortgage in order to fund such a purchase, in which case the financial institution providing the financing will require its own attorneys to take charge of the transaction in order to ensure their security is protected.

While an agreement to purchase land is essentially a contract between two parties, in relation to the purchase of land, there are certain clauses that are normally found in such contracts that carry special meaning and can affect the parties’ rights and it is important that they understand the implications of these terms.

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Firstly, contracts for the sale of land must be in writing and secondly the deed transferring the property must be done by an attorney-at-law.

It is advisable that you ensure that the attorney is properly registered and is in possession of a current Practicing Certificate.

The contract is the first step in the purchase of land and the deed in the final step, whereby the purchaser becomes the owner of the land.

Transactions involving the transfer of interests in land are commonly referred to as conveyancing. What many persons are not aware of is that the practice of conveyancing is regulated and the fees that can be charged for the preparation and execution of deeds are prescribed by law. Therefore, the legal fees payable in respect of a transaction involving land depend on the value of the transaction.

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Regardless of the attorney that you retain in order to guide you through the transaction, the fees are standard, so that no matter which attorney a person goes to, in respect of the same transaction, the fees are supposed to be the same.

Therefore, in retaining an attorney to guide you, as the client you are entitled to ask the attorney what are the fees that are payable, ask for an explanation of the breakdown of the fees and how the schedule of fees work, so that you are satisfied that you are being charged correctly.

The first step after you have identified a property will be to enter into the agreement for sale. The agreement for sale should identify the vendor and the purchaser, the property, the cost of the property, the amount of the deposit that will be paid, how the balance is to be paid, the provision of what is referred to as the title documents, when the sale is to be completed and what are the consequences of failure to complete.

Agreements for the sale of land usually provides for the payment of a ten percent deposit and the payment of the balance within 90 days, subject to the vendor proving that he has the unencumbered title to the property.

The agreement for sale can be tailored to meet the specific circumstances of the particular transaction.

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The reason for the provision of 90 days to complete the transaction is to allow the vendor to search the title and satisfy himself that the vendor has proper title and can transfer the property upon the payment of the balance of the purchase price.

The vendor will provide a copy of the deed by which the vendor came to own the property, as well as provide a copy of the last land and building taxes receipt and a water clearance certificate from the Water and Sewerage Authority (WASA).

The need for these documents is to allow the purchaser to properly identify the property for the purposes of searching title and to ensure that there are no liens on the property.

If the land and building taxes were not paid when they were payable, the State has the power to sell the land in order to recover these taxes regardless of who is the current owner. If the water rates are not paid up, WASA can also sell the property in order to recover the outstanding rates regardless of who is the current owner.

An attorney will need to search the property in order to ensure that the property does not have any other liens against it, for example subject to a mortgage or if the vendor has judgments against him against in respect of which the land can be sold to satisfy such judgments or that the property is properly in the vendor’s name. Once there is proper title, the transaction can be completed, the balance of the purchase price paid and the property transferred to the purchaser.

In the event the vendor is unable to complete the sale, there are number of remedies that the purchaser can pursue. The appropriate remedy will depend on the reason why the vendor was unable to complete the sale. In the event the purchaser is unable to complete the purchase by the time fixed for completion, it is possible for the vendor to forfeit, or keep, the down payment that was made.

Because the purchase of land is such a large investment for most people, it is advisable that you retain the services of a reputable attorney who is experienced in the field of conveyancing at the beginning of the transaction in order for the transaction to be completed smoothly and to avoid potentially costly legal conflicts.

Ravi Nanga is an attorney-at-law

[Please note that this article is intended only to provide general information on the topic being addressed and should not be taken as providing legal advice. In order to be properly advised it will be necessary for an attorney to examine the relevant documents and obtain the necessary instructions before properly advising as to rights and obligations]

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