Guide to buying real estate in Barbados
There are no legal restrictions for non-citizens who wish to purchase real estate in Barbados. However, due to the peculiarities of local transport laws, the absence of property rights insurance, unregistered land rights, and other factors, an attorney is required to purchase property in Barbados. This article focuses on the steps required to close a transaction after you have completed negotiations with the seller.
Agreement for Sale
Once your negotiations are complete, your attorney will work closely with the seller’s attorney and prepare an agreement for sale. After the agreement is signed, usually the buyer will deposit a security deposit of 10% of the purchase price. The agreement, together with the guarantee, is then submitted to the seller’s attorney. The seller will then sign the agreement, and a copy of the agreement will then be submitted to the buyer’s attorney.
Title Investigation
The next step is for your attorney to conduct a search of the property title to ensure that the seller holds good legal title to the property and that there are no encumbrances such as mortgages, fees or liens affecting the property. Charges can also be in the form of unpaid court decisions, unpaid water bills, and unpaid land taxes.
Sale and Purchase Settlement
Once the title search is complete and all charges cleared, the seller’s attorney will then prepare the carriage documents for closing. After closing, the seller’s attorney will usually exchange the documents of carriage, along with the previous deed of title, for the remainder of the purchase money.
Financing for non-citizens
There are mortgage options available to non-citizens. The Barbados mortgage market is not as mature as the US or UK markets and therefore does not offer the widest range of mortgage options available in more mature markets. However, attractive terms are still available, with a loan-to-value ratio of up to 70%, a term of 20 years, an interest-only option, and an interest rate tied to LIBOR. Mortgages are available in US and Canadian dollars as well as Sterling and Euros.
Closing fee
The seller of the property will be responsible for paying the stamp duty and property taxes. Stamp duty is currently subject to a rate of 1% of the purchase price. Transfer tax is charged at a rate of 2.5% for land without buildings; and in the case of land with buildings, 2.5% of the amount that is greater than the purchase price or the value of the land exceeds $125,000.
Attorney fee
Attorney’s fees are governed by the 1997 Barbados Law Professions Regulations which set a scaled minimum fee to be charged by lawyers acting in certain non-debate matters. The fee charged is a varying percentage of the cost of the property purchased. The scale fee is the minimum fee, and attorneys reserve the right to increase the fee to account for years of experience and the complexity of the transaction. An additional 15% VAT (Value Added Tax) fee must be paid at attorney’s expense.
Disclaimer
This article is not intended to be exhaustive, nor is it an adequate substitute for appropriate legal advice. Anyone considering purchasing real estate in Barbados is strongly encouraged to obtain local legal representation and tax advice with respect to any proposed property purchase in Barbados.
