Barbados Real Estate – What You Need To Know About Buying Property In Barbados
A guide to buying real estate in Barbados
There are no legal restrictions for non-nationals wishing to buy real estate in Barbados. However, due to the peculiarities of local conveyance laws, the absence of title insurance, unregistered land titles and other factors, an attorney is required to purchase property in Barbados. This article focuses on the steps required to close the deal once you have completed your negotiations with the seller.
The Agreement for Sale
Once your negotiations are complete, your attorney will liaise with the seller’s attorney and prepare the agreement for sale. Once the agreement is signed, it is customary that the buyer will put down a deposit of 10% of the purchase price. The agreement, together with the deposit, is then delivered to the seller’s attorney. The seller will then sign the agreement, and a copy of the agreement is then delivered to the buyer’s attorney.
Investigation of Title
The next step is for your attorney to conduct a search against the title to the property to ensure that the seller holds a good legal title to the property and that there are no encumbrances such as mortgages, charges or liens affecting the property. Encumbrances may also take the form of unpaid judgments, outstanding water bills, and unpaid land taxes.
Completion of the Sale and Purchase
Once the title search is complete and all encumbrances are cleared, the seller’s attorney will then prepare the conveyance documents for closing. Upon closing, the seller’s attorney will normally exchange the conveyance documents, along with prior title deeds, for the balance of the purchase money.
Financing for non-nationals
There are mortgage options available for non-nationals. The Barbados mortgage market is not as mature as the US or UK market and therefore does not offer the breadth of mortgage options available in those more mature markets. However, attractive terms are still available, with loan to value ratios up to 70%, 20 year terms, interest only options and rates tied to LIBOR. Mortgages are available in US and Canadian dollars as well as Sterling and Euros.
The seller of the property will be liable to pay stamp duty and property taxes. Stamp duty is currently charged at the rate of 1% of the purchase price. Transfer tax is charged 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 purchase price or value of the land exceeds $125,000.
The attorney’s fees are regulated by the Barbados Legal Profession Rules 1997 which prescribe a minimum fee scaled to be charged by attorneys acting in specific non-contentious matters. The fee charged is a varying percentage of the cost of the property being purchased. The scale fee is a minimum fee, and the attorney is entitled to increase the fee to take into the account his years of experience and the complexity of the transaction. An additional 15% charge of VAT (Value Added Tax) is payable on the attorney’s fees.
The article is not intended to be exhaustive, nor is it an adequate substitute for proper legal advice. Anyone considering purchasing real estate in Barbados is strongly encouraged to obtain local legal representation and tax advice in connection with any proposed purchase of property in Barbados.