For buyers
PURCHASING RESIDENTIAL PROPERTY IN BARBADOS (IN A NUTSHELL)
Purchasing residential property in Barbados is a straightforward process, but it's essential to understand the steps involved and the associated transactional costs. Here's a guide:
1. PROPERTY SEARCH
The quality of your buying experience will be influenced from the moment you choose which Estate Agent to use. Work with a reputable real estate agent, to identify suitable properties. Their guidance can save you time and money.
2. BE PREPARED
Your choice of attorney can make a substantial difference in the timing and ease of the transaction. It is in your best interest to use an attorney who is versed in real estate and property conveyancing law.
Register your foreign funds when bringing them onto the island. Your attorney will advise you and take you through this process. (More on this below)
Have your “Know your client” documents together and easily accessible. You will need these when you select your attorney, when you open a local bank account and to set up your accounts for your utility bills.
What type of transaction are you planning for and how will it be funded? If you will be using a mortgage, speak to your bank and adjust your transaction timeline and cost expectations accordingly. Using third-party financing will incur additional legal and administrative costs and will take more time for the transaction to be processed. Will the transaction be “Purchase of property” or “transfer of company shares”? Your attorney will be able to guide you on the requirements and process for both.
3. COMPLIANCE WITH ANTI-MONEY LAUNDERING (AML)
Provide documentation as required by your Estate Agent, bank and attorney to meet AML requirements, including but not limited to:
• Government-issued photo ID (passport).
• Proof of address (recent utility bill or bank statement).Proof of the source of funds
4. OFFER & AGREEMENT
Ensure any important communication regarding your purchase is in writing. Follow up pertinent verbal conversations with an email. Submit a written offer to the seller through your real estate agent. This mitigates any chance of confusion or misunderstanding between everyone involved.
If accepted, a legally binding Agreement for Sale is drafted by the seller’s attorney.
A 10% deposit of the purchase price will be due typically within 4 weeks of your offer being agreed.
5. DUE DILIGENCE
Your attorney performs due diligence, which includes verifying the title, zoning compliance, and ensuring there are no liens or encumbrances on the property. In the case of a transfer of shares, the due diligence conducted will also encompass verifying that the holding company is in good standing.
6. TRANSFER OF OWNERSHIP
Once due diligence is completed, the seller’s attorney prepares the documents for the transfer of ownership.
The balance of the purchase price is paid, and the deed is recorded with the Barbados Land Registry. Where the property is being bought by purchase of shares in the holding company, ownership is transferred by a Share Transfer Instrument which is filed with the company’s registered agent.
TIMELINE
The purchase process usually takes 2 to 3 months, depending on the complexity of due diligence.
IMPORTANCE OF REGISTRATION OF FUNDS
Registering foreign funds ensures you have the right to repatriate the following in the future:
Proceeds from the sale of the property.
Rental income earned on the property.
Failure to register funds could complicate future transactions and limit the ability to move funds out of Barbados.
TRANSACTIONAL COSTS
1. Property Transfer Tax (Seller Pays)
Residential properties: 2.5% on the value exceeding BBD $150,000 (approx. USD $75,000).
Sellers also pay 1% in Stamp Duty.
2. Estate Agents Fees
4% - 5% of the agreed selling price plus VAT.
3. Legal Fees
Buyer’s attorney typically charges 1% to 2.5% of the purchase price, plus 17.5% VAT.
4. Foreign Exchange Costs (If Applicable)
If paying in foreign currency, consider bank fees and exchange rates.
5. Property Valuation and Survey Costs (Optional)
If required by the buyer or lender, these services range between BBD $1,000 to $3,000, depending on the complexity.
6. Mortgage-Related Costs (If Applicable)
If obtaining financing, there will be additional costs for loan processing, legal fees, and valuation reports.
