The Stages of a Property Purchase in The Bahamas

The Agreement for Sale

Like many other countries, the laws of The Bahamas govern contracts for the sale of real estate. They are provided for by Section 3 of the Conveyancing and Law of Property Act, Chapter 38. Such contracts by Section 4 of the Statute of Fraud, Chapter 154 are required to be in writing, otherwise, no legal proceedings can be taken in respect thereof. It is perhaps necessary to emphasize that while many contracts which are made verbally are enforceable, no agreement for the sale of land can be enforced unless it is in writing. 

Therefore, the investor would be well advised to read and understand the contents of the contract which are usually set out in three parts:

1.	The particulars of sale;
2.	The conditions of sale; and
3.	A memorandum to meet the requirements of the said Conveyancing and Law of Property Act.

The Particulars of Sale 

The Particulars of Sale show:

a.	The parties involved in the sales agreement;
b.	The physical description of the property which may include an attached property plan as part of the description;
c.	The description of the estate or interest of the Vendor in the land, usually assumed and stated as a fee simple (outright ownership) in possession free from encumbrances;
e.	The document must state whether the property is freehold or leasehold;
f.	The benefits passing with the land, such as easements and restrictive covenants which are for the benefit of the land being sold; and
g.	The burdens affecting the land such as restrictive covenants, easements, leases, exceptions and reservations.

The Conditions of Sale

The Conditions of Sale are the second part of the Agreement for Sale. The special conditions commonly related to this section are:

a.	The date of completion when the conveyance executed by the Vendor is exchanged with the Purchaser for all purchase monies;
b.	The purchase price to be paid on or before the completion, the deposit to be paid usually upon signing the agreement, and the payment of the balance at completion;
c.	The deposit which is usually ten percent (10%) of the purchase price paid over to the Vendor’s attorney to be held in escrow (money held conditionally) until the Purchaser’s attorney is satisfied that all the Vendor’s obligations under the contract are met;
d.	The root of title as stipulated in Section 3 (4) of the Conveyancing and Law of Property Act requires the land title to be searched for a good root of title over a period of thirty years. This consists of the conveyances of the property from one person to another for valuable consideration over that thirty year period. The period may be shortened by commencing with a Crown Grant or lease, or a Certificate of Title issued pursuant to the Quieting Titles Act; and
e.	The conditions of sale must state the capacity in which the Vendor is selling, that is, as the beneficial owner, a trustee or mortgagee.

Standard Conditions

The third part of the Agreement of Sale consists of Standard Conditions. These standard conditions are provided for by the Conveyancing and Law of Property Act. They include:

a.	The giving of vacant possession to the Purchaser by the Vendor at completion;
b.	The production of an Abstract of Title, if required. The Abstract of Title is a schedule list of relevant back title documents which confirm the ownership right of the Vendor going back to a good root of title. The abstract may be waived, but the Vendor must still produce the back title information;
c.	Requisitions on Title are also required. The contract provides for a specified period of days within which the Purchaser’s attorney can raise questions on the documents and information provided by the Vendor’s attorney. He also poses questions which may result from his own searches in the Registry of Deeds and Documents, the Cause List where judgments, orders and rulings, if any, are recorded against the Vendor or his predecessors in title, and the Companies and/or Probate Registries. The Vendor’s attorney is also given an opportunity and time frame within which to respond. The contract usually provides for remedies if material requisitions are not satisfactorily answered after the stated period;
d.	There is usually a provision for the Purchaser not to take possession until completion;
e.	Sundry expenses and obligations attached to the land, such as real property taxes, utility charges and other contractual arrangements which must be paid in full to completion date are accounted for;
f.	The contract may provide for notices to complete to be given by either party in cases where the other fails to meet his obligations at the times stated in the contract; and
g.	The agreement may provide for real estate commissions to be paid to the realtor.

Preparation Sales

of agreements are usually prepared by attorneys, but in many instances, the real estate agents provide their own. It is important to remember that once a contract is executed, the parties involved will be bound by its terms, and it does not excuse the performance of any provision if a party has not been advised by an attorney, or if a party states that he did not understand what he signed. 

The Conveyance 

When property is acquired, the purchaser/investor is given a conveyance, which is sometimes referred to as a deed, or sometimes as an Indenture, as evidence of ownership. A conveyance is a document which legally transfers ownership from one party to another. It gives details of the actual transfer. It is divided into various parts: 

1. Date
2. Parties
3. Recitals
4. Testatum
5. Receipt
6. Operative Words
7. Description of Property
8. Easements et al
9. Habendum
10. Testimonium
11. Affidavit of Due Execution

a.	A Conveyance commences with a date even though it takes effect from the date it is actually delivered to the purchaser.
b.	The Parties include the full names, street addresses, and occupations of the Vendor and the Purchaser for purposes of identity.
c.	The Recitals are the narrative and introductory recitals which indicate whether or not the Vendor owns the property free and clear from encumbrances. If there are encumbrances or restrictions, these are usually indentified. The purchase price is stated in a certain currency.
d.	The Testatum, Latin for “known on good evidence”. This commences with the words “Now this conveyance witnesseth”.
e.	The Receipt clause confirms the payment from the purchaser and the receipt by the Vendor of the purchase price, which is also referred to as the Consideration.
f.	By Operative Words, the Vendor conveys as beneficial owner to the Purchaser the named property. The phrase “as beneficial owner” is very important and in a conveyance for valuable consideration implies that: i. the Vendor has good title to convey; ii. the Purchaser can enjoy the property quietly without interference; iii. the land is free from encumbrances; and iv. the Vendor will execute any further deeds to assure the Purchaser of good title.
g.	The Description of Property is a written brief description of the land which is generally placed in a schedule with a land surveyor’s plan exhibited to the conveyance.
h.	Easements, such as rights of way over some other property, which are to be granted, are inserted in the conveyance, as well as references to restrictive covenants (solemn agreements that are binding on all parties) to which the property is subject and any exceptions and reservations in favor of the Vendor.
i.	The Habendum basically specifies the owner’s rights as well as how those rights are limited. It may also specify time frame or certain prohibited activities. It usually commences with the expression, “To Hold” and continues “unto and to the use of the Purchaser, his heirs personal representatives and assigns in fee simple”. Where the Purchaser is a company, the expression is, “To Hold unto and to the use of the Purchaser, its successors in title and assigns in fee simple”.
j.	The tenth item on the conveyance is the Testimonium clause. This clause indicates the proof, evidence, and witness and in layman’s terms “seals the deal”. The clause may state that, “In WITNESS whereof the Vendor and Purchaser have hereunto set their respective hands and seals”. Only in cases where the Purchaser enters into a covenant with the Vendor, e.g. to observe restrictive covenants, is his name mentioned in the Testimonium, and he does not execute the conveyance.
k.	Finally, an Affidavit of Due Execution is executed. An affidavit, (in Latin literally means “trust affirm”), is a written declaration made on oath before somebody authorized to administer oaths. The affidavit is sworn by the witness to the signing of the conveyance by each party and such affidavit will have to be annexed to the conveyance.

The above notes describe a simplified form of a conveyance. Depending upon the situation involved, many conveyances can become quite complicated. For example, there may be more than one Purchaser or Vendor, and the Vendor may be acting in the capacity of a mortgagee or personal representative.

So far, the investor has found a property to invest in, and has entered into an Agreement of Sale; and the attorneys have drawn up the conveyance. The next step in the process is to stamp then record the conveyance. 

Stamping and Recording

As a matter of raising government revenue most deeds and documents are required to be stamped in accordance with the Stamp Act.

The stamp duty rates currently are as follows:

Amount	Rates
Up to $20,000	4%
Over $20,000-$50,000	6%
Over $50,000-$100,000	8%
Over 100,000-$250,000	10%
Over $250,000	12%

Upon stamping, the Registration of Records (Amendment) Act 1989 provides for deeds, documents and property grants to be recorded. Any deed which is first lodged and accepted for record in the Registry has priority and preference over other deeds and documents for the same property notwithstanding the latter was executed before the said deed was lodged for recording. 

The further purpose of recording is to provide notice to the world of all transactions pertaining to the property. 

This post is intended for your information only and is not intended to constitute a legal opinion.  If you require specific advice, you should contact a Bahamian real estate attorney.  You can contact a Bahamian real estate attorney by clicking here.