Real estate is one of the most strategic components of any economy. It acts as shelter, facilitates business transactions and serves as an investment tool, just to mention a few. In recent years, Ghana has experienced a surge in commercial real estate business.
For new players in the industry, knowledge about the industry is crucial to your success. Real estate expert, Lamudi Ghana, has compiled a list of five must know terms to guide you in your transaction process.
Real estate listing
This is known as an agreement permitting a real estate agent or broker to handle the sale or rental of a property. The agent or broker is paid commission on every successful transaction. There are various types of listings, the most common of them being open listing and exclusive agency listing. An open listing gives the right to sell or rent a property to multiple brokers while an exclusive agency listing transfers this right to a single broker, with the exception of the owner.
Letter of intent
In real estate transactions, a letter of intent is a document outlining the terms agreed upon by two or more parties. The basis for this document is to serve as a framework on which parties negotiate their formal agreement before entering into a contract. Though not legally binding, this document goes a long way to reducing conflict. Letters of intent are typically used in commercial real estate transactions bordering on pre sale and lease agreements.
Real estate appraisal
How can one sell or buy real estate without having an idea of the value? This is achieved through an appraisal or property valuation. An expert or appraiser is given the mandate to assess the value of a property using factors such as location, cost of building materials and the availability of social amenities. Some individuals prefer to make their own property valuations, especially in the case of residential real estate. However, this task should be left in the hands of an expert who is better qualified to give you a realistic appraisal of your property.
Common area maintenance charge
This is a fee levied on tenants of a commercial property. Aside the base rental charge, a tenant is expected to pay a proportional fee meant to cater for maintenance. Each tenant contributes an amount equal to the percentage of the tenant’s rented square footage of the total area of the property.
The act of acquiring property for a given length of time is known as a leasehold. In Ghana, the law requires all lands to be purchased on leasehold basis. The law states that Ghanaians must be given a maximum of 99 years while expats are provided with a 50-year lease. Upon reaching the end of the lease period, the land title is returned to the custodian, being the government, a stool of family. The usual procedure involves a renegotiation process to turn the land title back to the leasehold beneficiary. The leasehold purchaser, known as a landlord is permitted to sell the land or any property on it as an owner. For individuals who cannot afford an outright purchase of a property, short-term leases provide a suitable alternative.