Property in Jersey can be bought or sold either by contract passed before the Royal Court (a conveyance) or by share transfer. This general guide explains the steps common to both types of transaction.
Reaching An Agreement
Once you have agreed a purchase price for a house or property in Jersey, it is usual for the vendor's lawyers to prepare the formal documents, which include a draft contract or share vending agreement.
For sales or purchases in Jersey, or leasing property, it is necessary to obtain the consent of the Housing Minister of the States of Jersey. Permission from the Housing Minister to occupy share transfer property is also required. Sometimes the application is made by your Estate Agent, but if not we can prepare and submit the application on your behalf.
There are strict controls as to who can acquire residential property in Jersey. In relation to commercial premises, consent will, under the present law, be issued to a company under the Housing (Jersey) Law 1949 as amended. Consent will not be issued to an individual unless he or she is residentially qualified for Jersey Housing purposes. It is essential, in order to avoid delay, if you have not had Housing consent for a property in Jersey before, that you locate your birth certificate at an early stage as a copy of this may be required as part of your application for residential qualification. You may also need to provide your marriage certificate.
The Housing Minister should issue consent to a company to purchase commercial property on the basis that, should any residential accommodation exist or be created at those premises, such accommodation must be occupied by persons approved by the Housing Minister under the Housing law.
In some cases, if your property includes agricultural land, consent will be required from the Minister for Economic Development of the States of Jersey under the relevant law. That consent will invariably require the agricultural land to be leased to a local farmer.
If you wish to carry out any works to a property that you are buying, Planning and Building Bye-law consent may also be required. It is prudent to consider this matter prior to buying the property. If a prospective purchaser wishes to set up business in Jersey, there are stringent controls, and advice must be sought prior to acquiring the property if it is being bought for this purpose.
There are a number of steps we take in order to assist you with understanding the property you are hoping to buy in order to ensure you are protected before being fully committed to the transaction.
We check that the seller is the owner of the property that is being sold. We also check whether anyone else has any rights or claims over the property. This is known as "checking title".
Title to Jersey real property is a matter of public record; transfers of property take place on a Friday afternoon before the Royal Court in the presence of the Bailiff of Jersey or his delegate and two other officers of the Royal Court. They are then registered in the Public Registry of Jersey and are open to public inspection. Previously in French, contracts are now drafted in English.
In checking title to your property, we look at contracts by which the relevant property has changed hands for at least the preceding forty years. If relevant to your property, we will search back even further and trace the ownership of the property back to bare land.
We have a team of conveyancers who undertake this research. The Conveyancer will check the Public Registry online or attend at the Public Registry to carry out the relevant searches and establish the title to the property, the boundaries to the property, access rights, drainage rights and any other restrictions, that may affect the property, and to discover whether any mortgages (called "hypothecs") have been registered against the property.
Each property contract must contain the date of the sale, the full names of the parties, and all relevant details concerning the property, such as boundaries. In addition, it should contain a "provenance" detailing the names and title of owners of the property for at least the previous forty years. A Jersey qualified lawyer acting for the purchaser must present the contract to the Royal Court.
In addition to checking the records of the Public Registry, checks will also be made with the Planning & Environment Department, the various utility companies, the Transport & Technical Services Department and the Parish in which the property is located. Other checks and enquiries may also be made as necessary with the Chief Fire Officer and the Health & Social Services Department.
All of the responses from the above bodies invariably carry a disclaimer to a greater or lesser extent. Therefore we cannot guarantee either the accuracy or completeness of some of the information obtained from these searches. Accurate information cannot always be obtained from the utility services in relation to pipe and cable runs and rights of connection to mains services (where applicable). If there is a doubt, the matter is raised with the seller's lawyers. Enquiries raised with the Planning & Environment Department will establish whether the buildings on the land being purchased have been constructed in accordance with the necessary consents and whether there are any planning proposals, which are likely to affect that particular property. Please note, however that it is not possible to run any searches on neighbouring properties, unless the owners of such property consent to the search.
If you are buying a property by way of "Flying Freehold" we will make enquiries about the Association with the Association Representative, for example about service charges and other expenditures. For Share Transfer property, we will check that the company is in order by carrying out a company search at the Companies Registry to confirm all necessary documentation required by law has been lodged with it and that the company is still in existence by checking the company's books and records. We will liaise with the vendor's lawyers to make sure all the necessary company meetings take place, are recorded prior to and at completion and that the company has complied with all relevant laws, relating to companies in Jersey. In addition to the title check, we will enquire about service charges and any other expenditure planned by the company. Upon completion we will obtain a share certificate in respect to the shares you have acquired in the Company. If you have obtained a loan to finance your purchase, the lender will usually require the shares to be held in its name and lodged with it for the duration of the loan.
Finally, a visit will be made to the property to examine and check the boundaries and to make sure that the property does not encroach upon the neighbouring properties and that there are no breaches of any clauses in the title (eg a building restriction). Any encroachments permitted by the adjoining owner must, if they are to remain, be incorporated into the contract. If you are buying a property please be aware that neither the seller nor his or her lawyers are required to disclose any defects in title, boundaries, etc. to either the purchaser or the purchaser's lawyers: the purchaser acquires the property on a "buyer beware" basis.
Whilst we inspect the boundaries we do not undertake a survey of the property. Banks usually require a survey or estimate of value for valuation purposes before agreeing to a mortgage. Each and every contract of sale contains what is known as a "vices cachés" clause, which states that the purchaser is acquiring the property in the state in which it is found on the date of the contract of sale with all and any hidden or apparent defects (if any) as may exist. A prudent purchaser is therefore well advised to have a full survey undertaken of the property prior to passing the necessary contract of sale, for if problems do arise with regard to the structure of the property after sale, it is extremely doubtful that there would be any recourse against the previous owner.
Paying For The Property
Whilst the seller is entitled to the sale proceeds on the day of passing of the contract of sale before the Royal Court of Jersey, the practice in Jersey is for the consideration monies to be paid no later than the Tuesday following the passing of the contract of sale (unless the transaction is by means of share transfer, then monies are usually paid on the day of Completion). Notwithstanding the delay in making the payment, the lawyers acting for the purchaser will require that the funds be placed with them before or on the day of passing the contract. Under the Law Society of Jersey Code of Practice, if a lawyer permits one of his clients to acquire a property, he makes himself personally liable to ensure that the funds are there to pay to the seller's lawyers in accordance with the terms of the contract. Depending on the amount of the consideration, there may be a requirement for the purchaser's lawyers to account to the seller's lawyers for interest earned on the consideration from the date of passing contract to the date of receipt of the funds by the seller's lawyers. It is therefore vital for us that you place funds with us in time for your contract to pass.
If you have obtained a loan or mortgage to buy the property we will liaise with the bank's lawyers and check the loan documentation. Assistance can be given with the transfer of funds and, if you are selling, the discharging of the outstanding mortgages and loans from the sale proceeds. Whilst sale proceeds pass on the Tuesday after the contract is passed it is best not to access those funds until Wednesday.
Both a contract of sale and a share sale agreement will normally provide for the apportioning of the Parish Rates between the buyer and seller, as well as rental, if the property is the subject of a lease. If there is a rental apportionment, you should consider the situation of the interest on any delay in payment of the consideration money. Parish Rates are those levied by the Parish in which the property is situated.
If you are selling commercial premises by contract of sale which are occupied by tenants you should give consideration to how the rentals payable by the tenants should be apportioned. Under the Jersey Conveyancing system, the consideration money is not paid by the Buyer's Lawyers to the Seller's Lawyers until the Tuesday after the day of passing contract. Under Law Society Rules, the Seller is not entitled to interest on that money unless agreed otherwise with the Buyer. Again unless otherwise agreed possession of the premises passes to the Buyer on the day of passing contract. You should therefore consider whether you wish to claim for the four days' interest or make some other provision in relation to the apportionment of the rental.
We will calculate the Stamp Duty for you for your property purchase. Stamp duty is payable by the purchaser on or prior to the date of passing the contract to purchase the property. It is presently assessed on a sliding scale according to the value of the property.
A tax equivalent to Stamp Duty on purchases by share transfer of residential property is due to be introduced in early 2009, subject to final States approval.
If you are borrowing money to pay for the property and a mortgage is to be secured against the property then stamp duty is also payable on the registration of such mortgage.
Please note that there are different stamp duty rates for first-time buyers.
Meeting With You
We will arrange to meet with you to discuss the property that you are buying or selling. We will advise you about our title and other researches and ask you to complete any necessary paperwork.
Completion And Representation Before The Royal Court
The parties to the transaction either appear before the Royal Court personally or appoint an attorney, usually one of our property team, to appear on your behalf. If a company is party to the contract, either one of its directors appears, or an authorised agent or attorney. There are specific requirements in relation to the execution of a power of attorney and registration of the same with the Public Registry, which we can deal with for you.
If you are buying by share transfer then it is not necessary to go to Court. Instead, completion takes place when the Share Sale Agreement is signed and the shares are transferred for the agreed price.
Notwithstanding the delay in the payment of consideration (see above) it is usual for vacant possession of the property to be given on the day of the passing of the contract and keys to the property are often handed over in court when the contract is passed. Sometimes on residential property the parties agree to a day or so grace period to allow the seller to move out. Don't forget to let the various utility companies know that you are moving so that they can transfer your details to your new property and also please let us know of any agreement you may need to delay the moving date.
If you are buying freehold property it is advisable to insure the property from 2.30 pm on the day of passing the contract of sale, notwithstanding that there may be any delay in possession. This is usually an obligation if the purchaser is borrowing funds to make the purchase. In the case of Buyers share transfer, the obligation to insure the building (but not the contents) usually rests with the company.
At the same time as buying or selling your property you may wish to enter into other agreements. We are happy to draft these ancillary agreements for you and to advise you about them. Typical ancillary agreements include:
- Equity Agreements - when buying property jointly you may wish to agree in advance how the equity in the property is to be dealt with on a sale, particularly if one person is paying more towards the property than another.
- Option Agreements - an agreement usually for an option fee whereby you have an option to buy a property within a set period.
- Preliminary Agreements of Sale - an agreement binding the seller and the buyer to complete the transaction on an agreed date under penalty if they do not do so. A deposit of 10% is usually required.
- Cohabitation Agreement - this covers situations where both partners borrow jointly to purchase a property, but the property is bought in a sole name of one of the partners as the other may not have housing qualifications.
- Wills - this covers to whom you wish the property or shares to pass to in the event of your death.
This is designed to give you an outline summary of property transactions in Jersey and is by no means an exhaustive guide to buying and selling in Jersey. Prior to committing oneself to acquire a property in the Island, it is essential that legal advice from a Jersey qualified lawyer is first obtained.
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.