Life and the Law | Implications of adding a minor to a registered land title

There is no rule of law in Jamaica which prohibits adding a minor to a title or transferring a title to a minor.

Many parents are eager to add their children to their titles as a part of their efforts at succession planning. However, parents and guardians seeking to do so must understand the implications.

When faced with a transfer including a child, the registrar, further to the Registration of Titles Act, will lodge a registrar’s caveat to protect the interest of the child until he/she turns 18.

This caveat will prevent the adult on the title from being able to conduct any business using the title while the child remains a minor, except through an order of the court. This order of the court will have to be secured through an application to the court at your cost, and for which more than one attendance at court will be required.

Thankfully, the registrar’s caveat can be avoided by the use of a reservation clause in favour of the adult. Through this clause, power is reserved in the adult on title to deal in the title during the minority of the child.

This is important because in many instances, the parent/guardian may wish to sell the property or use the title as security during the minority of the child, often for the continued maintenance of the same child. This clause gives the adult that flexibility.

The reservation clause is a simple, yet effective tool to avoid stress for parents desirous of adding the names of minor children on titles, but who may wish to deal in the title before the child attains majority. It’s inclusion in the transfer should not attract any additional legal costs.

It is also critical to note that the painlessness of including the Reservation Clause in the transfer is not mirrored in the courts when there is no reservation clause and a registrar’s caveat has been lodged, and the parent wishes to deal in the title before the child turns 18 years.

Our experience is that the courts, in the interest of safeguarding the vested interest of the child, are often reluctant to simply appoint the adult on title as trustee for the child without more. Instead, the courts often insist on stringent orders to protect the value in money of the interest of the child, even to the extent of limiting the adult to access only the interest earned on the sum representing the value of the child’s interest, while the principal remains intact until the child becomes an adult. This is the case even where the adult on title is the parent or guardian.

It is therefore critical that if an adult insists on adding a minor to their title, that they ask the attorney acting on their behalf to include a reservation clause in their favour to avoid the rigours which will be associated with negotiating around the Registrar’s caveat.

POSSIBLE PROBLEM

While adding children in the right circumstances is arguably one of the tools in succession planning, parents and guardians must be mindful that if the child’s name is on title for residential property, it could also create a problem when that child, now an adult on title, desires to access his or her National Housing Trust (NHT) benefit.

The mandate of the NHT is to provide a loan to contributors to acquire their own home. The now adult, put on title for residential property as a child, will have to write to the branch manager to seek the permission of the NHT for them to access their full benefit, as opposed to simply a reduced homeowner’s loan facility.

Another implication to bear in mind when considering putting the name of a child on title is that if a child is on title, a financial institution is unlikely to accept the title as good security for the purpose of any of its loan facilities. This is likely to be the case even if there is a reservation clause in favour of the adult.

This article makes clear that what at first glance is a noble gesture, can become very inconvenient and costly, if it is not properly thought through.

If you are resolute about adding your minor child to your title, a simple rule of thumb is to ensure that you instruct your attorney that a reservation clause in your favour must be included in the instrument effecting the transfer.

Karene Stanley Jones is the Managing Partner at Karene N. Stanley & Company, attorneys-at-Law. Email feedback to knsjones@knscolaw.com.