Obtain an updated survey plan of the property
Agency: Licensed surveyor
If the building is 10 years or older, it is advisable to obtain a new updated plan of the land and the building is advisable to ensure that the boundaries on the ground have not changed or if the survey plan is old. This is also needed to obtain the Building and Street Line Certificate.
Time and cost: 14 days, LKR 32,467.55 (About 0.1% of property value)
A title search must be carried out at the relevant Land Registry
Agency: Colombo Land Registry
On receipt of the last title deed and plan from the seller, a title search must be carried out at the relevant Land Registry. A notary engaged by the purchaser must recommend the title. Good title must be established for the past 35 years. All deeds and plans must be checked. If prior deeds are not available with the seller the notary will have to check duplicates of deeds at the Land Registry. If plans are not available, the relevant surveyors would have to be contacted and obtain duplicates of the plans. Other checks must be carried out as well by the lawyer (notary) at the local authority.
As per the section 17(a) of the Notaries Ordinance No 1 of 1907 before any deed or instrument affecting any interest in land or other immovable property is drawn by the Notary, he shall search or cause to be searched the registers in the land registry to ascertain the state of the title regarding such land and whether any prior deed adversely affecting any interest in such land has been registered.
On confirmation that the title to the property is clear. If the title is not clear, it is recommended to purchase a title insurance is recommended, and the next step would be to obtain a policy of title Insurance (procedure 1a).
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, the time necessary to obtain this title will depend on the time taken by the title insurance company to evaluate the title, decide to issue or not to issue the title insurance policy and the cost will depend on the premium payable.
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 35 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.
Time and cost: 4 days, LKR 500
Obtain the non-vesting certificate, the ownership certificate and the building and street line certificate
Agency: Colombo Municipal Council
The seller obtains the following certificates at the Single Window Counter at the Colombo Municipal Council
- The Non-vesting Certificate
- The Ownership Certificate
- The Building and Street Line Certificates. The Street Line Certificate confirms whether the property is affected by a proposed road widening or any other reservation. The local authority issues a photocopy of the survey plan indicating the approximate position of the street line which is measured from the center of the Road.
Necessary documents to obtain Street Line Certificate
- Copies of Survey Plan with correct assessment
- Owner’s consent letter
- Applicant’s NIC photocopy
- If the assessment number given in the survey plan does not tally with the current assessment number municipal assessor’s letter clarifying the assessment number.
The buyer must also obtain from the seller the Certificate of Conformity already in his possession, which confirms that the building constructed is an approved construction.
Time and cost: 3 days, LKR 12,000 (Certificate of ownership Rs. 3500.00-Commercial + Non Vesting Certificate: Rs. 5000.00-Commercial + Building and Street Line Certificate Rs. 3500)
Transfer deed is signed in favor of the buyer
Agency: Notary
The Notary Public should check the following documents of both the Companies (Seller and Buyer)
- Articles of Association
- Certificate of Incorporation
- Latest Form 20 filed at the Registry of Companies – to obtain the details of the Directors
- Latest Form 13 filed at the Registry of Companies, if any – to ascertain the present registered office address
- Both companies should pass a resolution to sell/purchase the property and a shareholder resolution if the sell/purchase amounts to a major transaction.
As per the Section 2 of Prevention of Frauds Ordinance, Deed of Transfer must be signed by the seller company in the presence of two witnesses and Notary Public.
Section 12 of the Notaries Ordinance No 1 of 1907 states that Notary shall not authenticate or attest any deed or instrument unless the person executing the same and the witnesses shall have signed the same, in his presence and in the presence of one another, and unless he shall have signed the same in the presence of the executant and of the attesting witnesses.
Time and cost: 2 days, LKR 325,175.51 (1% of purchase price (Lawyer’s fees) + LKR 500 additional cost)
Obtain the market value from the Provincial Department of Revenue
Agency: Provincial Department of Revenue, Western Province
Before or after the payment of stamp duty the instrument of transfer is forwarded to the office of the Provincial Department of Revenue of the Western Province to obtain the market value of the property. This measure was introduced beginning March 1, 2013 with the purpose of ensuring that stamp duties are paid based on the correct market value. The appropriate value will be provided at the discretion of the department’s valuer. If the instrument is submitted after the stamp duties have already been paid and after the examination the department determines that the amount paid is inadequate, then the balance must be settled. The department will provide the certification of “instrument with duly paid stamp duties.” By ensuring that the stamp duty was paid based on the value provided by the Provincial Department of Revenue the instrument will not be recalled later on for examination of its value and will not be refused registration. According to Provisions of Financial Statute of The Western Province No.06 of 1990, Stamp duty should be paid on the Market Value of immovable properties in transferring such properties
Documents required to obtain a valuation of the property:
- Copy of the previous deed
- A draft Deed of Transfer executed by the seller company
- Survey Plan
- Building Plan
- Route plan
- Rates Assessment Notice, Valuation report (if any)
- Photocopy of Buyer’s N.I.C.
The following details must be furnished to obtain a valuation of the property from the Department of Revenue of the Western Province.
- Details of the Buyer and Seller
- Details of the Notary
- Nature of the Deed
- Details of the Land
- Details of the Building
- Decided purchase value
- Relevant date of the market value
Time and cost: 1 day, LKR 250
Payment of stamp duty at a nominated bank
Agency: State Bank
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 Revenue Commissioner of the relevent Provincial Council in which the land is situated.
Time and cost: 1 day, LKR 1,297,702.02 (Stamp duty payable as: 3% on the First Rs. 100 000 and 4% on the Balance)
Deed is sent for registration to the relevant land registry
Agency: Colombo Land Registry
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 within 3 days after receiving the Day Book. Notaries are involved with searching, preparing title report and attestation, as well as paying stamp duty. The details of the registered deeds are published in the Land Registry website (www.Rgd.gov.lk) and notice boards are available at the Land Registry office. Computerized system and greater number of staff are ensuring faster registration of deeds.
Time and cost: 15 days, LKR 100
Name of the buyer must be registered at the Municipality and the certificate of ownership is obtained
Agency: Colombo Municipal Council
The name of the new company will have to be registered as the new owner at the Colombo Municipal Council. An abstract of title form should be duly filled by a Notary Public and should be submitted to the relevant Local Authority together with a Pedigree, a certificate, a copy of the rate receipt, a certified copy of the latest plan and deed of transfer and a covering letter prepared by the Notary. Thereafter the name of the new owner will be registered in the Assessment registers and the Certificate of Ownership will be issued giving the present owner’s name.
Time and cost: 3 days, LKR 3,500 (for commercial properties)