The Root of Buying and Selling Property in Barbados
By System Administrator on 09 Aug, 2011
When buying or selling real estate in Barbados, purchasers and vendors alike often wonder what goes on behind the scenes, in terms of the process involved. Sometimes, this question is posed in relation to the length of time it may take a transaction to be completed. There are a number of factors that contribute to the time it takes for the sale and purchase to be completed, for example, the negotiation of the Sale and Purchase Agreement. However, the purpose of this article is to give readers a brief insight into the two systems of land in Barbados, being registered and unregistered land, and what is involved in the process of buying and selling land under these systems.
The sale and purchase of land, because of the nature of this asset, is governed by particular laws and procedures. In Barbados, the system used for buying and selling real property is modelled largely after the old English system. In Barbados, while there are some areas which use the registered system of land, the unregistered system is still predominant, while in a number of foreign jurisdictions, including the United Kingdom, the registered system of land is now predominantly used.
Under an agreement for the sale of land in Barbados, regardless of whether it falls under the registered or unregistered system, a vendor is required to show to the purchaser good title to the land being sold. In other words, a vendor is required to show a purchaser that he owns the land and also how he came to own it. Under the Law of Property Act Chapter 236 (“the Act”) Barbados law, the time limit on the history of how the land came to be owned by the vendor, which he is required to show to a purchaser, is twenty years.
A vendor, however, is not only required under contract to prove title, but also to prove good and marketable title to the land that he purports to sell. There is no perfect definition of “good and marketable title”, but it can be interpreted to mean that if a vendor has good and marketable title to land, he has full ownership of it, the land is not encumbered, and the purchaser would be able to sell the land without any obstacle.
An encumbrance is a right that attaches to real property. It includes mortgages, easements and covenants that affect the land. There may, for example, be a restriction on the use of the land which says that the property may be used for residential purposes only. An encumbrance does not prevent the sale or purchase of land from occurring. It will, however, be passed from vendor to purchaser if not extinguished prior to the completion of the sale and purchase. If, for example, the purchaser intends to use the land for commercial purposes, and there is a covenant stipulating that the property may be used for residential purposes only, that issue will need to be addressed.
The means of researching title and identifying encumbrances depends on the system of land that is being used. In the unregistered system the ownership of the land is established and encumbrances are identified by the vendor providing to the purchaser the title deeds to the property. The purchaser’s lawyer has to manually conduct a review of all of the said deeds which will normally reveal any charges, covenants and easements affecting the land.
Although, as indicated above, twenty years is the period for which title deeds are to be inspected, there are some situations in which the purchaser’s lawyer should look at title deeds that go beyond this period. For example, if there is an easement that is contained in a title deed that does not fall within the twenty-year period, the purchaser is still entitled to see it. An easement, such as a right of access, is an example of a right affecting the property of which the purchaser should be made aware. There may, for example, be a right of access through the land being acquired that may have been granted to the owner of a neighbouring property, if not the neighbour’s property would otherwise be land-locked.
In addition to a review of the title deeds, which can be a lengthy process, particularly if it involves going beyond the said twenty-year period, a purchaser’s lawyer sends requisitions on title to the vendor’s lawyer. The purpose of this is to identify any encumbrance or other matters of which the purchaser should be aware which may not be revealed by the title deeds to the land being purchased.
As such, the unregistered system can lend itself to practical issues which can cause delays. The vendor can have misplaced the title deeds, or where the property is mortgaged, the title deeds may be in the possession of a lending institution so that copies are not immediately available or cannot be provided to the purchaser’s lawyer for review in a timely manner.
Most foreign purchasers, in particular those from the United Kingdom, may be more familiar with the registered system of title. In contrast to the unregistered system, the main features of the registered land system are that information relating to the title of land is maintained at a central repository, namely the Land Registry, and that the title to registered property is essentially guaranteed by the Registrar of Titles.
Under the registered title system, it is not necessary for a vendor to produce all of the title deeds to the purchaser. Instead, the vendor’s lawyer provides to the purchaser’s lawyer a copy of the Certificate of Title. Additionally, the purchaser’s lawyer would conduct title searches against the property at the Land Registry.
A search of the register against a property at the Land Registry in Barbados generally provides all of the information that a purchaser will need in relation to the property. The Land Registry maintains a record of all the information about each property, including a description of the property, the chain of title, and the rights and interests affecting the property, such as any easements, covenants, charges and other rights attached to the property.
The conveyancing process is thereby simplified, and some of the legal and practical issues associated with delays in the buying and selling of real estate are alleviated. However, since the registered land system is a relatively new one in Barbados, it can also have its its own challenges as a new régime. At present, only a small proportion of property in Barbados falls under the registered land system.
In conclusion, while the existing systems in place under Barbados law for the buying and selling real estate introduce unavoidable delays, it is expected that Barbados will fully embrace the registered system of land in time, however, the process for the change is a lengthy one. In the interim, it is useful for vendors and purchasers to understand what is involved in the conveyancing process in respect of unregistered land in Barbados, in comparison to the registered system in the United Kingdom and in other countries.
Vidisha K. Hathiramani and
Alana Goodman Smith
The Red Book 2011 – The Pink Pages pg. 105