Knowledge

Background

Jersey property law is a distinct system which (although it has been heavily influenced in more recent years by the English regime) has historically developed from Norman-French customary law.

Property in Jersey is not registered at a central registry and title to property is not guaranteed by the state (as in England and Wales). It is, therefore, for the buyer's lawyer to ensure that the buyer will receive good title to the property on completion.

Most Jersey contracts will contain a clause which stipulates that the buyer takes the property in the state in which it is found (inclusive of all defects, whether they were hidden or apparent). For more information, please refer to our separate briefing 'Buyer beware! Defects and misrepresentation in property sales'.

Types of property

Jersey law divides property into two distinct categories:

• "immovable property"; and
• "moveable property".

Immovable property denotes ownership which is "good against the world". An owner of immovable property can enforce their rights of ownership against any other entity which infringes them. The category includes land (and buildings constructed thereon) and leasehold interests for a term of over nine years (known informally as "contract leases").

Moveable property is more akin to a contractual right and the owner will, therefore, be unlikely to be able to enforce their property rights against anyone who has not contractually bound themselves to honour such a right. Contractual interests such as licences to occupy are moveable property under Jersey law but the moveable property classification includes shorter leases for a term of fewer than nine years (known as "paper leases").

Types of property interest

The categorisation of each property will affect the method of acquisition or disposition and the rights and obligations that the owner acquires. All immovable property contracts in Jersey must be passed before the Royal Court of Jersey, which sits on a Friday afternoon.

The types of property:

Freehold – A freehold interest is a non-technical phrase used in Jersey to describe the most robust form of property right available in the island. A freehold property gives the owner the title to the land as well as everything below and everything above it (although this is subject to both practical and statutory limitations).

Flying freehold – The concept of a flying freehold was developed to accommodate the growing popularity of apartments and office blocks in the island.

A flying freehold is created by carving out an area of the property by way of a "declaration of co-ownership" which is registered in the Public Registry. The declaration is a bespoke document which establishes an "association" (comprised of the various flying-freehold owners at the site) and governs the way in which each of those owners will be entitled to use both their individual properties and the wider site. The declaration also includes any administrative provisions necessary to facilitate the ongoing use.

The owner of a flying freehold property technically owns two interests:

• the exclusive ownership of the unit they have purchased; and
• a share in the ownership of the wider site in which the unit is situated.

Leasehold – Leasehold property gives a tenant an exclusive right of occupation for a set number of years in return for the payment of rent. The relationship of the landlord and tenant is governed by the provisions of a lease (which are generally very comprehensive). As mentioned above, leasehold titles can be either immovable or moveable property, depending on the term of the lease. Lenders will tend to require at least 70 years of unexpired lease term before the property is acceptable to them as good security.

By contrast to England and Wales, it is unusual for residential property to be purchased on a long leasehold basis. The creation of new residential leasehold property has now been effectively abolished.

Share transfer – Although not technically an immovable property right, Jersey has popularised the use of shares to grant practical rights to occupy property, which is most commonly used by residential developers. In such scenarios, the freehold of the development will be owned by a Jersey limited company which will have customised articles of association. 

The articles of association allocate exclusive rights of occupation over specific parts of the development to each share in that limited company (e.g. an exclusive right to live in a particular apartment) as well as more general non-exclusive rights (e.g. a right, in common with other occupiers of the development, to come and go over the common parts or use car parking spaces).

The buyer of a unit will purchase a share in the freehold-owning company rather than the title to the property itself. The share transfer does not have to be registered at the Royal Court as it is not a contract dealing with immovable property.

The creation of new share transfer property has been effectively abolished by the Government of Jersey, although the change does not affect existing share transfer properties.

Modes of ownership

Jersey property can be owned by a number of different structures or legal persons:

Individuals – Individuals are able to own property in their personal capacity, but there are a number of limitations on who may purchase residential property in Jersey. Individuals can purchase commercial property in Jersey without such restrictions applying, but such ownership in an individual's own name is unusual because of the risk to the individual's personal assets.

Corporate structures – Corporate structures are permitted to purchase property in Jersey, but they are significantly limited in their ability to purchase residential property. Whilst there are limits on their purchase of commercial property, the regime is much less restrictive. 

Corporate structures are preferred as vehicles to own commercial property as the interposition of a corporate vehicle prevents personal assets of the owners being seized to cover corporate debts.

Trusts – Jersey law does not permit Jersey immovable property to be placed into a trust. However, the shares in a Jersey company which owns immoveable property can be held on trust.

In spite of the above-mentioned restrictions, there are two principal quirks of the system that are beneficial:

• Whilst there are limits on individuals' and corporate entities' abilities to purchase property in Jersey, either is usually able to inherit property and subsequently enjoy that property as if such limitations had never existed.
• There is no ban on either individuals or companies acquiring rights to occupy property by share transfer, although the physical occupation of that property may be subject to limitation.

Co-ownership

Jersey property can be owned by more than one person. There are two modes of co-ownership with key differences:

Summary

The Jersey legal system (especially in relation to property) may seem rather quirky, but it has been in operation for many hundreds of years and remains in good working order today. However, given the nuances of Jersey property law, it is useful to seek comprehensive legal advice at the outset. 

Bedell Cristin has a team of property experts who can help you with any queries.