With interest rates at an all-time low and the increasing popularity of Air B & B, more people are looking to purchase properties in Jamaica in 2019. However, hovering over what appears to be prosperity is a tornado of financial despair waiting to happen if you do not know what you are doing. You can lose your entire deposit, suffer extraordinary delays in closing the transaction, be charged interest penalties or even be sued should the deal goes sour. This article is written from the perspective of a real estate lawyer in Jamaica and to help buyers especially foreign buyers and returning residents. I will offer you some tips on how to prevent your dream from becoming a nightmare.

Make Sure You Can Afford Your Mortgage

This first tip may sound unnecessary since your mortgage institution will do its own checks to ensure that you can repay your loan. This is an important point because losing your mortgage especially too early may put you in debt. Your mortgage institution will resell your property if you are unable to repay. As if losing your home is not bad enough, the bank can later sue you if, after the sale, there remains a shortfall on your account. Therefore, you MUST think long term. A mortgage is a lifetime commitment and so you must consider the future expenses to lower your risk of losing your mortgage. If for instances you have children, consider that your expenses may increase as they progress through the different stages of the education system. Ideally, your mortgage should be no more than 25% of your gross income. You can stretch this up to 28% if you do not have other debts. That way a majority of your income can be spent on food, transportation and other daily needs.

Stay Ahead of Your Mortgage Payments

If you can, ideally you want to have at least two months’ worth of mortgage payments in you bank excluding your closing costs when you a purchasing a property. This will lead you off to a good start. So if there are any unforeseen circumstances arise, you will still be able to  pay your mortgage for two months.

Select a Good Real Estate Lawyer

Once you have decided on how much you can afford to borrow (if you are going that route) the next step is to find a competent real estate lawyer. A lot of people complain that real estate lawyer fees are too expensive, but it tends to work out in the end. A good real estate lawyer will ensure that your interest is protected. A real estate lawyer may be able to see things especially in the sales agreement contract that you may miss. For instance, the forfeiture of deposit. I always call this the deadly clause, it simply means that if you back out of the contract, you will lose you’re your deposit.

A good real estate lawyer can get these terms out of your contract. Another area that a good real estate lawyer may be able to assist with is the interest rate applied when you fail to comply on time with terms of the contract. A diligent real estate lawyer will ask for a lower interest rate on the balance of the purchase price as a penalty. Your real estate lawyer may even be able to request an extension to close and ask for waivers of the penalties.

A good real estate lawyer, therefore, is worth the costs. Most real estate lawyers in Jamaica, charge a fee of 2% of the purchase price to represent the purchaser. Here are some tips in finding a good lawyer in a Jamaica

Please note that a good trial lawyer may not equate to a good real estate lawyer. Hire a real estate lawyer with experience in conveyancing matters to represent you. You need someone who will negotiate the best interest for you.

Enquire About of Fees and Closing Costs

Aside from the deposit payable, there are several other fees associated with real estate transaction. In fact, the costs associated with a real estate transaction in Jamaica is relatively high. Most of the fees are percentage based. Your legal fee can be anywhere between 2-5 %, then there is stamp duty at $5000, but this is shared equally between vendor and purchaser, so the purchaser only pays $2,500. Registration fee is also payable which is 0.5%, this fee is also shared equally between vendor and purchaser and so the purchaser pays 0.25% of this fee. The purchaser also must obtain his or her own independent valuation report which also attracts another fee.

You can ask your real estate lawyer to give you an estimate of what the transactional cost would be.

DISCLAIMER:

The contents of this article are for informational purposes only and must not be relied upon as an alternative to legal advice from your attorney.