5 Things You Should Know When Buying Land
Whether it’s for personal use or development, land is favoured by many as a quick and easy way to get into investing. As it is considered unimproved property, a land sale is a fairly straight-forward transaction. But, before you make that down payment, there are few things you should look out for to ensure it is a sound investment!
1. What type of land is it?
Residential, commercial and agricultural are different zoning conventions and determine what the property should legally be used for. For instance, residential land is specifically zoned and approved for the building of single-family homes, apartment buildings or townhouses. According to where the land is located, there may be specific restrictions in terms of the size of the structure and therefore you will need approval. Areas like Woodbrook, Aranguez and Chaguanas have a mix of commercial and residential land or residential and agricultural land. The zoning of land can be changed but it’s best to check with the relevant government authorities to ensure that you’re buying the right zoned land for your intended use.
2. Is it freehold or leasehold?
What’s the difference?
Freehold rights occurs when you own the land, the property that sits on it and the space above it indefinitely. There are no restrictions on the right of the owner, and it can be transferred or inherited. Maintenance is the responsibility of the landowner and there is no lease rent or renewal fees to be paid.
Leasehold gives you temporary ownership of the land from the state or lessor for a specified number of years, for example 99 years, as stated in the lease, which also outlines the terms and responsibilities of either side. Lease rent is paid every year and there is a renewal fee at the end of the lease term. If you are selling or transferring ownership, you must get approval from the state or the lessor. In some cases, you may have the option of buying the freehold title.
Leasehold land is quite common in gated developments and certain parts of T&T. While there’s no difference between the land itself in both cases, the rights around leasehold land can be restrictive. Hence, you should know the property rights of the land before investing.
3. Is the land free and clear of any claims or titles?
Land ownership records or assessment rolls are useful as they list the name of the owner of the land, the boundaries surrounding it and the size of the parcel of land. When purchasing land, your lawyer will conduct a registered land title search for documents that will serve as evidence of ownership. This will ensure good title as well as determine if there are any liens against the property.
However, prospective buyers should be aware of fraudulent schemes, such as:
• Fraudulent Deeds - This document is drawn up by an attorney, stamp duty is paid, and the Deed is then registered at the Land Registry. The Deed looks legitimate except that the signatures of the various parties are all forged.
• Identity Theft - This person agrees to sell the property to you but presents false identification during the process of conveyancing. Prospective purchasers should do a site visit and inquire with neighbours to verify rightful ownership.
It is imperative that you use reputable Real Estate Agents and Attorneys, registered with the FIU (Financial Intelligence Unit) to safeguard yourself and your financial investment.
4. What’s the landscape like?
In Real Estate (and Geography), we call this the topography of the land; whether it’s gently sloping, flat land or hilly. A topographical survey is an accurate representation of a site, which is scaled to show the contours and elevations for use by architects and engineers in the design of buildings for construction.
Why is this important? It can inform the amount of funds required to prepare the land for construction. The topography of a land site can make or break a transaction as we sometimes underestimate the degree of investment required.
5. Is it ready to build?
When you are ready to build, whether it’s commercial or residential land, you are legally required to seek permission to develop by the relevant authorities. For example, Town & Country Approvals set out the permissions for the type of development proposed for existing land use and it also provides overall development standards applicable to the particular site i.e; distances from the boundary, how high, how many stories etc.
It is possible for several applications for different types of development to be submitted for one property, be approved and remain valid for a period of time. At times, some landowners may even sell the property with existing Town & Country approvals, which is less stress for the new owner.
The process of buying land is just as involved as buying improved property. It can be overwhelming especially with the prevalence of land fraud. While the above tips are the basics, it is not an exhaustive list. For more on information on red flags, advice and tips to protect yourself from fraud, feel free to contact any one of our Agents for a chat!