The Property Banks Buyers Guide to Trinidad Tobago
Acquisition of Real Estate by
Foreigners
The Foreign Investment Act, 1990 allows foreigners (including
individuals and companies) to purchase up to one (1) acre of land
for residential purposes and up to five (5) acres for commercial
purposes provided that the purchase price is paid in an
internationally traded currency through a bank or other entity
authorized by law as a dealer in that currency. Additionally, the
foreigner must, through his Attorney-at-Law, deliver to the Minister
of Finance a Notice specifying his name, address and nationality,
the date and registration particulars of the instrument by which he
became the owner of the property and evidence of his payment in
foreign currency.
Foreigners may exercise the option to lease property or buy freehold
title. Under the Foreign Investment Act land may be acquired by a
foreign investor on an annual tenancy or for any less interest for
the purposes of his residence, trade or business but not exceeding
five acres of land in all. Mortgages are given primarily upon
satisfactory evidence as to the value of the property and the fact
that the title to the property is free from all encumbrances.
If a foreigner wishes to purchase land in excess of the stipulated
acreages, he must apply for a licence from the President of the
country in order to do so. This application must indicate the
proposed land use and must comply with the controls and restrictions
of the relevant planning and environmental authorities.
Contracts For Sale And Purchase Of Land
In the case of an agreement for the sale of land, Trinidad & Tobago
law prescribes that the agreement must be in writing and duly signed
by the parties (the Vendor and the Purchaser). There is no fixed
form of contract but, at the very least, the property, price and
parties must be identified. The contract usually also provides for
the payment of a ten per cent (10%) deposit on the purchase price
and the balance in a certain period of time (normally ninety (90)
days). Where a real estate agent is employed to sell land on behalf
of an owner, the agent often prepares the Agreement for Sale. It is
advisable, however, that the purchaser ensure that the agreement is
approved by an Attorney-at-Law before he signs it. Alternatively,
the Attorney-at-Law may prepare the agreement. Where a real estate
agent has been retained by the owner, a commission is payable by the
owner amounting to 3% to 5% of the purchase price.
Land Title Systems
There are two (2) systems of law under which land is held in
Trinidad & Tobago:
The old law or common law system of conveyancing, and
the Torrens system of registered conveyancing or the Real Property
Ordinance (R.P.O.) system of conveyancing.
Most of the land in Trinidad & Tobago is still held under the old
law system. This is the system which is based on the English common
law as modified from time to time by statute such as, for example,
the Conveyancing and Law of Property Ordinance (Chapter 27, No. 12).
This is the system of registration of deeds relating to the transfer
of land. The original deeds are lodged at the Deeds Registry of the
Registrar General’s Department and searches are conducted, at that
Department, to trace the Vendor’s title or determine how the Vendor
acquired ownership of the land or property being sold. The
Purchaser’s Attorney or his search clerk prepares what is called an
abstract of title consisting of a list of documents, facts and
events setting out the history of ownership of the property and all
dealings with the property over a period of at least thirty (30)
years. The first document contained in the abstract is called the
root of title and thereafter, in chronological order, there must be
a chain of title that continues from the root to the Vendor without
any break.
Title to property is either freehold or leasehold. In the case of
the latter, the term of years can vary between periods of 25 years
or 999 years.
The R.P.O. system is based on the Torrens System (after Sir Robert
Torrens who invented it) which is used in Australia, New Zealand and
several other countries which have adopted it. In Trinidad & Tobago,
the R.P.O. system exists side by side with the old law system, and
it is not uncommon to find one property standing on lands held under
both systems.
Under the R.P.O. system, the title is backed by a Land Assurance
Fund against which any person who has been [fraudulently] deprived
of his interest in land can claim compensation and to the extent of
any shortfall in the Fund, the claim is guaranteed by the Government
of Trinidad & Tobago as a charge on the Consolidated Fund.
The Procedure Involved in The Transfer of Real Estate
In order to facilitate the smooth and timely conclusion of a
purchase transaction, the parties concerned are required to submit
to the Attorney-at-Law preparing the transfer documents copies or
the originals of the following documents where applicable.
The Contract for Sale signed by the parties i.e. the Vendor and the
Purchaser.
The Deed by which the Vendor acquired the property, or the
Certificate of Title if the property is held under the R.P.O.
Releases of all outstanding mortgages on the property together with
statements from the mortgagees as to the amount required to effect
the releases and a note on the legal costs incurred in preparing
such releases.
Current receipts for Water and Sewerage Rates, Land and Building
Taxes, Land Rent and Condominium Management Charges.
As soon as the relevant documentation is received, the
Attorneys-At-Law will engage the services of a Search Clerk to
conduct a search of the records at the offices of the Registrar
General. These searches will indicate the history of ownership of
the property and verify whether the property is subject to any and
if so what incumbrances. On average such a search takes between two
(2) to three (3) weeks at a cost between TT$300 and TT$500. Whilst
the search is in progress, the relevant Deeds may be prepared.
Once it appears to the Attorney-at-Law that the Vendor’s title is in
order, the relevant transfer documents may be completed. These
documents typically consist of a Deed of Transfer whereby ownership
in the property will be transferred from the Vendor to the
Purchaser.
The Purchaser is required to engage the services of an Attorney to
prepare this Deed/Transfer on his behalf.
The Vendor may either choose to appoint his own Attorney to revise
the documentation on his behalf, in which case he should notify the
other parties involved of the identity of that Attorney or
alternatively, arrangements can be made for the Vendor to attend on
the
Purchaser’s Attorney to execute the documents there.
The Purchaser’s Attorney-at-Law is usually responsible for co-ordinating
the closing arrangements for this transaction. This entails
verifying that the title is in order and that the relevant deeds,
including the release of any existing mortgages on the property,
have all been properly executed. When the relevant transfer
documents have been signed by all the parties involved, the balance
of the purchase price is paid to the Vendor and/or his mortgagee and
the sale transaction finalized.
Transfer Taxes
The next stage in the process is the stamping of the documents by
the Board of Inland Revenue. The present law provides that where the
property is or includes a dwelling house and the property is for use
wholly or mainly for residential purposes (Residential Transfers)
the stamp duty payable is as follows:
Residential Transfers
$0.0 $300,00.00 TT 0%
Next $100,000.00 TT 5%
Next $100,000.00 TT 7.5%
Over $500,000.00 TT 10%
When the property is a commercial property or land only
(Non-Residential Transfers) the Stamp duly payable is as follows:
Non-Residential Transfers
(Includes Commercial Properties And Land)
Where the consideration for the sale does not exceed $300,000.00 TT
– 2% 2%
Where the consideration for the sale exceeds $300,000.00 TT but does
not exceed $400,000.00 TT – 5%
5%
Where the consideration for the sale exceeds $400,000.00 TT – 7%
7%
Once the appropriate stamp duty has been paid, as certified by an
embossed stamp affixed by the Board of Inland Revenue, the original
transfer documents are lodged with the Registrar General’s
Department and a registered copy will be delivered to the Purchaser
as proof of his ownership of the land in question. The registration
fee payable is typically $50. TT.
Land Use and Development
Land use and development is controlled by the Regional Corporations
and the Town and Country Planning Divisions. Permission is required
to subdivide land, alter its use, carry on development or
construction repairs or renovations.
Plans must be submitted first for the approval of the Town and
Country Planning Division. If the plans do not contain any defects
that infringe planning and/or building regulations, outline approval
is granted subject to the approvals of the other controlling
authorities such as the Water and Sewerage Authority and the local
Health Authority. Final approval is granted when all the Authorities
have certified that the necessary infrastructural works have been
put in place and all regulations have been complied with.