TerraLex Cross-Border Real Estate Guide

The Bahamas has an unregistered land system. It is governed by the Law of Property and Conveyancing Act and for condominiums, the Law of Property and Conveyancing (Condominium) Act. The Bahamas’ Land Law is based on pre-1925 conveyancing laws and English Common Law system and therefore, the Buyer/their attorney will conduct title searches, reviewing information and documentation relating to the property that goes back at least 30 years or back to the initial Crown Grant or Certificate of Title issued by the court. Title searches will be conducted at the Registry of Records of Deeds and Documents (“Registry of Records”), the Supreme Court Registry and the Companies Registry.

As noted above, we do not have a registered land system, but any title deed, mortgage, charge, right of way or other agreement potentially affecting title should be recorded in the Registry of Records. Registration ensures that related rights over a property are available for a title search.

Pursuant to the provisions of the International Persons Landholding, Act, 1993 a non-Bahamian must apply to the Bahamas Investment Authority for either a Certificate of Registration or a Permit, depending upon the circumstances of the acquisition, such as size and/or the intended use of the property and whether the non-Bahamian owns more than one parcel of land. Additionally, obtaining a permit is a condition precedent to closing. If the circumstance calls for the non-Bahamian to obtain a permit but they fail to acquire the same, the transfer to the non-Bahamian is null and void. Certificates of Registration are obtained post-closing.

Additionally, depending on the nature of the property investment, it may also be necessary for the foreign investor to obtain approval from the Exchange Control Department of the Central Bank of the Bahamas as further described below.

Foreign investors will usually hold real estate in a corporate vehicle or trust. If a foreign investor wishes to use a corporate vehicle to hold real estate in The Bahamas, the corporate entity must be “Bahamian”.

Therefore, foreign investors will opt to either: i. Incorporate a company under the International Business Companies Act, 2000 (an “IBC”) as IBCs are easy to incorporate and provides a flexible corporate structure; or ii. Register a foreign company in The Bahamas under the Companies Act, 1992.

Once the exchange of contract occurs, the risk of destruction or damage to buildings on the land passes to the purchaser. Insurance provisions are used in the contract to protect or minimize exposure to purchaser.

At completion, the parties ensure any taxes, assessments, utilities are prorated, and Vendor portion is paid up to the date of completion and purchaser assumes responsibility of the same once transfer is complete.

The Owner must ensure:

• If the property is held in a company name, the company remains in good standing/not struck off the register.
• annual real property taxes are paid up to date. Real property taxes are charged as a percentage of the market value of the property and varies depending on the use of the property.
• Property association fees/rent charges (if any).

There are certain business areas/sectors which are reserved for Bahamian Nationals only: • Wholesale and Retail Operations. • Commission agencies engaged in the import/export trade. • Real estate and domestic property management agencies. • Domestic newspapers and magazine publications. • Domestic advertising and public relations firms. • Security services. • Domestic distribution of building supplies. • Construction companies, except for special structures for which international expertise is required. • Personal cosmetic/beauty establishments. • Commercial fishing within the exclusive economic zone of The Bahamas. • Auto and appliance service operations. • Public transportation inclusive of locally solicited charter boat tours. • Landscaping. • Recreation and Watercraft operations.

Yes. The Exchange Control Department of the Central Bank of The Bahamas (“ECD”) is responsible for the operations of exchange controls in The Bahamas, pursuant to the Exchange Control Act, 1952 and the Exchange Control Regulations, 1956. ECD’s primary objective is to regulate all foreign currency transactions and the inflows and outflows of foreign currency to and from The Bahamas. ECD prohibits those deemed non-resident from engaging in Bahamian currency transactions or holding Bahamian securities without prior approval. Similarly, Individuals/Companies deemed “Resident” for exchange control purposes may not maintain a foreign currency bank account nor engage in foreign currency transactions or hold foreign securities without the prior approval and must obtain prior permission before taking out foreign currency loans or purchasing or remitting foreign currency. In recent years, the regulations have been relaxed for private residential purchases.

Yes. Vendors and Purchasers enter into Agreements for Sale of real estate subject to the provisions of the Conveyancing and Law of Property Act 1909 and other terms and conditions made between the parties.

Yes. Financing may be obtained both locally and internationally (subject to approval for international finance).

No.

Yes. Project Development is approved by application to the National Economic Council together with the Bahamas Investment Authority.

No. However, due to the lack of a registered land system, the issue of priority is paramount to notice to the world. Deeds that are first lodged and accepted for record in the Registry will have priority or preference; and that deed is deemed and taken to be good and valid and would not be defeated or affected by reason of priority in time of execution of any other documents affecting title.

No.

1. Annual real estate tax over the property based on the assessed value of the property whether personal or commercial; and
2. Value Added Tax on the transfer of property, according to the registered value of the property or purchase sale agreement, whichever is higher, whether personal or commercial.

Yes. Benefits and exemptions may be available under the Value Added Tax Act, 2014 and related regulations and amendments thereto.

Yes. Per the Value Added Tax Act, 2014 and related regulations and amendments thereto, value added tax is payable on debt instruments.

In The Bahamas, commercial leases will include standard provisions including term of the lease, deposit, rent, both Tenant and Landlord’s covenants inclusive of the responsibility of payment of utilities, real property taxes and assessments/service charges, Tenant’s default, sale of the premises, dispute resolution, renewal of lease, property alterations to meet the business’ needs, maintenance, insurance and termination.

Particulars of personal leases in The Bahamas include the term of the lease, deposit, rent, both Tenant and Landlord’s covenants inclusive of the responsibility of payment of utilities, real property taxes and assessments/service charges, Tenant’s default, sale of the premises, dispute resolution, renewal of lease, property alterations (if applicable), maintenance, insurance and termination.

Relative terms would be set out in the lease. Usual English law applies to such tenancies as a tenancy at will for example, and a minimum of 30-day notice is required.

There are no specific statutes related landlord and tenant matters and terms would be set out in lease.

Yes. Non-Bahamians acquiring an interest in property by way of leasehold (over 21 years) requires approval from the Bahamas Investment Authority as governed by the International Persons Land Holding Act 1992 with all related regulations and amendments thereto. Leases under 21 years do not require approval.

Yes, but subject to terms of contract.

Yes. Under the provisions of the Value Added Tax Act, 2014 and all related regulations and amendments thereto, all leases should be stamped within 6 months of the date of the Lease or a penalty will accrue.

Yes. There is regulation under the Real Property Tax Act 1969 and Value Added Tax Act, 2014 and all related regulations and amendments thereto.

Yes. There are regulatory approvals required under the provisions of the International Persons Land Holding Act 1992 with all related regulations and amendments thereto.

Yes. However, there may be regulation in regard to registration as a foreign company.

No.

Not directly. However, all property owners operating properties as short-term vacation rentals have to register their properties with the government and obtain a business licence, register for value added taxes and national insurance unless they have the property rental managed by third party operators such as AirBnB, VBRO or other Bahamian licenced management agent companies permitted to conduct rental business management.

No.

Construction projects are priced by related industry professionals such as Quantity surveyors and technical staff and is based on usual considerations such as shipping costs, import customs duties, value added taxes, cost of materials, cost of labour, change work orders.

Common clauses include risk of loss and insurance in instances whereby the Vendor is the developer will maintain “builder’s risk” insurance to cover physical loss or damage to the buildings and materials on site, and comprehensive or commercial general liability insurance for a specific amount to protect from claims under contractor’s liability, compensation and/or other employee benefit acts.

Building Regulation Act, 1971 (Chapter 200) and Building Regulation General Rules and all amendments thereto.

The Planning and Subdivision Act 2010 together with all related regulations and amendments thereto and the Environmental Planning and Protection Act 2019 with all related regulations and amendments thereto regulate placements of bonds as security for breaches of each of the respective Acts.

The Planning and Subdivision Act 2010 with all related regulations and amendments thereto and the Environmental Planning and Protection Act 2019 with all related regulations and amendments thereto regulate development, construction, environmental, sustainability of resources including water and other natural resources.

The Planning and Subdivision Act 2010 with all related regulations and amendments thereto governs the zoning, land use, subdivisions, severances, and related planning regimes.

It is not. However, there is a bond which is required when approval is obtained for a new subdivision.