Barbados Real Estate Guide
Understanding the Process of Buying Real Estate in Barbados
Whether you are a national or non-national of Barbados, please ensure that you acquaint yourself with this “Barbados Real Estate Guide“. Learn about purchasing property in Barbados Caribbean. The process is a reasonable one but there are few concepts that you need to get familiar with: retaining an attorney to issue legal advice and who understands your needs and being knowledgeable of the financing options.
This is particularly so for non-resident non-nationals who are required by regulations of the Central Bank of Barbados that all funds for the purchase of property in Barbados must be obtained outside of this jurisdiction. Therefore financing for the foreign purchaser must be obtained overseas or, it can done in Barbados, but it has to be done through an offshore financial institution. These funds must also be registered with the Central Bank.
The Requirement of an Attorney
Legal advice from a registered Attorney is a mandatory element for anyone purchasing property in Barbados. A buyer should appoint an attorney whose fees are approximately 1.5%-2% of property costs plus VAT. Additionally during the process the required Attorney must prepare the agreement for sale, the deed of conveyance and the deed of transfer. In Barbados the buyer and seller are responsible for their own legal fees. The peculiarities of Barbados’ conveyancing laws, the absence of any scheme of title insurance, and the predominance of unregistered title to land are factors which make real estate transactions in Barbados potentially risky for the unfamiliar buyer. This reinforces the need for a registered attorney.
The Agreement for Sale
At this point there be action on the part of the buyer and the seller. Firstly for the seller’s lawyer is responsible for preparing the Agreement for Sale. This in turn brings the purchaser into action by signing the agreement in duplicate and paying a deposit which is generally 10% of the purchase price. The next step in this part of the process would be the delivery of both the deposit and the signed agreement to the seller’s attorney. The seller will then sign the agreement and a duplicate of the said agreement will be delivered to the buyer’s attorney.
Barbados Real Estate Guide – Investigation of the Property Title
But the signing of the agreement by both parties and the paying and delivery of the deposit are only the tip of the iceberg in the process. Now the buyer’s attorney should conduct a search against the title of the property to ensure that the title and that the property or land is free from any charges or encumbrances this includes unpaid mortgages, unpaid judgements or land tax.
Completion of the Sale and Purchase
The sellers lawyer draws up the conveyance, which is checked by the buyer’s lawyer before the buyer signs it and pays the balance of the funds. The conveyance then goes back to the ’seller’s lawyer where it is signed by the vendor and the sale is completed. Under some new developments which are new constructions after the 10% deposit there will be a series of stage payments made through the construction period typically amounting to 85%, with 5% retention for completion of the property. At this juncture the seller’s attorney prepares the instrument used to convey title to the buyer. Upon closing the seller’s attorney will normally exchange that instrument, along with prior title deeds, for the balance of the purchase money.
Mortgages & Finance
For Barbadian nationals purchasing property in Barbados can be painless even if they do not have the necessary funds to finance such a venture. Mortgages are a highly viable and popular option and these can be obtained from registered banks in Barbados or mortgage companies.
But non-resident non-nationals are required under the Central Bank of Barbados regulations that all funds for the purchase of property in Barbados must be obtained outside of Barbados. The overseas purchaser must therefore either obtain his financing overseas or, if it is done in Barbados, it must be done through an offshore financial institution. These funds must also be registered with the central bank.
Interestingly however overseas buyers do have the mortgage option available to them as well in US dollars. These are available for non-nationals at around 50%-70% of the property value, with a maximum term of 15 years, and must be approved by an offshore financial institution. The foreign buyers must prove they can make the repayments exclusively from personal funds.
EXCHANGE CONTROL
Foreign currency brought into the island, as well as funds borrowed by non-nationals should be registered with the Central Bank of Barbados.
Non resident sellers and buyers were able to save on their foreign exchange with a policy implemented by the Central Bank of Barbados two years ago. Effective April 1st 2007, where the sale of a property by a non-resident is to another non-resident and there is no foreign exchange loss to the country, the proceeds of sale can be repatriated without restrictions. A company incorporated in another jurisdiction and registered as an external company in Barbados is resident in Barbados. With this regulation, if the property is owned by a company incorporated in another jurisdiction and registered as an external company in Barbados and that company transfers the property, there will be exchange control restrictions.
Barbados Real Estate Guide:
Planning Approval
If there will be new construction or extensive renovations on the property planning approval from the Town and Country Planning Office will be necessary. The Town and Country Planning Office will be guided by the zoning of the land and environmental issues. Permission from the Town and Country Planning office usually takes between two to six months.
Closing Costs
Closing costs have traditionally been seen as nuisances for buyers and can be expensive as well. In Barbados the seller of the property will be liable to pay stamp duty and property tax. Stamp duty is charged at the rate of 1% of the consideration for the sale. In terms of Property Transfer Tax there is no Capital Gains Tax in Barbados. However for Transfer Tax, this is applied equally to local and foreign vendors. For the seller transfer tax is required at the rate of 2.5% in respect of land where there are no buildings; and in the case of land with buildings, 2.5% on the amount by which the greater of the consideration paid or value of the land exceeds $125,000.
