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Both forms of ownership allow the division of property so that one building can be divided and co-owned by many people, this may include a purpose built block of apartments or an older property which has been sub-divided.
There are however key differences in the two modes of ownership as outlined below:
Governed By Different Laws
Flying Freehold ownership is governed by the Loi (1991) sur la co-propriété des immeubles bâtis which was drafted specifically to cover co-owned property.
Share Transfer ownership is governed by the Companies (Jersey) Law 1991 which was not specifically drafted to cover co-owned property but to cover all types of companies including trading companies.
To purchase a flying freehold apartment you will attend the Royal Court sitting on a Friday afternoon to pass a contract with the vendor, both parties simply standing and raising their rights hands as the front page of the contract of sale is read aloud by the presiding Bailiff or Deputy Bailiff. Once passed the contract is recorded in the Public Registry, there are no title deeds in Jersey. The apartment will legally be yours subject to the Declaration of Co-ownership
To purchase a share transfer apartment you will be required to enter into a share sale agreement with the vendor and this will detail the shares you have purchased in the company, those shares will entitle you to the exclusive occupation and enjoyment of your apartment. The company in which you hold the shares will own the freehold in the apartment block, while you own shares in that company which entitle you to occupy your apartment, subject to the company Articles of Association.
Movable Estate or Immovable Estate
In Jersey your property is divided into movable property and immovable property, this division if important for estate planning because different rules apply for each type of property.
A Flying Freehold apartment will form part of your immovable estate.
A share transfer apartment will form part of your movable estate.
Declaration of Co-ownership / Articles of Association
Occupation of your Flying Freehold apartment will be governed by the Declaration of Co-Ownership which contains the rules and regulations of how you and the other co-owners are to live collectively, sharing common areas and expenses.
Occupation of your Share Transfer apartment will be governed by the companies’ Articles of Association which may contain rules and regulations of how you and the other shareholders are to live collectively, sharing common areas and expenses.
Association Representative / Company Secretary
A Flying Freehold association made up of the co-owners will delegate some of the running of the association to an Association Representative and sometimes, in large apartment buildings, to a management company, but only as provided for in the Declaration of Co-ownership.
A Share Transfer company is made up of members who may also be directors and it is the directors who manage the company, along with the company secretary. The directors may decide to employ a management company to assist, but only as provided for in the company Articles of Association and as per the Companies (Jersey) Law 1991.
Should you purchase your Flying Freehold apartment with the assistance of a mortgage, the lending bank will need to take security against the apartment by way of a legal charge or hypothec. You will be required to sign a billet as part of the loan documents and this billet is registered in the Public Registry. You will pay stamp duty on the amount registered.
Should you purchase your Share Transfer apartment with the assistance of a mortgage, the lending bank will need to take security over the shares you are purchasing by requiring you to enter into a security interest agreement. This security interest will be registered at the Jersey Financial Services Commission in the Security Interests Register (SIR). Land Transfer Tax will be charged on the amount registered.
Buy to let Investment
To purchase a Flying Freehold apartment you will need the relevant Registration Card to show that you are either Entitled or Licenced as per the Control of Housing and Work (Jersey) law 2012.
To purchase a Share Transfer apartment you do not need a Registration Card nor are you required to be either Entitled or Licenced. You can purchase the shares and let the apartment out to either an Entitled or Licenced person, however you cannot occupy the apartment yourself.