Property Ownership in Trinidad & Tobago

Owning property is a dream for many. In Trinidad and Tobago, for many young persons, property acquisition is akin to a rite of passage into secure and responsible living. Purchasing property, however, is no small feat. Sometimes, first time homeowners make avoidable mistakes simply because they lack the right guidance, support, and information.  This is a challenge that the team here, at Terra Caribbean, has identified. We are committed, as real estate agents, to provide you, our stakeholders, with the best support that we can. A key component of this support is ensuring that you have easy access to the right information when engaging in property transactions.  So, if you’re thinking of purchasing property in Trinidad and Tobago, but do not understand the steps required to complete the process, here are some simple tips that can help to make your property acquisition easier:

1: Learn the Legal Framework Governing Property Transactions in Trinidad and Tobago

Real Estate law or Property Law in Trinidad and Tobago is based on a combination of statutory regulations and common law principles. Key statutes include the Conveyancing and Law of Property Act and the Real Property Act. These land title systems govern the processes for property transfer, ownership rights, and legal documents for property purchase.

It is also important to understand the distinction between freehold and leasehold properties:

• Freehold property: The owner has full ownership rights indefinitely.
• Leasehold property: The owner has rights for a fixed period, subject to lease conditions.

2: Conduct Normal Due Diligence

Legal due diligence is a critical component of responsible property purchases.

For instance, before making an offer to purchase a property, potential purchasers should conduct normal due diligence to confirm:

• Whether the property is freehold or leasehold
• Whether the vendor owns the property he is proposing to sell
• Whether he has the legal rights to engage in a sale.
• Information as to whether the property was or is subject to a mortgage
• Confirmation that Town and Country plannings are in order
• The physical condition of the property including boundaries, means of access, adverse possessors, and any other negatives or defects.

3: Make an offer

Properties that are advertised for sale usually have their asking price listed. A purchaser can either make a formal offer in accordance with the vendor’s asking price or he may offer a bit less than the asking price after inspecting the property. The purchaser may also offer more than the asking price if there is a high demand for the property. The vendor must accept the purchaser’s offer for the next stage of the legal transaction to begin.

4: Complete a Sale Agreement/ Agreement for Sale

Once the vendor accepts the purchaser’s offer to purchase, both parties enter into a property purchase contract or what is more commonly known as an Agreement for Sale. An Agreement for Sale or Sale Agreement is a legal transaction where the purchaser is asked to make a partial payment- 10% deposit on the agreed sale price. This money can be paid directly to the vendor, giving him immediate access to the funds, or it can be placed in escrow so that neither purchaser nor vendor would be able to access it. The deposit is usually kept in escrow by the real estate agency, an attorney for a period of approximately 90 days. This allows the purchaser a fair window to complete his due diligence checks on the property proposed for sale and to ensure he has all the funds necessary to complete the transaction. Should the sale not complete through no fault of the purchaser, the deposit will be refunded to the purchaser. If the purchaser does not complete the sale in 90 days as stipulated in the sale agreement, he would have to seek to renegotiate an extended period for the transaction or the seller can forfeit the funds.

The Terms and Conditions in a standard sale agreement include the following:

• Purchase price
• Time period for completion (usually 90 days)
• Conditions (e.g. securing financing)
• Deadlines for completion
• Penalties for breach of contract

Documents exchanged in this transaction include:

• A copy of the deed
• Deed of release (in escrow has a mortgage and an up-to-date settlement letter)
• Town and Country planning approvals
• WASA clearance certificate
• An up-to-date WASA bill
• Land and Building tax receipt.
• Lease rent receipt for leasehold properties
• Copy of share certificate for leasehold properties
• Consent to assign the lease

Given the significance of this transaction, it is always advisable for persons engaged in a property transaction to hire the services of a qualified attorney specializing in conveyancying law.

5: Hire the services of a qualified attorney from a reputable property law firm

During the 90-day window afforded to complete the property purchase transaction, the purchaser’s attorney who should be qualified and specialized in conveyancing law, is expected to conduct search and title investigations to verify the property’s legal status, ownership rights, and potential encumbrances. This is often the most challenging and complex stage for a first-time homeowner. It involves:

1. Title Search: Attorneys conduct a title search at the Land Registry to confirm the seller’s ownership and ensure there are no competing claims, mortgages, or liens on the property.
2. Survey Plan Verification: Both vendors and purchasers consider employing the services of property surveyors to ensure that the property’s boundaries and dimensions match the survey plan. An updated plan may be prepared by a licensed land surveyor.
3. Encumbrance Check: Verify whether the property is subject to easements, restrictive covenants, or other encumbrances that could affect its use.
4. Tax Clearance: Confirm that all property taxes and land rent (if applicable on leasehold properties) are up to date.

6: Secure a mortgage

If financing is required, purchasers must secure a mortgage from a financial institution. This involves:

1. Pre-Approval: Obtaining pre-approval to determine the loan amount and repayment terms. Usually, property purchasers are encouraged to obtain pre-approval letters before scouting for property.
2. Valuation Report: Providing a valuation report from an accredited appraiser to confirm the property’s market value.
3. Legal Documentation: Submitting the sale agreement, title documents, and other required paperwork from the vendor.
4. Execution of Mortgage Deed: The purchaser’s attorney prepares the mortgage deed, which must be signed and registered.

7: The Conveyancing Process

The conveyancing process formalizes the property transfer. Key steps include:

1. Preparation of Deed: The purchaser’s attorney drafts the relevant deed/memorandum of transfer.  

1. Stamp Duty Payment: Purchasers must pay stamp duty to the Board of Inland Revenue (BIR). The amount depends on the property’s value and the rates stated here apply to residential homes:

○     First $850,000 for residential properties: Exempt (first-time homeowners only)

○     Then 3% on the next $400,000

○     Then 5% on the succeeding $500,000

○     And 7.5% on the balance

○     Shortcut method if the price exceeds $1.750,000 – Calculate 7.5% of cost and subtract $94,250

1. Registration: The executed deed is registered at the Land Registry, completing the legal transfer.

8: Post-Purchase Obligations

After acquiring the property, purchasers must:

• Update their property tax records with the Board of Inland Revenue (BIR).
• Transfer  utility accounts (e.g., electricity, water) to their name.
• Comply with leasehold terms (if applicable).

Special Considerations for Foreign Purchasers

Foreign nationals face additional requirements for property purchase in Trinidad and Tobago.  While the Foreign Investment Act (sections 6 and 7) allows foreign investors in Trinidad (including individuals and companies) to purchase up to one acre of land (residential) or up to five acres (commercial) without a foreign investment license, larger purchases require a License of Alien Landholding.

Among other things, this legislation also requires that the purchase price for the acquisition by the foreign investor must be paid in an internationally traded currency through a bank or other entity authorized by law as a dealer in that currency.  One exception to this requirement is in the case of a purchaser that is a locally incorporated company (but deemed a foreign investor due to its shares being owned by foreign investors), where such purchaser finances the consideration from capital reserves or retained earnings.

It should be noted that different rules apply to Tobago. Consulting with an attorney experienced in foreign investment ensures compliance with these rules.

Conclusion

Navigating the legal aspects of buying property in Trinidad and Tobago requires a lot of careful planning and expert guidance. From conducting legal due diligence to completing the conveyancing process, understanding the legal requirements for property purchase safeguards purchasers from potential risks. Starting the process with professional, committed and qualified real estate agents, and engaging a qualified property attorney ensures a seamless transaction and protects your investment in this dynamic real estate market.