A guide to purchasing property in Barbados

The process of purchasing property in Barbados takes time to complete. By law, only an attorney can provide you legal advice; do not rely on advice given by a real estate agent or any other third party. Whether you are a buyer or a seller, you need legal counsel who will look out for your interests.

The Agreement for Sale

Once negotiations are complete, the next step is the Agreement for sale, which is usually prepared by the seller’s attorney. At the time of signing, the buyer signs the agreement in duplicate and pays a deposit; typically 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

After the agreement is signed the buyer’s attorney conducts 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

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.

Closing Costs

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. Transfer tax is exigible 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.

Retaining Legal Advice

Any person intending to purchase or sell property must retain the services of an attorney in Barbados to represent their interests. The agreement for sale, the deed of conveyance and the deed of transfer must all be prepared by an attorney. 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.

Attorney’s Fees

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.

Financing

Barbadian nationals who wish to purchase property in Barbados but do not have the necessary resources to finance the purchase may be able to obtain a mortgage from a Barbados bank or mortgage company. However, the Central Bank of Barbados regulations require that all funds for the purchase of property in Barbados by non-resident non-nationals 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.

Disclaimer

The above overview is not intended to be exhaustive, nor will it be an adequate substitute for proper legal advice. Every purchaser is strongly encouraged to obtain local legal representation and tax advice in connection with any proposed purchase of property in Barbados.

Lex Caribbean
Attorney's-at-Law
Worthing, Barbados
P: (246) 430-3750
F: (246) 430-3789
W: www.lexcaribbean.com