Purchasing flying freehold property in Jersey – a brief guide
In this guide, our legal experts will explain the process of purchasing flying freehold property in Jersey.
What is a flying freehold property?
Flying freehold is a form of co-ownership: A larger property is divided into individual apartments, generally, residential units which, as in any building in multiple occupation, share certain areas (entry halls, stairways, lifts, gardens, yards, etc.) and services (drainage, electricity, etc.). The co-owners form an incorporated Association and abide by a declaration of co-ownership, as registered in the Public Registry. This Association takes decisions in a general assembly of the co-owners; it can act on their behalf, acquire and alienate property and rights, and litigate. A co-owner will have sole ownership of an individual unit and ownership in common of the communal areas (the share or lot).
The procedure involved in purchasing flying freehold property
Review of the draft contract of Sale
Parslows Jersey conveyancers will review the property’s description, given in the draft contract of sale by the Vendor’s lawyer, to ensure that it corresponds with the information provided in the Public Registry. We will check to ensure that all rights either over, or for the benefit of the property, are adequately set out in the draft contract of sale.
Review of the declaration of co-ownership and associated records
We will review the declaration of co-ownership. This document sets out the rules and obligations of the Association and the co-owners.
The declaration of co-ownership will detail your responsibility to maintain your flat, and the contribution you will have to pay towards the Association’s expenditure. The Association will have a duty to insure the property as a whole and maintain the property’s structure. You will be obligated to contribute to these expenses, which are usually recovered by a service charge.
We will check the minutes of the Association meetings and request information from the Association representative. This will be to obtain clarification as to levels of expenditure incurred by the Association, whether the co-owners are discussing any major expenditure and that appropriate insurance cover is in place.
The declaration of co-ownership contains details of the boundaries of the property, the rights and obligations of the Association as the owner of the land and buildings, and any restrictions and rights affecting the property and its title.
Accordingly, Parslows conveyancers will check the title to the Association property. This involves reviewing all transactions conducted by the Vendor and his predecessors in title, for a minimum period of 40 years. Title research is now usually conducted online using the PRIDE system. The title to neighbouring properties will also be looked at, to ensure that the boundaries they claim towards the property to be purchased, and rights set out in those properties’ contracts correspond with the information set out. The main aim of such an exercise is to ensure that the Association (and therefore the Vendor) has a good, unencumbered marketable title to the property, free from any outstanding claims. It should be noted that a title check will not reveal the existence of certain rights, such as the rights of widowers or widows. In these circumstances, we have to rely on information received from the Vendor’s lawyer.
We 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, Transport and Technical Services, the relevant parish, Jersey Electricity, Jersey Water and, depending on the property, Jersey Gas, Rent Control Tribunal and Public Health.
It is drawn to your attention that all agencies now put disclaimers on the accuracy of the information they provide. Therefore, the Purchaser’s lawyer is not liable if the information provided is incorrect.
As soon as possible after the 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 Vendor’s draft sale contract corresponds with the circumstances on site. We will thereafter draw to your attention any defects and or issues. In some circumstances, it may be necessary to request that any such defects be dealt with by the Vendor or a neighbour or to obtain defective title insurance coverage.
Buying and Selling Property in Jersey
In order to buy and sell property in Jersey, you must hold a valid registration card providing entitlement to purchase.
In circumstances where you require a mortgage, your mortgage advisor will assist you with applying for a mortgage. If and when your mortgage is approved, you must sign the facility agreement and return it to the bank as soon as possible to avoid delays. A satisfactory survey and valuation are likely to be a condition of any loan.
Thereafter, Parslows 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 mortgage 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 by the Thursday immediately prior to the passing of the contract.
Other issues you need to be aware of when purchasing flying freehold…
Survey and valuation
Please note that while your bank will request a survey and valuation, this ensures 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. The contract of sale will contain what is called a vices caches clause. This, in essence, means that all hidden or apparent defects are your responsibility once you have purchased. If you don’t have a survey, any defects found after you buy will be your responsibility.
If you have agreed to buy contents from the Vendor, these must be listed in an inventory. 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.
Stamp duty is a duty levied by the Treasurer of the States when purchasing flying freehold and applies to every contract that is passed before the Court. Stamp duty is payable by the buyer. Stamp duty is calculated by reference to the purchase price and is also payable in respect of any mortgages or loans to be secured against the property.
Goods and Services Tax (GST)
Wholly residential property is free from Goods and Services Tax. If the property you are buying does not fall within that category, GST may be payable.
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 directly communicate with the Vendor to ensure a smooth transfer of the various services supplied to the property and that no service is unnecessarily disconnected. It should be noted that while buildings insurance will be taken out in the name of the Association, you will be responsible for contents insurance.
Your contract of sale will provide for the apportioning of the parish rates and other periodic payments between the vendor and purchaser.
The big day… purchasing flying freehold
Passing of the contract
Once we have completed our review of the property, met with you and returned the loan documentation, you should be ready to purchase the property.
When purchasing flying freehold in Jersey, you do not sign a contract; instead, it is passed in the Royal Court and you or your attorney will attend Court on a Friday afternoon to swear an Oath to abide by the terms of the contract.
Attendance in court
If you so wish, you may attend Court in person. Alternatively, you can, by power of attorney, appoint someone else to attend on your behalf. If you attend the Court personally, you must wear formal attire. Failure to dress appropriately may result in the Court refusing to pass the contract.
The procedure in Court for purchasing a flying freehold
The procedure in Court for purchasing flying freehold is that you should wait until your name is called and then stand up. You will be asked if you understand the contents of the deed (i.e. the contract). You will be asked to raise your right hand, and to swear an Oath that you will be bound by the terms of the contract and will not act against those terms. A copy of the contract will be retained in the Public Registry and will constitute evidence of your title to the property.
Once the contract has passed before the Court, you will be handed your keys by your conveyancer.