Jersey: Living By The Rules

Last Updated: 7 March 2012
Article by Appleby  

In Jersey there are several different ways that purchasers obtain the right to occupy their property and some of them impose rights and duties upon a purchaser.

Purchasers of an apartment will usually have either purchased by share transfer or flying freehold.

The purchaser of a share transfer property will have an exclusive right to occupy a specific apartment by virtue of ownership of shares in a company. The purchaser will be responsible for the upkeep of the interior of their specified apartment together with any other parts which are in their exclusive use such as balconies or gardens.

The property and the land upon which it sits will be owned by a property holding company in which the purchaser will hold shares.

The company's Articles of Association will set out the rights and duties of each shareholder such as to pay service charges and maintain their own specified part of the property. The Articles will also contain the company's obligations, which usually include payment of the buildings insurance and maintenance of the communal areas (ie lifts and gardens).

The shareholders service charges are paid to the company secretary or managing agent who will then settle the company's expenses and deal with the administration. Larger developments will have a professional secretary or managing agent but a smaller building may be run by one of the shareholders.

Since 2010 a purchase by way of share transfer is subject to payment of land transaction tax ("LTT") which equates to the same amount as stamp duty payable in respect of a freehold purchase. The completion of a share transfer transaction is by way of signing of agreements and does not require the purchaser to attend before the Royal Court; and so the transaction may be completed on any day of the week. There is at present no public record of who owns by way of share transfer as each company keeps its own shareholders' register.

If a purchaser has bought by way of flying freehold then they will own a "lot" or portion of the property which is defined in a Declaration document.

The Declaration will contain each co-owners right to occupy their specified "lot" and will include the rules by which the co-owner must abide. The Declaration will create an Association of the co-owners, the head of which is the Representative. The Representative is the executive officer of the Association and carries out decisions and obligations on its behalf. In a similar way to share transfer the upkeep of the building as a whole will be funded through service charges and the Representative (which again in larger developments is often a professional managing agent) will deal with the administration and maintenance of the property as a whole.

The purchaser of a flying freehold is required to pay stamp duty to the Royal Court upon the passing of their contract of purchase. The purchaser will either need to attend Royal Court in person or give a power of attorney for someone else to appear on his behalf.

The purchase of a house will take place by the passing of a contract before the Royal Court and the purchaser will acquire the freehold buildings, land and rights as set out in their contract of purchase. The contract may include their rights to have pipes and other apparatus across or under their neighbours' land as well as their access rights to come and go from their property. The contract may also include restrictions as to the use or building on the land and can contain restrictions as to whom the property may be sold in the future. In a first time buyer development an onward sale is frequently restricted to first time buyers.

A right to occupy a property can be given by a lease. In Jersey there are two types of leases. If the lease is for 9 years or less then it is known as a "paper lease" and does not need to be passed before the Royal Court. A lease for more than 9 years is known as a "contract lease" and needs to be passed by the Royal on a Friday afternoon. The contract lease is liable to payment of stamp duty which is calculated in accordance with the rental income and length of the lease.

All contracts, whether by way of flying freehold, freehold purchase or contract lease are recorded in the Public Registry and it is this record which is evidence of ownership of, or right to occupy, a property and land rather than the possession of "title deeds" as is the case in the UK.

Whichever way property rights are acquired a purchaser should always meet with their lawyer or conveyancing manager prior to completion and ensure they are fully informed as to their rights of ownership, occupation and any obligations for which they may be liable.

As originally appeared in Homelife, March 2012

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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