introduction
What you should know
Finance the purchase
Hire a real estate agent
Hire a lawyer
Costs and fees
Comment
introduction
A second home in the Bahamas has been a highly sought after product by international buyers since time immemorial. The Bahamas is an archipelagic nation of 700 islands and cays, each island offering its own charm and a unique Bahamian culture. As the value of real estate in the jurisdiction tends to maintain or appreciate gradually over time, the purchase of real estate remains a viable and achievable wealth creation mechanism.
What you should know
The Bahamas has an unregistered land tenure system which is based on the transfer laws of England and Wales prior to 1925.
The title must be deducted by the seller for a period of not more than 30 years or the title must otherwise begin with a grant or lease by the Crown or a certificate of title issued by the court in accordance with the provisions of the Quieting Titles Act, depending on period is shorter. As a result, it is customary for a buyer to hire a local attorney to search for a title and issue a title opinion in order to ensure that the seller has a valid and marketable documentary title.
Land ownership by non-Bahamians is governed by the International Persons Land Ownership Act. When a non-Bahamian wishes to purchase a house or condominium to be used as a family residence or undeveloped land not exceeding two acres for the construction of a family home, the purchase must be registered with the Bahamas Investments Board after the fencing. When a non-Bahamian wishes to purchase a house or condominium or undeveloped land of more than two acres for any other use (i.e. as rental property or other commercial use), the purchase must be approved by the Bahamas Investments Board prior to closing. It is also common for land to be held in the name of a business or family trust for estate planning purposes.
Non-Bahamians who acquire residence in the Bahamas can apply for annual or permanent resident status (without the right to work) upon completion of the purchase of the property. To be eligible for permanent economic residence (without the right to work), the non-Bahamian must purchase a house worth at least $ 750,000 for use as a family residence.
Finance the purchase
Financing through local lending institutions is available for non-Bahamians who wish to purchase real estate in the Bahamas. When purchase financing is required, it is customary for the sales contract to be subject to a condition precedent so that the financing is guaranteed within a reasonable period of time before closing.
Hire a realtor
There are many local real estate companies (some are affiliated with international brokerage houses) that have been in business for many years and can provide a wealth of knowledge on buying and leasing land, real estate listings and marketing.
Hire a atorney
A local lawyer should be engaged from the start of the transaction to assist with the entire process – he should review the letter of offer, purchase and sale contract, construction contract, letter of loan facility and any other key document before they are signed.
When acting for a supplier, the routine duties of a local lawyer should include:
- drafting of the sales agreement;
- the drafting of the transfer and any other closing document;
- deduct title from the buyer and respond to any requisition for title; and
- help close the deal.
When acting on behalf of a buyer, the common duties of a local lawyer should include:
- review of the letter of offer;
- examination of the sales agreement;
- perform a title search and issue an opinion on the title;
- examine the means of transport and any other closing documents;
- assist in obtaining a certificate or permit from the Bahamas Investments Board;
- help finance the purchase (if necessary); and
- help close the deal.
Costs and Fees
Value Added Tax is due on the sale and purchase of real estate at the following rates:
- 2.5% when the purchase price is less than $ 100,000; and
- 10% when the purchase price exceeds $ 100,000.
The fees of real estate brokers are generally payable as follows:
- 6% of the purchase price of an improved good; and
- 10% of the purchase price for an undeveloped property.
Comment
The advice of a local lawyer should be sought at the start of a transaction to ensure the process is as transparent as possible and to identify any potential issues before the parties reach a binding agreement. A local lawyer should be able to assist you with all aspects of buying Bahamas real estate and any related estate planning, including marina club membership and applying for residency status. .
For more information on this topic, please contact Anwar mitchell to Lennox Paton by phone (+1 242 502 5000) or by e-mail ([email protected]). Lennox Paton’s website can be accessed at www.lennoxpaton.com.
