In Episode 10 of The Property Buyers Guide, Justina Hamupembe, also known as YourHomeGirl, delves into the concept of juristic entities purchasing property.
Abe Malherbe , an experienced legal practitioner, notary public and conveyancer, sheds light on the types of entities that can own immovable property, their benefits, and the recent legislative changes affecting their use.
Q1: Can juristic entities purchase property?
Abe:Yes, non-natural entities—or juristic entities—can purchase immovable property in Namibia. These include:
- Close Corporations (CCs): Governed by the Close Corporations Act and administered by BIPA.
- Companies: Various forms are recognised under the Companies Act, also overseen by BIPA.
- Trusts: Governed by the Trust Administration Act, trusts are quasi-juristic and managed by the Master of the High Court.
- Partnerships: Though not juristic entities, they can own property under the name and style of the partnership based on the common law of partnerships.
These entities or legal forms as explained above in the context of trust or partnerships, can own property in their own name or in combination with other natural persons or juristic entities, providing flexibility for buyers and investors.
Q2: What are the benefits and disadvantages of purchasing immovable property through a juristic entity?
Abe:The benefits and disadvantages depend on the type of entity and its purpose:
Benefits:
- Limited Liability: CCs and companies separate the liabilities of the entity from its members or shareholders, protecting personal assets.
- Asset Protection (Trusts): Insolvency remote discretionary Trusts offer insolvency protection, keeping critical assets safe from creditors.
Disadvantages:
- Legislative Changes: The Transfer Duty Act of 2024 has significantly reduced the financial benefits of owning residential property in a CC, Trust or company.
- Administrative Costs: Entities like CCs, Trusts and companies incur ongoing costs, such as accounting services and compliance fees.
Q3: How have recent legislative changes impacted these entities?
Abe: The Transfer Duty Act of 2024 and other recent legislation have reshaped the property landscape:
- CCs, trusts and companies owning residential properties now face transfer duty, making them less attractive for this purpose as they no longer offer a mechanism for avoiding the amounts associated with an outright transfer.
- Individual buyers benefit from increased transfer duty exemptions, saving costs on properties up to N$1.1 million, which is not enjoyed by juristic entities.
- Trusts remain effective for asset protection but are not cost-saving entities due to higher administrative overheads.
- Transfers in members interest in close corporations, shares in companies or an interest in trusts, which own properties other than residential i.e industrial/commercial properties, still offers a massive costs saving without the application of transfer duties.
Conclusion
Justina wrapped up the episode by reflecting on the evolving role of non-natural entities in property ownership. For many buyers, it may no longer be financially advantageous to use CCs or companies for residential purchases. However, asset protection through trusts and the flexibility of partnerships still have their place in the property market.
Stay tuned for more insights into property ownership next week on The Property Buyers Guide!
