Sabrina N. Gordon, Business Reporter
Andrew Gracey, land surveyor ... The first tenet of property acquisition is checking for a registered title.
Almost everyone aspires to home ownership, but often, that process begins with the acquisition of land.
If you are contemplating purchasing property, it is best to first educate yourself on any legal requirements or impediments relating to the piece of land you covet.
There are a number of steps, and nearly all of them require the payment of a fee.
These are called transaction costs, which are often additional to the price quoted for the property you are about to buy.
Sunday Business, with the help of land surveyor Andrew Gracey, offers you a guide.
It is essential, for example, to establish whether a registered title exists for the property.
"A registered title ensures that you know who exactly owns the land," said Gracey, president of the Land Surveyors Association of Jamaica (LSAJ).
In the past, "land used to be sold using common-law titles, that is, where an estimate of the land size is done and a receipt is given in a cash transaction," said Gracey.
But those days are gone.
Registered title
A buyer seeking a loan to finance the purchase of the property is now required to produce the registered title.
Having identified and established that the land has a registered title, the next step is executing the purchase.
At this stage, the process is not much different from buying a house.
It requires, first, that you acquire the services of a commissioned land surveyor to define the legal boundaries of the property and verify that the survey pegs are in place.
The surveyor would, on the basis of the assessment, issue a surveyor identification report.
"The surveyor identification report is the document that guarantees that the land is the land described on the title, that the boundaries are in place; and there are no breaches in the covenant," said Garcey.
A covenant is a legal deterrent.
It is usually lodged on the title by the local planning authority - or parish council - in which the particular piece of land is situated.
Covenants can take varying forms, such as specifying the boundary/building's distance from the road, and length an of fencing so as not to create obstructions.
It could also take the form of a stipulation that the land cannot be further subdivided.
"A good reason for that would be the land might be too small and subdividing it further would increase the density," said the LSAJ president.
Boundry pegs
The sale agreement should require that the survey marks be located prior to the sale, and that the buyer has a right to see that the boundary pegs are in place before the purchase is finalised.
It is in the buyer's interest to do so, remarked Garcey.
A valuation report will also be required, and it - along with the surveyor identification report - ensures that the land is that which is described on the title, and that none of the covenants has been breached.
The standard cost involved in getting these reports done is usually 0.3 per cent of the value of the property, but is likely to be more, depending
on the expenses incurred by the professionals involved, and the condition of the property.
"If the land is heavily wooded, then this represents added expense because it has to be cleared," said Gracey, explaining that in this case, the boundaries may not be easily identified, or the marks may have disappeared.
In this situation, the boundaries would have to be re-established in accordance with the title, he said.
Conformity
Where the pegs are in place, the surveyor checks to ensure that the physical boundaries are correct and in conformity with the registered title.
Other transaction costs likely to be incurred by the buyer include legal fees, stamp duty and transfer fee, as well as a registration fee to effect the transfer of the title from the seller to the buyer.
In carrying out the transaction, legal fees may also be incurred.
The buyer can choose to go with the vendor's lawyer, but this is not advisable, said Garcey.
In such cases, he said: "Sales agreements are drawn up to the benefit of the vendor, where certain clauses may penalise the buyer."
To illustrate this, he said that time clauses may be inserted that better suit the seller.
Thus, it is advisable to obtain a lawyer, but the cost involved is normally about 3.0 per cent of the selling cost of the property, and is taxable.
Blueprint
With your residential lot secured, the next thing to consider is the blueprint/architectural design - a plan for your house.
The cost of the plan depends on the size of the building, but according to experts in the field, getting such a plan done is 4.0 to 5.0 per cent of the total construction cost of the building.
For a residential building, it would cost about $4,000 per square foot.
A topographic plan to guide the architect who will be designing the house is also recommended.
Both the topographic plan and quantity survey are advisable since they help to determine the level of spending required to construct your dream home.
"Never attempt to build a house without a budget," said Gracey.
"It is highly recommended and supported that a builder gets an estimate of the cost to build from a professional - a quantity surveyor."
A nominal approximation of the cost to prepare an estimate ranges between $10,000 and $30,000, depending on the value of the construction.
The estimate is done for the builder's budgetary purposes, but for persons accessing funds from a lending institution, a more detailed estimate, known as a bill of quantity, is done.
This sets out in more detail, the cost of construction, including material, labour and other associated expenses.
Here again, the cost to produce a bill of quantity depends on the value of the construction, said Celtus Graham, quantity surveyor with Davidson and Hanna.
If a builder is acquiring funds from the National Housing Trust, he/she must provide a blueprint and bill of quantity.
Having obtained the plan, the builder must have it approved by the relevant local planning authority before the house can be built.
Cost varies
The cost to approve a residential building in the Kingston/St. Andrew area varies, depending on the location.
The fee is about $65 per square metre for houses to be built in upper-income neighbourhoods, $51 per square metre for middle-income zones such as Pembroke Hall, Molynes Road and Washington Boulevard, and $36 per square metre for the lower brackets, according to information obtained by Sunday Business.
Plans submitted to the authority can take anywhere from three to six months to be approved, depending on whether amendments need to be done or the drawings are to be submitted to other agencies for approval.
The cost and approval time will differ for the various local planning agencies. For example, the St Catherine Parish Council charges a fee of $100 per square metre to approve plans for dwelling houses within a six-eight week period, said Dwayne Dyer, building officer at the council.
With your approved plan, and a professional estimate of the costs involved to build the house, you are now on your way to setting up that dream house.
The steps to purchasing land
Identify the property.
Investigate the property: look at boundaries, make sure there is a registered title with the seller's name.
Make an offer and agree price.
Draw up sales agreement. The cost is usually shared in a fixed proportion between the seller and the buyer. It is estimated to cost $50,000.
Make the deposit. Deposits are usually about 15 per cent or more, depending on the seller.
Cost requirements for closing the transaction (as percentage of selling price)
A surveyor ID report0.30% Valuation report0.30% Stamp duty2.75% Transfer fee0.25%
Andrew Gracey, land surveyor ... The first tenet of property acquisition is checking for a registered title.
Steps in the building process
Design of house plan. Industry experts estimate cost to be approximately $4,000 per sq ft.
Approval of plans by planning authority.
Bill of estimate from quantity surveyor. Incurs a nominal cost of $10,000 to $30,000. However, the rate is often applied as a percentage of the value of the construction.
Financing. Obtain or Identify financing, whether lending institution or own funds.
Hire contractor to build the house.
sabrina.gordon@gleanerjm.com
