Transfer of Property Act at Sri Lanka
In Sri Lanka, property transfers are primarily governed by the Civil Law framework, specifically the Sri Lankan Civil Code, along with other relevant property-related statutes. There is no specific law called the "Transfer of Property Act" like in India, but property transfer laws are clearly outlined in the country's legal system.
Here are the key laws and steps involved in property transfer in Sri Lanka:
1. Sri Lankan Civil Code
The Civil Code of Sri Lanka provides the primary legal framework for property transactions. It outlines the rules regarding the ownership, sale, lease, and transfer of property.
It covers both immovable (real estate) and movable property, with specific provisions on sale agreements and the transfer of ownership.
2. The Registration of Documents Ordinance
This law governs the registration of documents, including property transfer agreements.
For a property transaction to be legally valid and recognized against third parties, it must be registered with the Land Registry. The transfer of property is only complete once the transaction is properly registered.
3. Process of Property Transfer in Sri Lanka
The typical process of transferring property in Sri Lanka includes the following steps:
Sale Agreement: The buyer and seller must sign a sale agreement that clearly outlines the terms of the transaction, including the property description, price, and any conditions of the sale. This agreement is usually drafted with the help of a lawyer.
Title Verification: Before completing the sale, the buyer should verify the title of the property to ensure that the seller has clear ownership and there are no encumbrances (like mortgages) on the property. This can be done through the Land Registry.
Execution of Deed: The next step is the execution of a Deed of Transfer (also called Deed of Sale). This deed legally transfers ownership from the seller to the buyer. It is signed by both parties and needs to be witnessed.
Notarization: In some cases, the Deed of Transfer may need to be notarized by a notary public to confirm the validity of the transaction.
Payment of Stamp Duty: Stamp duty (a tax on legal documents) must be paid on the Deed of Transfer before it can be registered. The amount is usually calculated based on the sale price of the property.
Registration with the Land Registry: The final step is the registration of the Deed of Transfer with the Land Registry. This ensures the transaction is legally recorded and the buyer is recognized as the new legal owner of the property.
4. Land Registry
The Land Registry in Sri Lanka is the official body responsible for recording property ownership and other related transactions. It is essential that all property transfers are registered at the Land Registry, as the ownership of property is not legally effective until it is recorded there.
5. Taxes and Fees
Several taxes and fees apply to property transactions in Sri Lanka:
Stamp Duty: This is a tax on the Deed of Transfer and is typically paid by the buyer.
Registration Fees: The buyer or seller (depending on the agreement) may be responsible for paying the registration fees to register the transaction with the Land Registry.
Capital Gains Tax: Although there is no specific capital gains tax on property in Sri Lanka, profits made from the sale of property may be subject to tax under certain circumstances, particularly for businesses or entities selling properties for profit.
6. Inheritance and Donations
Inheritance: Property transfer through inheritance in Sri Lanka is governed by the same civil laws. A property owner can pass their property through a will or under the laws of intestate succession (if there is no will).
Donations: Property donations also follow similar legal procedures, with a deed of donation being executed and registered in the Land Registry.
7. Property Disputes
In the event of disputes over property ownership or the terms of a transfer, such matters can be taken to court. Sri Lanka's legal system allows for resolution of property disputes through the courts, where a judge will review the evidence and make a ruling.
Key Steps in Property Transfer in Sri Lanka:
Negotiation and Sale Agreement: Both parties agree on the terms, and a sale agreement is signed.
Title Verification: The buyer verifies the property's title and ensures there are no legal issues with ownership.
Execution of Deed of Transfer: The Deed of Transfer is signed by both parties, and it may be notarized.
Payment of Stamp Duty: The required stamp duty is paid.
Registration: The Deed of Transfer is registered at the Land Registry, making the transfer legally binding.
RELATED Blog
0 comments