Share Transfer | Residential Property
When you buy a flat or unit by share transfer, you are in fact purchasing shares in a company. The company owns the property and your ownership of the shares gives you a right to occupy the flat or unit, as the case may be.
The procedure involved in purchasing share transfer property
Review of draft contract of Sale – the share vending agreement (the “SVA”)
The share transfer in the company is conveyed by way of a SVA. It is the ownership of these shares which give you the right to occupy the flat or unit within the property owned by the company. The SVA is provided by the Vendor’s lawyer.
Amongst other matters, the SVA will set out the shares to be sold and the amount the shares are to be sold for. Furthermore, the SVA will contain warranties. These will be given by the Vendor in relation to the company, the property and the unit that you will be occupying. It is common for the SVA to contain a damages clause, which could be used against a party who, after signing the SVA, does not proceed with the transaction.
Review of the company books
The company is legally obligated to maintain detailed registers relating to the directors, secretary and shareholders. We will inspect the registers to check that these are up-to-date and accurate. We will also review the minute book to check that the company is being managed satisfactorily.
The company business is guided by its Articles of Association (the “Articles”). The Articles will set out how the company will be run, the rights of the shareholders, directors and details of the different units. The Articles are in effect the agreement between the company, the directors and the shareholders. We will review the Articles to ensure that they are satisfactory in relation to your ownership of the shares. Furthermore, we will check the company’s memorandum, which sets out the name of the company and its registry number.
We will also check that the company has a current insurance policy covering the buildings and third party liability. We do not, however, review the terms and conditions and appropriateness of such policy as this is the responsibility of the company. Please note that you will need to take out additional insurance in relation to your own contents insurance, as this is not covered under the building insurance.
We will also obtain details of the current service charges applicable to the unit and whether any additional charges are due to be made. Clearly the service charges can increase and this is no more than a snapshot at the time of the request.
We will also obtain a copy of the latest accounts for the company. Please note that we are not qualified to provide advice on the accounts and, as such, you may wish to arrange to have an appropriately qualified person review these accounts.
While the company will already have purchased the property, we will carry out a title check in the public registry. This is to ensure that all is actually in order with the property and that no material issues have been overlooked.
It should be noted that a title check will not reveal the existence of certain rights, such as the rights of widowers or widows.
We will send out search letters to the various agencies, who may be able to provide information in respect of the property.
Search letters are commonly sent to Planning, Department of Infrastructure, the relevant parish, Jersey Electricity, Jersey Water and, depending on the property, Jersey Gas, Rent Control Tribunal and Public Health. The various agencies each levy a fee for this information.
It is drawn to your attention that all agencies now put disclaimers on the accuracy of information they provide. The Purchaser’s lawyer is therefore not liable if the information provided to him is incorrect.
As soon as possible after title has been checked and the search letter replies have been reviewed, Parslows Jersey conveyancers will attend on site. The purpose of the site visit is to ensure that the company’s sale contract corresponds with the circumstances on site. We will thereafter discuss any defects and or issues with you. In some circumstances it may be necessary to request that any such defects be dealt with by the Company or a neighbour, or to obtain defective title insurance cover.
In order to buy share transfer property in Jersey that you intend to occupy, you must hold a valid registration card providing entitlement to purchase.
In circumstances where you require to borrow, your advisor will assist you with the application for a bank loan. If and when your loan is approved, it is essential that you sign the facility agreement and return it to the bank as soon as possible, to avoid delays to your share transfer. A satisfactory survey and valuation is likely to be a condition of any loan.
Thereafter we can advise you on the legal implications of entering into the bank’s security documents; for example what will happen if you do not keep up your loan repayments.
Please note that if a balance of funds is to be paid to make up the difference in the price payable for the property, you must make sure that it is with us at least two days immediately prior to the passing of the SVA.
Other issues you need to be aware of …
Survey and valuation
Please take note that while your bank will request a survey and a valuation, this is to ensure that its loan to you is safeguarded. This is not necessarily comprehensive and you should consider carefully the benefit of instructing a surveyor to carry out a full survey. If you don’t have a survey, any defects found after you buy will be your responsibility. The survey should be carried out on the buildings owned by the company as a whole, as opposed to just the unit itself, because the company, and effectively you and the other shareholders (if any), will have liability in relation to the structure of the buildings, the common areas and any works which may be necessary.
If you have agreed to buy contents from the Vendor, it is essential that these are listed in an inventory, and this should be drawn up by the estate agent as soon as possible after the offer has been accepted, so that no nasty surprises or last minute price reductions arise on the eve of completion. Both parties should review the inventory to ensure that they are receiving (or selling) all the contents that they understood were part of the deal.
Land transfer tax
Land transfer tax is levied by the Treasurer of the States and is applicable to every contract which is passed. Land transfer tax is payable by the buyer. It is calculated by reference to the purchase price and is also payable in respect of any mortgages or loans to be secured against the shares.
Wholly residential property is free from Goods and Services Tax. If the share transfer property which you are buying does not fall within that category, we will discuss GST with you further; it is payable by the buyer when applicable.
Utilities and insurance
You will need to ensure that all utility accounts are transferred into your name, in readiness for the day of completion. It is usual for a buyer to communicate with the Vendor directly, to ensure the smooth transfer of the various services supplied to the flat or unit, and that no service is unnecessarily disconnected.
It is essential that you are covered by contents insurance from the time of passing contract, and you should provisionally arrange this well in advance and call your insurer to confirm and issue a cover note before the contract is passed.
The SVA will provide for the apportioning of the parish rates and other periodic payments between the vendor and purchaser.
The big day … buying your new home
Signing the SVA
Once we have completed our review of the company records and the property, met with you and returned the loan documentation, you should be ready to purchase the shares giving you the right to occupy your unit.
To buy share transfer property in Jersey, you do not attend Court. Instead you will be required to sign the SVA. This can be signed on any day of the week.
Agreement as to possession should be arranged well in advance via the estate agent. Care should be taken when agreeing extended possession periods, with regard to issues such as insurance and liability for damage, or even destruction of the property and or flat/ unit during this period.
For advice, assistance or further information on share transfer property in Jersey please do not hesitate to call 630530 or email us on firstname.lastname@example.org or call 630530.