The largest single investment an individual can make is to buy property. There is a large amount of money at stake and hence care should be taken to make sure that the seller is authentic and that the sale itself goes through the proper procedure.Following the global real estate crisis in 2008, Trinidad and Tobago’s home rates dropped by approximately 20 percent. Unlike other countries in the Caribbean, the market in Trinidad and Tobago has not recovered as quickly. A reason for this could the government regulation declared in 2007 that requires foreign investors to acquire a license for all land purchases in Tobago.
Today there is stability in the market and prices rose to approximately 6 percent in 2015 from the previous year. The good news is that the real estate market continues to recover and it is very much a buyer’s market.
However, brokers maintain that the dropping oil prices may prevent the full recovery of the real estate market. Trinidad and Tobago has large oil and gas reserves that cater to an industrial economy that is largely based on petroleum and petrochemicals, especially in Trinidad.
The housing market may receive a boost from the joint efforts of the tourism industry and the government to boost tourism. The increasing number of airline flights can also help in this regard. Trinidad usually draws more international homebuyers who move to the island for work purposes, while Tobago’s is mostly a tourism-driven market.
At current rates, a three-bedroom, two-bathroom single-story house with a two-car garage in Trinidad is likely to start at approximately 310,000 USD, according to some brokers. In the more desirable neighborhoods, modern homes are likely to start at around 550,000 USD in Tobago. Small condominiums in Tobago are known to start at about 390,000 USD, while single-family houses can begin at 550,000 USD.
Most of the buyers in Trinidad and Tobago were British and German nationals, and some from the United States and Canada, prior to 2007. But following the 2007 licensing regulation, foreign homebuyers have reduced considerably. The global financial crisis of 2008 was also a contributing factor. The number of foreign buyers heading to Tobago has significantly decreased. Most Europeans coming to Trinidad for work reasons seek homes on the island.
The basics of buying
All potential foreign homebuyers in Tobago must have a license, while the landholding license is hardly ever needed in Trinidad. Tobago has many areas reserved for tourism development, for instance, Englishman’s Bay and Bacolet Estate were one can obtain a license in about 40 days. But brokers maintain that clients looking to buy in the Bacolet Estate development area should expect the license to be granted in up to six months.
Outside of the areas designated for tourism development areas in Tobago, overseas nationals may apply for a license, but it is not certain that they may receive one. Brokers maintain that lawyers usually charge anything from 1 percent to 1.5 percent of the sale price of the home. It is also advisable to hire a surveyor while negotiating with the buyer. Buyers should reserve almost 10 percent of the sale price of the home for closing costs, including legal fees and stamp duty. The fees of the real estate agent are typically taken care of by the seller. Overseas homebuyers must buy property in Trinidad and Tobago in foreign currency. There are local banks which will negotiate a mortgage in US dollars, but interest rates can be as high as 6 percent.
Hiring a lawyer
Foreign homebuyers are advised to employ a lawyer even though this constitutes an extra expense. A reputable attorney will be able to assist you in evaluating offers, especially those that come with various conditions. A lawyer will also be present to represent your interests during the transaction process, reserve your payment in escrow, analyze complicated mortgages and lease options, peruse contracts and manage the property’s closing process. A lawyer can also advise you on what you need to disclose to a buyer before you purchase property and can assist you in avoiding unnecessary discrimination against probable purchasers.
There are two types of land laws in Trinidad and Tobago, one which is usually called the ‘old law’ system, and the Real Property Ordinance system. The Real Property Ordinance, or RPO system of conveyance, is established on the Torrens System, which attempted to eliminate the need for title searches by ensuring that all components of land should have a Certificate of Title. This system was named after Sir Robert Torrens. So, all dealings such as mortgages, leases, transfers or other impediments in relation to the specific area of land of RPO must be mentioned in the Title Certificate. In this manner, the title of the seller can easily be determined by what is evident on the Certificate of Title.
According to this system, the state guarantees the title and in cases of fraudulent holding back of the interest in RPO land, the person can demand reimbursement for land assurance fraud. The RPO system has its advantages and land parcels still witin the earlier system can be transferred to the RPO system; however most land parcels in Trinidad and Tobago are still kept within the erstwhile system, which is based on English Common Law and has been altered occasionally by local acts.
Estates in land
The degree of the duration of the amount that one owns or has interest in land is known as an estate in land. There are Freehold estates wherein an interest in the property has no stated end; and Leasehold estates, wherein the interest has a stated end called a ‘term of years’. These types of interests accord an owner the right to occupy, hold or use the land to his benefit. When there is a transfer of a person’s estate in land, the nature of the process used will differ based on if it is under the Old Law system or RPO, and also if it is a freehold estate or a leasehold one.
In case of a freehold estate, the instrument of transfer is a Deed of Conveyance under the Old Law, and by a Memorandum of Transfer under RPO. In case of a leasehold estate, under the Old Law, the transfer is via a Deed of Assignment and by a Memorandum of Transfer in case of the RPO. Leasehold estates have a stated end of interest unlike freehold estates, but it is common to come across leasehold interests for extremely long periods of time.
Agreement for sale
In case of the sale or buying of land, the concerned parties are not required to enter into an official contract, but it is recommended that you do so. The agreement for sale must be in written form and must bear the signatures of all concerned parties. An agreement for sale does not have any pre-specified form, but it must carry the property description, the identification of the seller and the buyer and the selling price. The agreement also usually accommodates a 10 percent deposit, which is funded by the buyer and must be completed within 90 days.
Upon signing the sale agreement, the buyer’s lawyer must examine the property title in detail. This search is done at the Registry of Deeds at the Registrar General’s Department. In this process, a summary of the title is composed which bears the list of all documentation concerning the land and presents the past account of the ownership of the land for a minimum of twenty years. This document begins with the account depicting the owners of the property, which is required to be at least 20 years old. There must be a continuous chain of documents till the present day, ending with the seller.
There are cases where the seller may agree to sell land which is under mortgage, and in these cases the seller must furnish the document specifying the mortgage release fulfilled in escrow by the lending agent along with a lender’s statement concerning the amount necessary for the release along with the specification of the lawyer’s fees for drawing up the release. Following this, the buyer’s lawyer may reserve from the remainder of the amount of the sale cost, the amount necessary to settle the mortgage and the lawyer’s fees on behalf of the lender.
Title searches of lands are easier under RPO and comprise an analysis of the authorizations added to the Title Certificate. It is a quick and easy process to verify the current landowner through a check on the endorsements. This will also confirm if there are any previous loans or other impediments involving the land.
Transfer of property
Usually the buyer’s lawyer will prepare the transfer contract. But in cases where the buyer is leasing new land, the seller’s lawyer will draw up the lease instrument. Both cases involve the buyer bearing the costs.
After the property title is clear, the instrument of transfer may be accomplished. The seller must furnish the details below upon closing of the deal.
• Tax receipts pertaining to land and building or house receipts indicating that the imbursement has been done for the present year which was charged in the seller’s name
• Receipts of water and sewerage rates for the present period
• Clearance certificate for water and sewerage guaranteeing that no past payments exist for the property
• Town and Country Planning Approval and a certificate of completion if the house has been recently built. Lands that have been recently subdivided also need approval for the same.
• Payments for all pending mortgages added in escrow along with a document indicating the amount necessary to complete the mortgage with a mention of the lawyer’s fee for drawing up the release.
Leasehold properties and condominium or townhouse schemes require some further documents such as:
• Lease rent receipt
• The leaser’s approval of the assignment where required
• Receipt of ongoing maintenance charges where applicable
• To indicate the seller’s share or shares in the property management company, the share certificate in the name of the seller
• The property management company’s articles of incorporation and by-laws
• Share transfer that has been duly executed
The relevant documents are registered only after they are stamped. The system of Old Law does not make registration mandatory and a buyer can furnish clear title by showing the deed which was originally executed. But it is recommended that you have your deed registered soon as it will have precedence over the other deeds of the relevant property. The law states that a deed that is not registered shall be considered fraudulent and nullified. Therefore, the registered disposition of the property will take precedence over the unregistered disposition, in spite of the latter having taken place earlier.
Under the RPO system, it is compulsory to register a property. According to the RPO, an unregistered instrument cannot be subject to any estate or interest in properties until registered.
Upon registering the instrument, the buyer’s lawyer will typically draw up a Return of Ownership, a form that the purchaser must furnish as the Warden or District Revenue Office of the specific address in which the land stands, in order to update their records. Following this, the Lands and Building Taxes will be assessed in the buyer’s name.
The Foreign Investment Act restricts the ownership of land by foreigners to one acre in case of residential lands and five acres in case of lands for business purposes. When a license is not needed, the Act maintains that the funds must be transacted in a currency that is internationally traded via an authorized individual as one who deals in that currency. In addition, the buyer and their lawyer must hand over a notice indicating the name, nationality and address of the one who is investing, the date and registration details on account of which they were deemed the owner and proof that the buying price was paid in an internationally traded currency.