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So somebody wants to buy a flat but the agent says it is a “share transfer”. Many would be confused by this term if they’ve never experienced it before. Some might think it is time share, or that it’s a con of some sort. The reality is less sinister. It’s not a trap but it does mean the buyer is buying shares in a company rather than in the flat itself.

How does Jersey’s share transfer system work? 

Jersey has had a system for a number of years where it has been possible for a property to be owned by a company and the company’s constitution documents are structured so that the owner of a block of shares in the company is treated as the owner of a flat in a building.

To demonstrate how it works let’s take an image borrowed from baking. Imagine a sponge cake with layers of sponge with jam in between: imagine that each layer of sponge is equivalent to part of a building; there will be sponge on the bottom; jam in the middle; and sponge on top.

Imagine now a building with two floors and a flat on each floor. The company owns the whole of the building (or the whole of the cake).

The company in turn is owned by its shareholders. Its constitution will state that the owner of the first block of shares will have exclusive rights to the ground floor flat (the sponge at the bottom of the cake); the next block of shares will entitle the holder to the first floor flat (the top layer of sponge); and the jam is the structure of the building (stairs, walls etc.) which is owned by both shares. 

This analogy is simple and in real life the arrangements can be much more complicated with large buildings, lots of flats and therefore lots of shareholders. The principles, however, remain the same. The company owns the whole building but its shareholders have divided the building among them and each holder of a block of shares in the company is entitled to exclusive occupation of their part of the building or, to put it another way, to have their own slice of the cake while sharing the jam between them.

Leaving aside the costs of buying, share transfer buyers need to be sure what the cake looks like before buying a slice of it. There are also other considerations for those buying by share transfer and, certainly, Viberts can advise you in more detail. 

Key considerations when buying share transfer property in Jersey

Here are the headline considerations buyers should be aware of:

Some buildings have an age restriction and only permit residents over a certain age. For example, some homes are for residents aged 55 or over. Some have restrictions on children too. Many share transfer properties don’t allow pets or the management will consider pets on a case by case basis. I have come across one building where the new owner had to have his teacup terrier vetted by the other shareholders.

Buyers need to understand that, while buying a home, that home is linked to others and is within mini-democracy. That buyer may be out voted.

Buildings often operate a programme where all the occupiers contribute to a central fund to pay for the building’s expenses. It’s important to know what they are, what they cover and whether they are to cover bare minimum costs or whether they include a sinking fund. If there is a sinking fund, what is the level of the reserve? It's an important consideration if there has not been any recent maintenance carried out to the building.

The last point to make about share transfer flats is about leaks, damp and maintenance. Jersey is a small island surrounded by water. Although the sunniest place in the British Iles it also regularly rains. Some buildings can suffer from water penetration and the last thing I would want somebody to do is buy a damp flat so there’s a real need to ensure the flat being purchased is free of this issue.

If properly kept, the company’s records should hold a reference to leaks or damp now or in the past. By way of example, there was a client who was very keen on a particular share transfer flat and was impressed the owners had recently decorated throughout. It was only on noticing black mould behind a radiator did she realise the reason for the paint job: needless to say she did not proceed with the purchase! 

Our advice with any property transaction is do your homework; buyers need to keep their eyes open.

Certainly we can advise on the rights, responsibilities and company records when making a share transfer purchase. Please get in touch if you need advice.