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 commodity for international buyers since time immemorial. The Bahamas is an archipelago nation of 700 islands and cays, each island offering its own charm and unique Bahamian culture. As the value of real estate in the jurisdiction tends to stabilize or gradually appreciate over time, the purchase of real estate remains a viable and accessible wealth creation mechanism.
What you should know
The Bahamas has an unregistered land system which is based on the conveyance laws of England and Wales prior to 1925.
Title must be deducted by the seller for a period not exceeding 30 years or title must otherwise commence 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, according to the period is shorter. Accordingly, it is customary for a buyer to engage a local attorney to search for title and issue an opinion on title in an effort to ensure that the seller has valid, marketable documentary title.
Ownership of land by non-Bahamians is governed by the International Land Persons Act. Where a non-Bahamian wishes to purchase a home or condominium for use 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. Where a non-Bahamian wishes to purchase a house or condominium or undeveloped land greater than two acres for any other use (i.e. as rental property or any 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 corporation or family trust for estate planning purposes.
Non-Bahamians who acquire residency in the Bahamas may apply for annual or permanent resident status (without the right to work) upon completion of the property purchase. To be eligible for economic permanent residence (without the right to work), the non-Bahamian must purchase a house with a minimum value of $750,000 for use as a family residence.
Finance the purchase
Financing through local lending institutions is available to non-Bahamians wishing to purchase real estate in the Bahamas. When purchase financing is required, it is customary for the sale contract to be subject to a condition precedent that the financing is obtained within a reasonable period of time before closing.
Hire a rbroker
There are many local real estate companies (some affiliated with international brokerages) that have been in business for many years and can provide a wealth of knowledge on land buying and leasing, property listings and marketing.
Hire a attorney
A local lawyer should be engaged at the start of the transaction to help with the entire process – they should review the offer letter, purchase and sale agreement, construction agreement, loan facility letter and any other key documents before they are signed.
When acting for a supplier, a local lawyer’s routine duties should include:
- drafting of the sales agreement;
- drafting of the assignment and any other closing document;
- deduct title from the buyer and respond to any requisition on title; and
- assistance in closing the transaction.
When acting for a buyer, typical duties of a local attorney should include:
- review the letter of offer;
- examine the sales agreement;
- perform a title search and issue a title opinion;
- review the transfer and any other closing documents;
- assist in obtaining a Bahamas Investments Board certificate or permit;
- help finance the purchase (if necessary); and
- assistance in closing the transaction.
Costs and Fare
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 real estate broker’s fees are generally payable as follows:
- 6% of the purchase price of an improved good; and
- 10% of the purchase price for unbuilt goods.
Comment
The advice of a local lawyer should be sought at the start of a transaction to ensure that the process is as transparent as possible and to identify any potential issues before the parties enter into a binding agreement. A local lawyer should be able to help you with all aspects of buying real estate in the Bahamas and any related estate planning, including joining the marina club and applying for residency status. .
For more information on this subject, please contact Anouar Mitchell to Lennox Paton by phone (+1 242 502 5000) or email ([email protected]). The Lennox Paton website can be accessed at www.lennoxpaton.com.
