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Prospective sellers of real estate (land or house and land) often focus only on the price they intend to have the purchaser pay for their property. However, as with purchasers, this is not the complete picture. There would be legal costs, taxes and other expenses which the seller would have to bear. These additional expenses can amount to significant sums.
Let’s look at an example of the sale of a house for a price of $350,000. Normally, the seller’s lawyer would be responsible for drawing up the agreement for sale and this is paid by the seller. Based on the Bar Association recommend fees the legal costs that a lawyer should charge for preparing an agreement for sale is 1% of the sale price of the property. If additionally, the lawyer is handling the sale of the property which would include interfacing with the purchaser’s attorney, perusing mortgage deed, they may charge a further 1%. In total therefore the seller’s lawyer may charge 2% of the sale price whch is $7,000.00.
There may be special circumstances which could require further legal expense. If for example the property was subject to a mortgage then a reconveyance may be necessary. There may be other things that have to be done to perfect the title such as evicting a squatter, or replacing a lost deed.
But the big ticket expense item is property transfer tax.
Property transfer tax
On every sale of property the government has to be paid property transfer tax. The transfer tax payable by a seller who is a citizen of Grenada is 5% of the sale price less $20,000. In our example therefore the property transfer tax will be 5% of $330,000 or $16,500.00.
Additionally, the seller would have to pay up any outstanding property tax which was unpaid up to the date of the sale.
Non-Grenadian Seller
If the seller is not a Grenadian, in addition to the above expenses they would have to pay property transfer tax of 15% instead of 5%. Hence instead of $16,500, the property transfer tax would be $49,500.00
Conclusion
The expenses for a typical Grenadian seller of a property being sold for $350,000.00 could be over $23,000.00 ($7,000 legal costs plus $16,500 property transfer tax) and for a non-Grenadian seller it would be over $56,000.
It means that a Grenadian seller selling a property for $350,000 would at best receive $326,500. And a non-Grenadian selling a property for $350,000 would at best receive $293,500.
Prepared for KALINA Property Solutions by Joseph Ewart Layne.
Joseph Ewart Layne is a graduate of Hugh Wooding Law School; he holds an LLB (Honours) and an LLM (Corporate & Commercial Law) from London University and a LLM (Legislative Drafting) from UWI, St. Augustine. He also holds a BSc. (First Class Honours) in Applied Accounting from Oxford Brookes University and is an ACCA Affiliate.
This article is for general information purposes only. Its contents do not constitute legal advice. Before you act on any matter in this article, seek advice from an attorney-at-law
