Conduct Due Diligence to Avoid Outstanding Dues

February 13, 2018

Owning a property is anyone’s dream come true. However, if you have to pay for the dues incurred by the previous owner, that fine dream will turn into a nightmare.

Paying for outstanding dues of a previous owner of a property you just acquired is not only unjust and unfair to the new property owner(s).

One may have the perception that this is a breach of your right and are entitled to some sort of redress. However, when it comes to the Land Transfer Act Cap 131, the situation is different. If the dues on the property from the previous owner is not cleared, the liability will be transferred to the new owner.

Something similar happened in Amelia’s case, which was bought to the Council’s attention.

Amelia was in a jovial mood after purchasing a property along the Suva-Nausori corridor. It was time for celebration for her and her family as it was their first investment property. They did not encounter any problems with the documentations. During the period in which the property was being transferred to Amelia, she was advised by her lawyer that the rates and outstanding dues had been cleared by the previous owner. She was not given any documents by the lawyer to confirm that the property had no outstanding dues. It was only after the transfer of the property, Amelia received a notice from the Town Council asking her to pay the town rates which has been in arrears since 2005. The Town Council advised her to clear off the outstanding arrears on the property since the property was under Amelia’s name.

After conducting various meetings with the Town Council, Amelia was advised that as per Section 44 of the Land Transfer Act, she was required to pay the outstanding dues. Amelia had to go out of her way to communicate with Town Council instead of her solicitors, as her solicitors were not helpful.

Section 44 (3) of the Act stipulates: “Upon the registration of a transfer, the estate and interest of the transferor as set forth in the instrument of transfer, with all rights, powers and privileges thereof belonging or appertaining, shall pass to the transferee, and the transferee shall thereupon become the proprietor thereof and shall be subject to and liable for all requirements and liabilities to which he would have been subject and liable if he had been the former proprietor of such estate or interest”.

The law is clear that as soon as the property is transferred to the new owner, he/she will be held responsible for all liabilities and dues on the property. The previous owner will have no rights and liabilities over the property in question anymore.

In this case, Amelia was held liable to pay all the outstanding arrears as per the Act.

It is the prime responsibility of the lawyer acting for the parties to carry out due diligence to protect his or her clients. They need to carry out proper investigations to ensure that all dues and liabilities are cleared prior to proceeding with the transfer of the property.

Whilst there was not much that could be done in Amelia’s case, the Council can only advise consumers to be more responsible before signing off a property deal. They need to get their lawyers to conduct appropriate property searches prior to executing any property documents. Once the documents are duly signed, stamped and registered, it is too late to overturn the process.

The property search with the Registrar of Titles will allow buyers to know details of the property before being tangled into such situation. Consumers should also check with the Town and City Councils for any overdue rates by the sellers of the properties. Needless to say, a check should be run with Water Authority of Fiji (WAF) and Fiji Electricity Authority (FEA) to comprehend that there are no dues imposed by the utility providers.

When scouting for properties, one should ask whether the title of the property is clear from all arrears by previous owners. Give very specific instructions to lawyers so that they can ensure the property is cleared from all arrears and such processes are properly documented.

Consumers are being reminded not to trust the seller or the lawyer completely but sight the documents from WAF, FEA, and Town Councils on the property they intend to purchase to ensure the previous owner had cleared all the arrears pertaining to the property.

Investing in any real property takes one’s whole life’s savings and more. Hence, the same should be used properly without undergoing unnecessary hassle.


Warning: count(): Parameter must be an array or an object that implements Countable in /home/ccofitgalax/public_html/wp-content/themes/ccofweb/template-parts/content.php on line 51