Selling Property 101
Even though the real estate market has slowed down in recent months, there are still plenty of homebuyers eager to make a purchase. There are several things that can be done to help potential homeowners find the right buyer and close the sale.
Having the standard housing reports ready and available for inspection for prospective buyers is always a plus. These are an appraisal, survey plan, structural survey—or home inspection report—and termite report. The benefit of having these at an early stage is that it will allow homeowners the opportunity to correct any minor defects that could be a turnoff to purchasers, and they can also demonstrate what a great investment the BVI property is. Alternatively, you can allow the buyer access to the property to have their own reports carried out; some purchasers will want to obtain their own reports, regardless. Provision can be made for this in the agreement for sale.
A Cane Garden Bay property paitiently awaits a new owner. Photo by Dan O'Connor.
Sellers and prospective purchasers routinely inquire whether a letter of intent—which is more commonly used in practice in the BVI than the USVI—is binding.They are not intended to be binding, but they can be. While letters of intent are generally expressed to be subject to contract, this is not definitive. If the matter was ever tested in court, the court will ask whether the terms are sufficiently definite, clear and final to be capable of becoming binding once the other party has accepted the letter of intent. A good litmus test is whether there is sufficient detail in the letter for the real estate transaction to be carried out to completion in accordance with those terms. If you don’t want the letter of intent to be binding, ensure that it states that its purpose is to set out the heads of terms on which the parties intend to negotiate an agreement for sale. It should then go on to state the key features of the deal but without including specifics such as timelines—these are best left for the agreement for sale.
An agreement for sale is absolutely necessary. It provides certainty to both the seller and the buyer, by setting out all the agreed terms and conditions in writing, such as:
•The type of title (freehold, leasehold etc)
•The chattels that are to be sold with the property (e.g. furniture, appliances, vehicles)
•The deposit that the buyer must pay
•Any conditions on which the buyer can terminate the agreement (e.g. in the BVI, failure to obtain Non-Belonger’s Landholding License, unsettled title or boundary issues)
•The closing date
•The time periods within which the buyer must conduct his/her due diligence (title searches, boundary surveys, structural and termite reports) if these are not already available
•default by buyer
•default by the seller
In the BVI, if you hold the property under a Non-Belonger’s Landholding Licence, be prepared to provide a copy of your original transfer and original NBLHL, registered withing the Land Registry.
Don’t sign an Agreement for Sale unless you are absolutely sure that you are satisfied with all its terms. You cannot cancel a sale and purchase agreement just because you have had second thoughts about buying or selling the property. In general, once you have signed a sale and purchase agreement and the conditions set out in it have been met, if you don’t proceed with the sale/purchase of the property, you risk having to pay a significant amount of monetary compensation to the other party.
Next month, I’ll look at how the Agreement for Sale deals with the standard housing reports; the rights of either party; and the practical steps parties can take, when the outcome of these reports are unsatisfactory.
USVI Property Attorney Bill McConnell contributed to this article.