Buying Immovable Property could very well be one of the biggest decisions and investments in a person's life and it has been well known to also create a great deal of stress and anxiety whilst going through this process. There is a series of checks to be carried out on the Purchasers' end in order to make sure that their investment is suitable to the needs and does not carry out any unknown risks or liabilities after the transfer of the Immovable Property. Such checks might take a few weeks, depending on how well prepared and attentive the Seller is, but it is well worth the wait in order to minimize any risks.
Below are five basic steps which everyone should consider prior to entering into a legally binding agreement for the purchase of their dream property:
1) A full Lands Registry Search should be carried out on the Property
Upon request of the Owner or any interested party the Lands Registry Office can provide a full Search showing any prohibitions (i.e. prohibition to transfer), contracts of sale or encumbrances, such as mortgages or memos (Court decisions registered on the Property). If you are provided with one from the Owner, make sure that it is recent and, in any event, as close to the date of signing the Contract of Sale as possible.
It is very important to know in advance whether any such restrictions or encumbrances exist on the Property because an encumbrance (e.g. a mortgage) will give priority to the right on the mortgagor on the Property before your rights as a Buyer arise. This does not mean that the existence of a mortgage should automatically cancel any negotiations, however this will mean that arrangements must be made in order for the mortgages to be lifted and/or any memos can be paid as part of the Purchase Price, so that you acquire a clean title deed
2) Check the status of the title deed and the legitimacy of the construction works
If there is a title deed, request for a recent title deed, as this will reduce the possibility of the Property having information that you are unaware of. Special attention should be placed on whether the title deed has notes on it, as this will mean that there are either minor or major building irregularities. In more serious cases, if a certificate of unauthorized work has been issued by the Authorities, the Owner could be prohibited to transfer or mortgage the Property. A recent title deed with no notes is usually a good sign but you should also be provided with a certificate of final approval relating to the construction (if applicable).
Nonexistence of a title deed or a non-updated title deed is a common phenomenon. This is not a problem in itself, however it is emphasized that in both instances, a more rigorous due diligence is required, as you might be required to spend time and money in updating the title deed depending on the findings. A certificate of final approval of the construction works and proof of the application for update of title deed (and division of plots if applicable) should also be part of the documents provided to a potential purchaser.
3) Request copies of the planning and building permits with the approved plans
This is applicable in cases where the property in question is not a mere plot and construction has occurred (whether completed or still ongoing). You need these documents for many reasons, one of them being to check the legitimacy of the construction works over the land. The building permit is what allows construction works to commence. Also, usually there are terms imposed that you should be aware of before you buy the Property (for example, special terms in relation to water supply of a pool, or in certain areas a certain style is allowed such as clay tiles on the roof, or allowance of right to light to neighbouring properties, etc).
It is a good idea for the plans to be checked by your own specialist as well as making sure that there is no planning or building permit issues.
4) Use experienced professionals
It is important that both an advocate and a specialist such as a civil engineer are involved. It is a common phenomenon that where property due diligence was not made on the property or the terms of either not having made prior inspections of the Property or the contract of sale were not properly negotiated or were unfavourable to the Buyers, such as the "trapped buyers" example or i.e. cases involving sales of properties that were expropriated. Both specialists can work in collaboration, with the specialist carrying out a survey as to existing costs for repairs or checking the structural integrity of the building or confirming compliance to the Permits issued, and the advocate can help you negotiate and implement the correct terms in the contract which will protect you.
5) Inspection and valuation
An inspection will give you an indication of the physical characteristics of the Property and its amenities, as well as the costs of repairs that might be needed to access your investment. Also, you should know the value of the Property you are buying as this will allow you to assess the investment as well as negotiating further.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
