Says Saminda Jayasekara, Attorney-at-Law

According to the report on Land Tenure Considerations in Sri Lanka’s Proposed National REDD+ Strategy Sri Lanka UN-REDD Programme, 82.25% of the land in the country is owned by the government while only 17.75% is owned privately. As the value of this land appreciates each year, and property is transacted between individuals, documentation and registering ownership become even more important.

To get more insight on deeds and lands in Sri Lanka, at LankaPropertyWeb, we interviewed Attorney-at-Law Saminda Jayasekara.

In Sri Lanka, land can be broadly classified into 2 types based on ownership. They are State-owned lands and private lands. State-Owned lands are lands owned directly by the Government of Sri Lanka or any Government or Semi-Government institutes including state-owned Companies. The ownership and the procedure of transferring the ownership are decided and governed by the State Land Ordinance or relevant Act of Parliament for establishing the said institute (Ex: Urban Development Authority Act No. 41 of 1978) or Articles of Association if it’s a State-owned limited liability company (Ex: Lanka Phosphate Limited).

Private lands on the other hand can be owned by a person including but not limited to any individual, Corporate, Diplomatic Mission, Religious Place/ Organization  and a Charitable Trust. However, it is always subject to the Lands (Restrictions on Alienation) Act No. 38 of 2014 and its amendments.

“Owners of private lands have the freedom/right to make changes the way they want to the property, including whether they want to build a house, apartment, or use it for agricultural purposes. But it is subject to the Zoning and Development regulations of the Urban Development Authority. To prove the ownership of the property, they need to have a deed with the title of the property registered in the relevant Land Registry under their name,” said Saminda Jayasekara.

According to Sec. 2 of the Prevention of Frauds Ordinance, every transaction related to land should be in writing and such documents should be executed in front of a Notary and two witnesses. In fact, a notarially attested document is a must for a transaction related to land or building. This document is called a deed and is an official record and proof of ownership of a property.

When inquired about the types of deeds in Sri Lanka, Saminda said, “There are few document types someone can use to gain ownership of a property, and of them the common is the Deed of Transfer.”

If a person intends to purchase property, he pays the relevant consideration to the present owner and gains ownership of the property through a deed of Transfer attested by a notary. In a Deed of Transfer, details of the Vendor and the Purchaser, Consideration, and details of the property are mentioned. It also describes how the vendor obtained the ownership to the property. The vendor may declare that the property has a good title, meaning that there are no encumbrances or lawsuits against it as well in the Deed of Transfer.

But what about the stamp duty charges?

Commenting on this, Saminda stated that irrespective of the Consideration passed at the transaction, the purchaser has to pay stamp duty for the Deed based on the market value of the property determined by the Provincial Department of Revenue. If the property is purchased through a Bank Loan, then Bank Valuation should also be considered when paying Stamp Duty.

He also revealed that for the 1^st Rs.100,000/= of the property’s value, a stamp duty of 3% should be paid while for the balance value of the property, 4% should be paid as stamp duty to the relevant provincial council.

In the Attestation, the Notary must mention how the Vendor and Witnesses signed, how the consideration passed and the way stamp duty was paid.

Another way of getting ownership of a property is as a gift through a Deed of Gift. It can be used to give property to a family member, servant or employee because of love and affection, honest and loyal service or any other acceptable reason towards the beneficiary. In the Deed of Gift, the Grantor has to mention his relationship with the grantee.

When asked about the exception in a deed of gift, Saminda said, “The Grantee must also sign in the Deed for acceptance of the Gift for it to become valid. If the Grantee is a minor, an adult can accept the gift on behalf of him. Deeds of Gift may also be drawn with specific conditions such as the life interest of the Grantor or someone in the family of the Grantor.”

The main difference between a Deed of Gift and Deed of Transfer is the consideration. In a deed of gift, there is no consideration, but parties still have to pay stamp duty for them. Here stamp duty is calculated based on the acquired value of the property by the grantor and the value of any improvements made to the property (i.e. constructing or renovating a house/building). But, here the rate of stamp duty is lower than for a transfer. For the 1^st Rs. 50,000/- of the property value stamp duty of 3% should be paid and for the balance, the stamp duty is 2%.

If a person has an undisturbed and uninterrupted possession of a property for more than 10 years, he can make a declaration on the said property using a Deed of Declaration. Once it is registered at the relevant land registry, the declarant’s title for the property will commence.

Commenting on this, Saminda said, “Banks and other financial institutes accept declaration titles only 10 years after the registration of the Deed. So if you register the property under your name today, you can only get a mortgage loan for the property 10 years from now.”

Prior to registering a Deed of Declaration at the Land Registry, the relevant land registrar will get confirmation from the Government Divisional Secretariat on whether the declared property is owned by the state. If it’s a government property, the registration will be refused.

People can also acquire property through last wills written by the owner of the said property who nominates a person who will own his movable/ immovable assets after his death. Nominees can be anybody including corporations, charities or religious places. The person should also nominate an executor in the will. The executor shall file a testamentary case in the relevant District Court and have to prove the will. Once the case is concluded, the court issues a probate, and the Executor has to execute a Deed known as the ‘Executor’s conveyance’. Beneficiaries of the last will then get titles to the properties mentioned therein after the registration of the same.

Expressing his views on the will, Saminda stated that one person can execute any number of last wills. But the final one will be the authoritative document. In it, the executor must expressly cancel his previous last wills as well.

When a person passes away without a last Will, distribution of his properties will be based on the law of succession in the country. In  the common law of succession, when a person dies, half of his property will be inherited by his spouse and the balance will be distributed among the children. If there are no children, the remaining half will be distributed among parents/ siblings.

However, if the parties involved fall under any personal laws of the country  such as the Kandyan law, Muslim law or Thesavalamai law, the general laws of succession will not apply and the relevant provisions of the personal law will be considered when accounting for inheritance.

If the estate of the deceased person is more than Rs. 4,000,000/- the next family member in line (i.e. spouse or eldest child) shall file a testamentary case at the relevant District Court. The court will issue a letter of Administration and the Administrator executes the Deed called ‘Administrator’s Conveyance’ to register the land at the Land Registry. The descendants and ascendants will then get the ownership of the properties according to the applicable law of succession.

A Partition Deed is a different type of legal document to claim ownership of a property. This is applicable when a property has co-owners and is used to distribute the land among all co-owners.

“Property can be partitioned in 2 ways. One is through a partition case where one co-owner files a case in the district court against the other co-owner and the court delivers a partition decree with the Final Partition Plan, and the other is through a partition deed,” stated Saminda.

In a partition case, the said Partition decree should be registered in the Land Registry, and claimants then get ownership of the property according to the final decree.

While in a Partition Deed, all co-owners agree to divide the property amicably. Here, a plan is prepared according to the agreement and a partition deed is executed jointly. However, the beneficiaries do not acquire a perfect title compared to the title from a Partition Case.

Matters to be considered prior to purchasing a Property

1. Title Search – Prior to purchasing a property, anyone shall conduct a title search at the relevant land registry for a minimum period of 30 years. The only exception is if the title commences from a Partition Decree. The Notary must be satisfied about the clear chain of the title for the property prior to executing a deed.

2. Local Authority documents – Purchaser must obtain the following documents from the relevant Local Authority for the property prior to the purchase.

• Street line Certificate – If there is a proposed road widening in the access road to the property by acquiring the subject property or part thereof, the Street Line Certificate will notify you.
• Building Line Certificate – When you plan to build something in the property, the Building Line Certificate notifies the amount of meters/feet to be kept free from the road within the property.
• Non- Vesting Certificate - If the owner of the property has not paid Assessment rates to the Local Authority, there is a risk of the property being acquired by the said authority. However, when the payments are regular, the Authority issues this certificate stating that the property is not identified for vesting.
• Ownership Certificate – Once a person purchases a property and registers the Deed in the Land Registry, application for registration in the Assessment registry at the Local authority should be done through a lawyer. The Ownership certificate shows who is the owner according to the Assessment Registry.

3. Utilities – Check whether the current owner of the property has paid for all utilities (Electricity/Water/Telephone/Cable TV etc ). If it’s an Apartment, additionally check whether the Management fee has been paid.

4. Special clearances due to the location – If the property borders or is within close proximity to a waterway, sea shore, High-security sensitive location, Airport or any other important place, clearance from the relevant authorities have to be obtained. For instance, , a property next to the President’s house has to get clearance from the President's Security Division while a beachfront property shall obtain a clearance from the Coast Conservation Department.

To get more details on the property buying and selling process, read LankaPropertyWeb’s complete Sri Lanka Property Buying Guide on our website.