Purchasing property in Sri Lanka involves legal, financial, and procedural steps. It’s important to follow the correct procedures to ensure a safe and legitimate transaction. Here’s how to do it:

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Step 1: Define Your Requirements

• Decide the type of property you want (land, house, apartment, commercial).
• Determine your budget, preferred location, and purpose (residential, investment, or business).

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Step 2: Verify Ownership and Legality

1. Title Deed (Deed of Transfer):
   • Ensure the seller has a clear and legal title to the property.
   • Verify the deed with a registered lawyer to check for encumbrances, unpaid taxes, or disputes.
2. Survey Plan:
   • Obtain the survey plan from the seller.
   • Verify it is certified by a licensed surveyor and matches the actual property.
3. Local Authority Approvals:
   • Ensure the property has been approved for construction or sale by the relevant municipal or urban development authority.
4. Encumbrance Certificate:
   • Check if the property has any pending loans or mortgages registered against it.

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Step 3: Hire a Lawyer

• Engage a qualified lawyer who specializes in property transactions.
• The lawyer will:
  • Review all legal documents (deeds, plans, approvals).
  • Draft and review agreements.
  • Facilitate a safe transaction.

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Step 4: Negotiate and Sign a Sales Agreement

1. Sales Agreement:
   • A pre-agreement outlining the price, payment terms, and conditions of the sale.
   • Typically requires a 10-20% down payment.
   • Ensure the agreement includes penalties for default by either party.
2. Stamp Duty:
   • Pay the stamp duty for the agreement, which varies by property value.

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Step 5: Conduct a Title Search

• Your lawyer will conduct a title search at the Land Registry for the past 30 years.
• This ensures there are no legal disputes or claims on the property.

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Step 6: Pay the Full Amount and Transfer Ownership

1. Balance Payment:
   • Pay the remaining amount through a bank draft or a traceable method.
2. Transfer Deed:
   • The seller will execute a Deed of Transfer in your name.
   • This deed must be signed by both parties and witnessed by a lawyer.
3. Registration of Deed:
   • Submit the signed deed to the Land Registry for registration.
   • Pay the registration fee (approximately 3-4% of the property value).

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Step 7: Obtain Other Documents

1. Tax Clearance Certificate:
   • Confirm that all property taxes have been paid by the seller.
2. Ownership Certificate:
   • Collect this from the relevant municipal authority to finalize your ownership.

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Step 8: Possession of the Property

• Once all payments are made and documents registered, you can take legal possession of the property.

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How to Stay Safe from Scams

1. Verify the Seller:
   • Confirm the seller’s identity and ownership of the property through the deed and local authority records.
2. Check for Fraudulent Deeds:
   • Some scammers forge title deeds; a thorough title search by your lawyer can prevent this.
3. Avoid Unverified Brokers:
   • Work with registered real estate agents or deal directly with the seller.
4. Beware of Underpriced Deals:
   • If the property is significantly undervalued, it might indicate fraud or hidden issues.
5. Legal Assistance:
   • Never skip the lawyer’s role in verifying documents and conducting searches.
6. Avoid Advance Payments:
   • Only pay the deposit or advance when the agreement is signed and verified.

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Costs Involved

1. Stamp Duty:
   • 3% for the first LKR 1,000,000 of property value and 4% for the remainder.
2. Legal Fees:
   • Approximately 2-3% of the property value.
3. Registration Fees:
   • 3-4% of the property value.
4. Additional Costs:
   • Survey fees, notary fees, and taxes (if applicable).