Process of Registering and Buying Property in Sri Lanka
Step 1: A title search must be carried out at the relevant Land Registry
Completion Time Frame: 3-7 days (simultaneous with procedures 2 and 3)
Completion Costs: LKR 1,000
Points to Note:
On receipt of the last title deed and plan from the seller, a title search has to be carried out at the relevant Land Registry. A lawyer/notary engaged by the purchaser has to recommend title. Good title has to be established for the past 30 years. All deeds and plans have to be checked. If prior deeds are not available with the seller the notary will have to check duplicates of deeds at the Land Registry. Confirmation from a notary/lawyer should be obtained that the title to the property is clear. On confirmation that the title to the property is clear, step 2 will apply; if not title insurance is recommended, and the next step would be to obtain Insurance Policy (procedure 1a). The costs of the search are: LKR 10 for search at the Land Registry; LKR 5 to check duplicate of deed, and LKR 105 to obtain copy of deed. Lawyer fees are additional.
If title insurance is recommended in procedure 1 due to a defect in title, then the next step would be to obtain a Buyer’s Policy of Title Insurance to cover defects. This step is optional and contingent to the result of step 1. If the policy is needed, it will take 3 days and LKR 230,000 to obtain. Usually title insurance is recommended for the following reasons:
• Prior deeds and documentation not being available and further if the registers at the land registry cannot be traced for 30 years (if the books are damaged).
• If there are any discrepancies in the title deeds and plans.
• If the present owner had owned an undivided share of a larger land, and had sub-divided it without the consent of the other parties or without a Deed of Partition or Partition Plan.
Step 2: Seller needs to obtain a group of documents from the Municipality
Completion Time Frame: 21 days (simultaneous with procedures 1 and 3)
Completion Costs: LKR 500
Points to Note:
The seller obtains the following documents from the Municipality:
1. The building and street line certificate
2. Certificate of non-vesting
3. Tax receipts in proof of payment of rates and taxes for the last quarter
4. Certificate of conformity in respect of the building
5. Certificate of ownership stating that the seller is the owner of the land and premises
Step 3: A new survey plan of the property must be obtained
Completion Time Frame: 14 days (simultaneous with procedures 1 and 2)
Completion Costs: About 0.1% of property value
Points to Note:
A new approved plan must be obtained for both the land and the building. They must be obtained by the seller and attached later to the application for registration.
Step 4: The parties must present some documents to the buyer’s notary/lawyer and the Deed of Transfer in favor of the buyer is signed
Completion Time Frame: 2 days
Completion Costs: LKR 500 + 1% of purchase price (Lawyer’s fees)
Points to Note:
The following document with regard to the company of the seller will have to be furnished to the buyer’s lawyer/notary:
1. Articles of Association of the company
2. Certificate of incorporation of the seller
3. Resolution authorizing the sale of land. If the purchase-sale is a major transaction as defined by section 185 of Companies Act No. 7 of 2007, such a transaction should require the shareholders sanction as well.
The buyer needs to pass a resolution to purchase the property.
On receipt of the above documents the deed of transfer in favor of the purchaser can be signed. Lawyer’s fees are paid by the buyer and will depend on the lawyer (usually 1% of purchase price).
Step 5. Payment of stamp duty at a nominated bank
Completion Time Frame: 1 day
Completion Costs: 4% of value of land minus LKR 1,000 (Stamp duty)
Points to Note:
After execution of the deed of transfer stamp duty will have to be paid within 7 days to a nominated state bank in favor of the relevant Provincial Council in which the land is situated.
Step 6: The deed is sent for registration to the relevant land registry
Completion Time Frame: 30 – 42 days
Completion Costs: Already paid in Step 5
Points to Note:
After payment of stamp duty, the deed duly attested by the notary, will have to be sent for registration to the relevant land registry. The deed is registered and returned to the notary from the Land Registry.
Step 7: Name of the buyer must be registered at the Municipality and the certificate of ownership is obtained
Completion Time Frame: 21 days
Completion Costs: LKR 200
Points to Note:
The name of the new company will have to be registered as the new owner at the Municipality. The certificate of ownership is obtained from the Municipality on execution of the deed of transfer in favor of the new owner.
Step 8: Notary hands over to the owner all the deeds and documents pertaining to the property
Completion Time Frame: 1 day
Completion Costs: no cost
Points to Note:
On receipt of the deed of transfer from the Land Registry the notary hands over to the owner all the deeds and documents pertaining to the property for retention.
Filed under: Sri Lanka