Whether you are buying or selling real estate in Trinidad and Tobago, there are a number of factors that should be considered at the outset, particularly if you are a foreign investor, in order to ensure that your transaction runs smoothly. In this Chapter, Melissa Inglefield, Partner and Candice Jones-Simmons, Consultant, in the Transactional Department provide an overview of the main topics which should be considered when dealing in real estate in Trinidad & Tobago:
A transaction for the acquisition of real property in Trinidad and Tobago is formalised and begins with the entering into of an agreement for sale.
The purpose of entering into the agreement is to provide the Purchaser with an opportunity to carry out due diligence on the related property, such as conducting title searches to verify, amongst other things, the legal owner of the property. Under Trinidad & Tobago law, an agreement for sale must be both made in writing and signed by both parties (the Vendor and the Purchaser).
While there is no fixed form of contract, an agreement for sale usually contains:
Where a real estate agent is employed to sell and on behalf of a Vendor, the agent often uses their form of agreement for sale for the transaction. However, it is advisable that the Purchaser ensures that the agreement is approved by their Attorney before it is signed. Alternatively, the Vendor or Purchaser may engage an Attorney to prepare the agreement.
Where a real estate agent has been retained by the Vendor, a commission, usually in the order of three to five per cent of the purchase price, is payable by the Vendor.
For most conveyancing transactions, the Vendor is required to produce the following documents to the Purchaser and his/her Attorney (where applicable):
If the Property is leasehold:
As soon as the relevant documentation is received, the Attorney 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) encumbrances.
On average such a search takes between two (2) to three (3) weeks and costs between TT$2,000 and TT$3,000. Whilst the search is in progress, the relevant Deeds/Instruments may be prepared by the Purchaser’s Attorney.
Once the Vendor’s title is in order, the relevant transfer instrument may be finalised by the Purchaser’s Attorney. Such documents typically consist of a Deed/Memorandum whereby ownership in the property is transferred from the Vendor to the Purchaser. Upon the signing of transfer instrument by the parties, the balance of the purchase price is paid to the Vendor and the sale transaction finalised.
In Trinidad and Tobago, the Aliens (Landholding) Act, Chapter 58:02 was repealed in 1990 and the Foreign Investment Act, Chapter 70:07 relaxed the restrictions on ownership of real estate by foreigners and improved the conditions for foreign investment. The Foreign Investment Act is available for download here, via the website of the Ministry of Legal Affairs.
Generally, the Foreign Investment Act (sections 6 & 7) allows foreign investors in Trinidad (including individuals and companies) to purchase without a foreign investment licence:
In addition, a foreign investor may do the following without a foreign investment licence:
However, the legislation requires that the purchase price for the acquisition by the foreign investor be paid in an internationally traded currency through a bank or other entity authorised by law as a dealer in that currency. One exception to such 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.
Upon the vesting of land in a foreign investor, the investor must, through his Attorney/Agent, deliver to the Minister of Finance, a Notice specifying the particulars of the transaction, including:
It should also be noted that the Minister of Finance may by Order prescribe areas in Trinidad in which a foreign investor may not acquire land without obtaining a licence pursuant to section 6(2) of the Foreign Investment Act. Currently, however, no areas in Trinidad have yet been identified.
If a foreign investor wishes to purchase land in excess of the stipulated acreages mentioned above, he must apply for a licence from the President of Trinidad and Tobago in order to do so.
An application for a licence under the Foreign Investment Act must indicate inter alia the proposed land use and must comply with the controls and restrictions of the relevant planning and environmental authorities. The application form for a Licence is available for download from the website of the Ministry of Finance and can be found by clicking on the following link: “Application Form to Hold Interest in Property under the Foreign Investment Act, 1990”.
All foreign investors desirous of purchasing any land in Tobago, regardless of the size, are required to obtain a licence effective as of February 16, 2007, pursuant to The Foreign Investment (Tobago Land Acquisition) Order, 2007. Currently, the application process is known to be very lengthy.
Nonetheless, to further encourage foreign investment, the Tobago House of Assembly with the approval of the Government, identified six regions on the island of Tobago as designated tourism-related development areas:
There are two (2) systems of law under which land is held in Trinidad & Tobago:
Most of the land in Trinidad & Tobago is still held under the old law system which is based on the English common law as modified from time to time by statute, including the Conveyancing and Law of Property Act, Chapter 56:01.
Under this system, original deeds are lodged at the Deeds Registry of the Registrar General’s Department. Searches are conducted at the Registrar General’s Department to trace the Vendor’s title and confirm whether the Vendor holds good and marketable title to the property. In assessing whether the Vendor has good and marketable title to the property, the Purchaser’s Attorney or Search Clerk prepares an ‘Abstract of Title’ which comprises:
The first document contained in the Abstract is called the Root of Title. Thereafter, in order for good title to be constituted, there must be, in chronological order, a chain of title that continues from the root to the Vendor, free from all encumbrances and without any breaks in the chain of title.
Title to property may be either freehold or leasehold. If the property is leasehold, the long term leases may contain a term of years can varying from 25 years and up to 999 years. In either case, the Purchaser’s Attorney will confirm what documents may be required in order to effectively vest the title to the property in the Purchaser.
The R.P.A. system is based on the Torrens System (after Sir Robert Torrens who invented it) and is used in Australia, New Zealand and several other countries. In Trinidad & Tobago, the R.P.A. system exists alongside the old law system and it is not uncommon to find one property consisting of lands held under both systems.
All dealings with land or property under the R.P.A. system are endorsed on a document called a Certificate of Title, the original of which is kept in the R.P.A. Registry of the Registrar General’s Department, with a duplicate being held by the owner of the property or by such other persons who may have an interest in the property (e.g. a mortgagee).
Under the R.P.A. system, once a person’s interest in the property has been endorsed on the Certificate of Title, that interest is said to be indefeasible. This effectively means that the title is guaranteed by the Government of Trinidad and Tobago through the establishment of the Land Assurance Fund. Any person who has been fraudulently deprived of his/her interest in land can claim compensation from the Fund.
All instruments which purport to transfer title of real property must be stamped with stamp duty and registered in the Land Registry.
Stamp duty is payable as per the Stamp Duty Act and its Regulations, depending on the type of property and the nature of the transaction.
RESIDENTIAL TRANSFERS (INCLUDING A DWELLING HOUSE)
Where the consideration for the sale or disposal of the property is:
| Consideration | Rate | |
|---|---|---|
| UP TO | $ 850,000.00 TT | 0% |
| NEXT | $ 400,000.00 TT | 3% |
| NEXT | $ 500,000.00 TT | 5% |
| OVER | $ 1,750,000.00 TT | 7.5% |
RESIDENTIAL TRANSFERS (LAND ONLY)
Where the consideration for the sale or disposal of the land is:
UP TO $ 450,000.00 TT 0%
NEXT $ 200,000.00 TT 2%
NEXT $ 200,000.00 TT 5%
OVER $ 850,000.00 TT 7.5%
NON-RESIDENTIAL TRANSFERS (COMMERCIAL & AGRICULTURAL)
Non-Residential Transfers refer to commercial and agricultural properties. The stamp duty payable is:
UP TO $ 300,000.00 TT 2%
NEXT $ 100,000.00 TT 5% on the full amount
OVER $ 400,000.00 TT 7% on the full amount
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. The registration fee payable for the old law system is typically TT$100.00 and TT$50.00 for the R.P.A. system.