By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A key Ministry of Finance adviser yesterday said he had asked government officials to probe whether there was “any merit” in complaints that the first-time buyer Stamp Duty exemption was being misinterpreted, agreeing that the situation might need to be clarified.

And James Smith was also in agreement with his minister of state for finance successor, Zhivargo Laing, both men telling Tribune Business it was “never the intent” of either the PLP or FNM governments to combine the conveyancing and mortgage prices to create an aggregate transaction value.

This is the main complaint that has been made to this newspaper, namely that by aggregating the conveyancing and mortgage values, the Treasury was valuing many real estate transactions at above the $500,000 first-time buyer exemption threshold. As a result, their applications were being turned down.

Pointing out that he was waiting for government officials to return with the investigation results, Mr Smith confirmed: “I’ve asked someone to look into the complaints and see if there’s any merit. I’ve asked, but not been answered.”

Agreeing that the Government may need to clarify the exemption, which is enshrined in law via the Stamp Act, Mr Smith told Tribune Business: “One should be consistent in interpretation. It shouldn’t be one way or the other.

“What will probably need to happen is that the Government needs to look at it and clear it up, so we’re all on the same page. We should get clarity.”

Explaining the intent behind the first-time buyer exemption, which was introduced by the first Christie administration for properties valued at $250,000 or less, Mr Smith said it was an economic stimulus designed to assist middle and lower income Bahamians, not a revenue raising measure.

“The intent was to provide an additional incentive to the real estate and housing industry to stimulate construction activity,” he explained. “It was not intended to be a revenue measure; just the reverse. It was meant to be an incentive to the housing sector.”

The Ingraham administration extended the first-time buyer Stamp Duty exemption and widened its scope, increasing the value to properties valued up to $500,000, and also including vacant land in the deals that could attract the incentive.

Mr Smith, though, indicated that he disagreed with the latter reform, telling Tribune Business: “It should have been a development incentive. Unless the intent was to build immediately, we should not be lending a stimulus to hoarding or speculative investments.”

He agreed, though, that the intention was not to enable vendors to avoid their portion of the Stamp Duty, Tribune Business has been told that transactions involving first-time buyers are increasingly being structured so that the purchaser pays 100 per cent of the Stamp Duty, not 50 per cent as is the norm.

This is being designed so that the seller avoids Stamp Duty, but Mr Smith added: “I don’t think that was the intention. It says the first-time buyer, not the first-time seller.”

His successor as minister of state for finance, Zhivargo Laing, told Tribune Business that several instances where first-time buyers were denied the exemption, after the Treasury added the mortgage and conveyancing values together to determine an aggregate, had occurred under the Ingraham administration.

These decisions, though, had been reversed, and Mr Laing said the important issue was how the exemption was being interpreted by the Christie government.

“The intention was never, if you had a $200,000 purchase and a $200,000 mortgage, that the two of those were combined,” Mr Laing said.

“It was one transaction. The transaction is a $200,000 purchase of a house, and it’s within the $500,000 limit.”

Agreeing that the Government needed to clarify the situation for the benefit of all concerned, Mr Laing recalled how the Ingraham administration went into action when the Treasury started using previous conveyancing documents to argue that real estate transactions should attract greater Stamp Duty liabilities than their current prices.

“We did the necessary to say to the Treasury this is the way the matter is to be handled,” Mr Laing added. 

And, referring to the first-time buyer exemption, he said: “This is an issue that any government has to do the necessary to clarify. It’s not what happened in the past, but what the situation is today.

“Persons that have concerns about this should be asking the Government what should be the case.”

If you are having issues regarding your stamp duty exemption application, you can contact a Bahamian property attorney.  You can contact a Bahamian property attorney by clicking here.

Subdivisions in The Bahamas

Assented to by Parliament on March 16th, 2010 the Act became law in the Bahamas with power to repeal the Town Planning Act, the Private Roads and Sub-divisions Act, the Private Roads and Subdivisions (Out Islands) Act and the Conservation and Protection of Physical Landscape of The Bahamas (Quarrying and Mining Zones) Order, 1997.

The Act however, is not yet in effect but the entirety or different sections thereof shall come into force on such dates as the Minister for the Environment may appoint by Notice published in the Gazette. It is anticipated that the Act or sections thereof will first come into force in New Providence with either simultaneous or eventual application to any Family Island or Family Island Government District and the Port Area of Grand Bahama.

It has recently been stated by the Minister of the Environment that “The Government has determined to delay the coming into force, the implementation of the Planning and Subdivisions Act, until October 1st.” – The Tribune, Business Section, Monday July 5th, 2010.

In the interim a summary of key provisions under the Act follows:

1. Objects and Purposes:-

Among others the foremost object and purpose is to provide for a land use planning based development control system led by policy, land use designations and zoning.

2. Definitions of Mention:-

“Minister” unless specified, means the Minister responsible for the Environment.

“Land Use Plan” means a policy document showing existing and future planned land uses including lands to be protected from development.

“Development” means the carrying out of any building operation, engineering orother operations in, on, over or under land; the clearing of land, the severance or subdivision of land into four or more lots; or the making of any material change in the use or otherwise of any land or building, structure or part thereof and includes outdoor uses, an addition to, or the constructing, erecting, placing, relocating, altering or replacing of, a building or structure or part thereof.

“legal non-conforming use” means the use of any land, building or structure, including that lawfully under construction or for which a building permit is in effect, that is not permitted by existing zoning, if such use existed on the day the zoning was enacted.

“Severance” means the division of not more than four new lots from an existing lot, the adding of land to an existing lot, the making of lot line adjustments. In addition, rights of way and easements also require land severance approval.

“Subdivision” in relation to land most significantly means the division of a parcel of land, into five of more new lots, parcels or tracts from an existing lot in any division of which provision is made for the reservation of land for the construction of access roads, rights-of-way or easements if required.

“Zoning” means provisions that divide land into zones, prescribe the purpose for which land, buildings and structures in any zone may be used, prescribe the design standards allowed for development, and prohibit the use of land, buildings and structures for any other purpose.

3. Structure and Administration:-

Administration under the Act shall be carried out by a Town Planning Committee, a Department of Physical Planning and a Subdivision Appeal Board. The definitions of which follow below:-

Town Planning Committee (“the Committee”) - shall consist of seven (7) members holding office for a period of three (3) years. The Minister may after consultation with the Committee give such general direction to the Committee as to the exercise and performance of its functions as appear to the Minister to be requisite in the public interest and the Committee shall give effect to such direction. Each decision of the Committee shall be published on the Official Government Website and in the case of a Family Island on the Family Island Administrator Notice Board or other prominent place.

Department of Physical Planning (“the Department”) – shall consist of a Director and such other officers who shall be subject to the general direction and control of the Minister.

There shall be a Policy and Planning Division and a Development Review Division. A Register shall be kept by the Director of all applications, decisions, revocations or modifications of approvals, notices served, agreements made,

buildings of special or historic value, and approved Subdivisions and Severances. The Director shall be the technical adviser to Minister and chief executive officer and technical adviser to the Committee and shall have the authority to approve applications that meet planning and zoning standards and to enforce the provisions of the Act. The Director also has the right to enter premises to ensure there is no contravention of a provision of the Act or Approval.

Subdivision and Development Appeal Board – shall apply the procedures of Section 65 of the Act on hearing appeals; against any decision of the Committee relating to a development application, where the Committee fails to make a decision within four (4) months of receiving a complete development application, against an order of the Minister made under the provisions Section 24, against a decision of the Committee to extinguish the effect of a

restrictive covenant, against the decision of the Committee by any person who has an interest in the matter. An appeal from a decision of the Subdivision Appeal Board will be to the Supreme Court but only on a point of law and the Supreme Courts decision shall be final and binding.

While an appeal is pending no development may proceed on any land which is the subject of an appeal.

4. Land Use and Development Controls

In preparation of Development one should be familiar with application criteria considerations inclusive of the requirement for site plan approval and the provision of environmental impact statements, applicable land use plans

inclusive of secondary land use plans, all applicable zoning bye-laws and Orders as well as areas that are designated of architectural interest.

Criteria for Consideration of Applications – on submission of a development application the Committee shall consider; the health, safety, convenience and welfare of the present and future inhabitants, conformity to the Land Use Plan, the Zoning Bye-law, conformity to National Land Use Development Policies, the suitability of the land for the proposed Development, conservation of natural resources, preservation of natural resources and environmentally sensitive lands, flood control, adequacy of utilities and services, restrictions or proposed restrictions (if any) on the land or buildings and structures proposed to be erected thereon and the restrictions (if any) on adjoining lands, the adequacy of community services, the proposed grades and elevations of roads and adequacy of road links, dimensions of proposed lots in a subdivision, amount of land to be dedicated for public

purposes, population density of area, percentage of land to be cleared, height of surrounding buildings, coastline encroachment and previous applications submitted for subject land.

Areas of Architectural interest – located in the set boundaries of downtown Nassau defined in the Act shall be subject to special architectural policies in the Land Use Plan in order to protect historic building types and styles. Additionally, other areas of architectural interest or historical value on any island may also be made subject to special architectural policies in a Land Use Plan in order to protect historic building types and styles across the Bahamas. Environmental Impact Statements – shall be submitted to the Department as part of any proposed type of Development that may have significant effects on the environment due to its nature, size or location or when the Development is of national importance, or of regional impact.

Land Use Plans – prepared by or for the Department (after consultation with interested parties and at least one public opportunity where questions and suggestions may be presented) shall be available for every Island of the Bahamas and shall contain among other aspects, maps, schedules tables and other descriptive matter that illustrate written statements on goals and objectives and land use policy and land use designations from residential and industrial to conservation and tourism with existing and planned road and utility corridors taken into consideration and even areas that should not be developed.

Secondary Plans may also be prepared bringing greater detail to specific areas. All Development approvals (save legal nonconforming land uses) and zoning shall be in conformity with the Land Use Plan which shall be available with all current amendments for viewing and purchase at the Department of Physical Planning and posted on the Official Government Website. If a draft Land Use Plan has not received final approval by the Minister, the Committee shall in considering any application for development be guided by the prescriptions of the draft Land Use Plan.

Zoning Bye-laws – shall be adopted by the Committee for each Island of the Bahamas and approved by the Minister which shall zone all land and allow for existing uses, prohibit and regulate the use of land and erecting of buildings and structures except for such purposes as set out in the bye-laws and shall recognize and incorporate all zoning orders issued by the Minister. In the absence of a Zoning Bye-law for a particular Island, a generalized zoning code shall be adopted by the Committee in conformity with the governing Land Use Plan.

Zoning Orders – made by the Minister may prescribe areas where new buildings or Development may or may not be permitted, areas that are to be environmentally protected, identified for the purposes of agriculture, forestry, fisheries and may also provide development controls on specific areas.

Zoning Orders shall be in conformity with the Land Use Plan and any National Land Use Development Policies and if in conflict with a Zoning Bye-law shall prevail to the extent of such conflict.

Restrictive Covenants – in existing Developments will be impacted through the subsequent zoning of such land by the further restriction or addition to the uses already existing under a Deed or Conveyance which may even change the restrictions and uses permitted. After zoning all new restrictive covenants shall be in conformity with the zoning and cannot further restrict nor permit uses or restrict the ability of the land being developed than set out in such zoning.

Legal non-conforming use – of land or a building or structure on such land that has been zoned contrary to its current use shall nevertheless continue so long as such legal non-conforming use does not cease, expand its physical presence, sustain damages to more than half its physical size less foundation or is not sold or leased.

Site Plan Control – approval is required for all Developments unless exempt by the Minister, and the Committee must approve all plans before commencement showing the location, massing and conceptual design of the exterior

of all buildings and structures to be erected, the existing grading and proposed alteration in contour and elevation of the land, servicing facilities, vehicular facilities, pedestrian facilities inclusive of those with disability, storage and waste facilities, lighting facilities and boarder and landscape facilities.

Bonus Zoning – is an incentive that can be provided; authorizing the increase of height and density of a Development otherwise than permitted in a Zoning Bye-law in return for provision of additional facilities, preservation of important areas or any other public benefit deemed suitable by the Committee.

Parkland, recreational and open space dedication – will as a condition of Site Plan or Subdivision approval for residential purposes be necessary and must consist of acceptable land representing no less than five (5) percent of the total land developed.

Development Charges, Agreements and Performance Bonds may also be necessary and entered into in accordance with the Act on submission of application to the Committee.

5. Approval Authority

No person shall commence or carry out any Development of land, without having first applied for and obtained where applicable the approvals required under the Act. Any laying out of roads or water pipes, the clearing or filling in of land or preparatory construction without the required approval shall be in contravention of the Act.

Approvals - that may be required for the Development of land from the Committee include, Land Use Plan Amendment Approval, Zoning Bye-law Amendment Approval, Minor Variance Approval, Site Plan Approval, Architectural Design Approval (for buildings or land that lie within the set boundaries of Nassau as defined in the Act), and Subdivision Approval or Severance Approval. A Notice of Zoning Compliance is also required from the

Director and no construction can start without also having obtained a valid building permit under the Buildings Regulation Act (Ch. 200).

Conditions or Amendments – may be imposed by the Committee on approvals; for Land Use Plan Amendment, Zoning Bye-law Amendment, Minor Variance, Architectural Design, and Severance and on Preliminary Support of

Application for Site Plan or Subdivision. The Committee may also refuse approval giving written reasons, or defer consideration pending further information from the applicant or the Department. Persons who commence Development without final approvals are subject to being order to cease Development, to demolish the building, effect alterations or restore it to its original use and condition.

Failure to meet conditions and time lines may result in approvals lapsing or being revoked and any decision of the Committee is final unless appealed to the Subdivision and Development Appeal Board.

No Approval required – for the uses of land as listed in the Third Schedule to the Act or in instances where the Development of land includes the carrying out of works for the maintenance, improvement or alteration of the interior of the building, or the carrying out of works within the curtilage of a dwelling house for any purpose ancillary to the use of the dwelling house or when it is on the Governments behalf or other statutory undertaker for the maintenance of roads, sewers, water mains, pipes, cables and for the carrying out of agriculture (not including the breeding or keeping of livestock) or forestry.

6. Subdivisions:-

Subdivisions must have received Subdivision Approval before any lots can be sold and all Developers must sign in advance an acknowledgement of this condition. All lots within a Subdivision must conform to the standards of the Zoning Bye-law and all roads shall be of such width as required by the Land Use Plan.

A Subdivision Approval - shall be given after submission of a complete application and after all conditions of Preliminary Support of Application have been met. In addition to specific conditions, the owner shall have to provide a bond or bond insurance for a sum fixed by the Minister responsible for Public Works and shall enter into an agreement with the Minister responsible for Public Works for the proper constructions and provision of roads, electricity, water, telephone, and other utilities throughout the subdivision to the specifications approved by the Committee.

No building or structure within a Subdivision shall be allowed to commence on any tract within the subdivision until; the road providing access from such tract out to the Public Road has been formed and graded, all lots have been marked out on the ground and set with markers and all utilities and services are available for hook up to each lot in the Subdivision.

Title to Subdivision lots - conveyed after the commencement of the Act will be null and void without prior Subdivision Approval.

The Act however makes provision to protect the title interests of persons whose conveyance of a lot was made prior to the commencement of the Act.

7. Private Roads:-

No alterations or work may be done to an existing private road until written approval has been received from the Minister responsible for Public Works and the Minister for Public Works may enter agreements with any private individual or association to construct, maintain and operate private roads or any other private services or works within the road allowance.

8. Penalties:-

There are penalties under the Act on summary conviction ranging from five thousand dollar ($5,000.00) fines for obstructing a person acting in the execution of the Act, to a general ten thousand dollar ($10,000.00) fine for anyone who contravenes a provision of the Act where no other specific penalty exists and also a twenty thousand dollar ($20,000.00) fine or one year imprisonment for anyone who contravenes the provisions relating to Subdivision Developments.

Conviction – for an offence against the Act gives power to the Magistrate to make such order prescribed by the Act or in lieu of or addition to such order, make such order as the circumstances of the case may require. Failure to comply with such order will enable to Minister to enter the subject premises and carry out the terms of the order at the expense of the owner.

Expenses incurred by the Minister in carrying out the terms of a Magistrate’s order or expenses incurred by the Minister responsible for Public Works in completing the proper construction of any roads or the installation of required services and utilities in a Subdivision may form a first charge on all property of the owner wheresoever situate.

The information contained in this post is provided for the general information, but is not intended to constitute legal advice. Clients and the general public are encouraged to seek specific advice on matters of concern. This guide can in no way serve as a substitute in such cases.  If you require specific advice you should consult a Bahamian Real Estate Attorney.  You may contact a Bahamian Real Estate Attorney by clicking here.

Law Relating to Distribution of Funds to Beneficiaries

Under general banking law, the property (e.g. monies) in a deceased account holder’s bank account passes to his legal representatives, by operation of law, on the death of a client of a bank licensed and registered in The Bahamas. The property is then distributed to the appropriate or named beneficiary, in accordance with the provisions of the deceased account holder’s will or the rules of intestacy, depending upon whether the deceased account holder died, having made a valid, inter vivos will or died intestate (without a will).

However, if the account is a joint account, the balance in the account becomes the property of the surviving joint account holder in the event of the death of one of the account holders, by virtue of the surviving account holder’s right of survivorship.

Therefore, the property in the deceased account holder’s account, subject to the terms and conditions of the bank’s mandate or contract with the client, cannot be disposed in any way that the bank chooses, since the legal ownership of the property in the account is that of the personal representative(s) of the deceased account holder.

Notwithstanding the foregoing legal principle, the personal representative must produce to the bank, sufficient evidence of probate of the will or letters of administration of the estate of the deceased account holder, as required by Section 49 (1) and (2) of the Supreme Court Act, 1996 (“the Act”) of the Bahamas. Although it is the duty of the personal representative to give notice of the deceased account holder’s death as soon as possible, the bank, being organised and operated under the laws of The Bahamas, may act only upon a Grant of Probate or Letters of Administration in this jurisdiction.

Under common law, a bank who pays the monies remaining in a deceased account holder’s account to a person who has not obtained one the foregoing grants of representation, becomes, by operation of law, an executor de son tort (one who, being either an executor or administrator, who has obtained a Grant of Probate or Letters of Administration in the deceased account holder’s estate, acts in some way as if he/it was an executor or administrator). The bank will also be liable to pay such penalties and duties as would have been payable on Grant of Probate or Administration.

The probate requirements in The Bahamas must be fulfilled before such property in a deceased account holder’s bank account, situate in or related to The Bahamas, may be distributed to the personal representatives of the deceased account holder, notwithstanding the fact that the will of the deceased account holder, may have already been probated in his country of domicile and a Grant of Probate issued in his country of domicile.

The foreign will or letter of administration must be probated again in this jurisdiction and a new Grant of Probate issued to the personal representative of the deceased account holder for the property in his account situated in or related to The Bahamas. The Grant of Probate or Administration, whatever the case may be, must be resealed in The Bahamas.

Under the Probate Rules of the Act, in order to reseal the foreign grant in The Bahamas, the following documents are required: (a). Petition for Resealing the Grant; (b). Bond for Making a Return; (c) Return; (d) Administration Bond (for resealing Letters of Administration) (e) Power of Attorney (to be issued to the person acting on behalf of the personal representative of the deceased account holder, in submitting the documents to the Probate Registry of The Bahamas); (f) Affidavit of Domicile and Assets; (g) Affidavit of the validity of the Will; (h) Three (3) certified copies of the Will; and (i) Three (3) certified copies of the Grant of Probate or Letters of Administration.

The foregoing documents are submitted to the Probate Registry of the Supreme Court of The Bahamas and the process may take from three (3) months to a year, depending upon the proper completion and submission of the documents, the nature of the assets, and the complete fulfilment of the probate requirements.

1. Upon receipt of the Grant of Resealing of Probate in The Bahamas, the bank should require the following information before release of the property in a deceased account holder’s account: (a). Certified copy of the Grant of Resealing of Probate from the authorised Attorney (under the aforementioned Power of Attorney) in The Bahamas; (b) An independent, written verification of the identification of the Executor or Administrator from a Notary Public or lawyer in his country of domicile; (c) Letter from the Executor stating that he has been advised by Bahamian legal counsel and/or the authorised attorney of the estate of the deceased account holder, that all of the relevant probate rules and procedures have been followed and completed, regarding the Resealing of the Grant of Probate in The Bahamas and that all of the relevant laws have been complied with, as preliminary steps in requesting the release of the property/monies in the deceased account holder’s account. 
   
   

The Executor should also make a formal request for the release or distribution of the property/monies in the deceased account holder’s account, indicating the specific reasons for the release or distribution of the property/monies for the account, and he should also provide the Bank with his specimen signature, duly certified by a Notary Public or lawyer in his country of domicile, or alternatively, copies of the first four or relevant pages of his passport.

Section 50 (1) (a) –(d) of the Act is also applicable to the distribution of funds to claimant(s) of the credit balances of the onshore and offshore accounts of deceased account holders, as it provides an easier, more efficient alternative to the formal requirements of the Act, under certain specified conditions.

Section 50 (1) of the Act gives the manager or assistant manager of a bank the discretion to pay “any sum standing to the credit of a deceased person to any person who upon producing satisfactory proof of death of such deceased person and upon producing such evidence as may be required by the manager or assistant manager to be entitled by law to the said sum standing to the credit of the deceased person”, without the production of probate or letters of administration.

To satisfy the requirements of Section 50 of the Act, the claimant of the credit balance of the deceased account holder must produce the following documents/information, before payment of the funds is made to them: 1. Certified copy of the death certificate of the deceased account holder, duly notarized or apostilled (as applicable to deceased account holders domiciled outside of The Bahamas requiring such legalization); 2. Certified copy of the will of the deceased account holder and/or a certified copy of an Affidavit of Law from an attorney in the country where the deceased account holder was domiciled at death, indicating the entitlement of the claimant under that country’s laws of succession. This is to establish the claimant’s legal entitlement to the credit balance of the deceased account holder; 3. Affidavit/Declaration by the claimant, duly certified by a Notary Public in The Bahamas or lawyer in his country of domicile (as prescribed by Section 8 of the Oaths Act), that the deceased person has no real estate in The Bahamas and his total personal estate does not exceed the amount standing to his credit at the bank; and 4. Actual or certified copies of Notices evidencing the fact that at least three (3) months has been given by the claimant by advertisement in three (3) issues of a daily newspaper in The Bahamas, requesting that all persons/creditors having any claims to the estate of the deceased account holder to notify the bank in writing of such claims.

The bank must then ensure that no other claims to the estate of the deceased person have been received by the bank and the bank must then forward the statutory declaration along with the evidence of advertisement for creditors of deceased account holder’s estate to the Registrar General.

It should be noted that the statutory procedure outlined in Section 50 of the Act should be used in a discretionary manner by the manager or assistant manager of the bank, in addition to and in compliance with its internal verification and due diligence policies and procedures, regarding such accounts.

Where the statutory procedure proves to be more open to scrutiny or arguably, less stringent, in its application, than the standards of the bank’s internal policies, procedures, and overall mandate, it may be advisable that the bank exercise its discretion in following the standard probate procedure in Section 49 of the Act, as a precautionary measure.

The information contained in this post is intended for your information only and does not constitute a legal opinion.  If you require specific legal advice you should contact a Bahamian estate-planning and administration attorney.  Such an attorney would be qualified to handle probate and administration of estates in The Bahamas.  You may contact a Bahamian probate and administration of estates attorney by clicking here.

Resort Developments in The Bahamas

Hotels in The Bahamas have been one of the most important aspects of the nation’s tourism industry. In the 1920’s and 1930s during the Prohibition in the United States, guests were accommodated at the major hotels – the New Colonial, the Fort Montagu, completed in 1926, and the Royal Victoria. Hotel operators enticed travelers with sporting tournaments and other sightseeing activities at the historical landmarks of New Providence. Foreign elite were lured by the exclusive Porcupine Club on Hog Island (now Paradise Island), the posh Bahamian Club on West Bay Street and others such as the Cat Cay and Bimini Rod and Gun Clubs. The Bahamian Club, which opened in 1920, was the first gambling facility in the Bahamas.

In the 1950s and 1960s, tourists flocked to the new resorts just west of Nassau at Cable Beach and to Paradise Island in the 1960s and 1970s. With its exclusive environment, Paradise Island soon drew other major investors like Merv Griffin and Donald Trump, whose creative genius made the island of paradise one of the most popular holiday destinations of all time.

Surely, establishing a hotel in The Bahamas can easily be one of the most important milestones of your lifetime. Boasting one of the world most attractive beaches, a stable government, and friendly culture, establishing a Bahamas based resort is a sound asset that will greatly benefit the pockets of its investors in the long term. Coupled with a strong commitment by the Bahamas Government to promote the islands of the archipelago along with incentive driven legislation, The Bahamas continues to be one of the most popular destinations to establish a vacation resort.

Defining a Hotel under Bahamian Law

Under previous Bahamian legislation a hotel means any building or a group of buildings enjoying common ancillary services in which accommodation is provided for reward for guests by a common management, and that the buildings contain no fewer than four bedrooms for the use of guests as sleeping accommodation, or be equipped with no fewer than ten beds for such use.

The recent amendments to the Hotels Act has now altered the definition of a hotel to include the concept of the “owner occupied rental home and owner occupied property” which is defined as “property occupied by a person who being the owner in fee simple or as a mortgager in possession, occupies and resides in such property exclusively as a dwelling house on a permanent or seasonal basis”. It seems that the minimum requirements of no fewer than four bedrooms for the use of guests as sleeping accommodation, or be equipped with no fewer than ten beds for such use, as required in the previous act, no longer apply.

Due to the recent concept of the condo hotel, the Hotels Act defines a condo hotel, as a building used as both a condominium and a hotel, thus allowing the owner to rent his unit to other visitors like any other hotel room, when the unit is not in use. Under Bahamas legislation a condo-hotel is a hotel which satisfies the following requirements:

• it shall be licensed under this Act and shall pay hotel license fees;
• it shall pay hotel guest
• it shall pay business license fees;
• it shall pay real property taxes, if applicable; and
• individual units shall remain in the hotel’s general rental pool for a minimum period of nine months per year.

Licensing a Bahamian Hotel

Obtaining a Hotel License

The Hotels Act provides the Hotel licensing Board with the authority to grant hotel licenses to its applicants wishing to operate a hotel in The Bahamas having regard to the need in the public interest to maintain an efficient hotel industry in The Bahamas. Through application made by the hotel operator, the hotel licensing board may also provide temporary licenses and play a deciding role in the, the transfer of licenses from one party to another, as well as varying any terms and conditions in which a hotel license can be held.

Under section 6 of the Hotels Act the licensing board also has the authority to establish the duration of the hotel license, which normally takes effect and expires on the 31^st day of December each year (for hotels in New Providence and Grand Bahama), and in any other case, on the thirty-first day of March, and may also provide an extension of the hotel license for further periods after the normal expiration date subject to the payment of the hotel licensing fee.

Fees Involved in Bahamian Hotel Ownership

Hotel license fees and Hotel guest tax are two types of fees involved in hotel ownership in The Bahamas. According to the Hotels Act, hotel license fees are paid to the hotel license board in respect thereof for the sum of three (3) dollars for each bedroom provided in the hotel for the use of guests as sleeping accommodation (S15 Hotels Act). This amount is applicable to hotels having:

• fewer than ten bedrooms for use of guests as sleeping accommodation or equipped with fewer than twenty (20) beds for such use in New Providence;
• in any Out Island either having fewer than twenty-five (25) bedrooms, or equipped with fewer than twenty (20) beds.

Under S16 of the Hotels Act, hotel guest taxes are paid by each guest of any hotel for the period during which the guest is provided with sleeping accommodation, at which the sum of six (6%) percent is charged of the total room rate for the period which the guest is provided with sleeping accommodation. Under legislation it is the duty of the hotel operator to collect the guest tax from its guest and make payment to the Public Treasury and, if permitted by the hotel licensing board, may be paid in installments or at such periods as may be prescribed (S17, Hotels Act).

Under Section 21 of the Hotels Act the hotel operator is required to keep and maintain financial records of the hotel, which may be inspected by the Minister or any person authorized by him in that behalf. This also includes make copies of any documents which relate or appear to relate to the financial records of the hotel. The Minister also holds the authority to request any information pertaining to the hotel operation as required by the Minister.

Default of Payment and Penalty for Operating without a Hotel License

The Hotel Licensing Board may by notice in writing require the operator of the hotel to remedy the default within such time, not being less than fifteen days, as may be specified in the notice. The Board may, where there is a license in force in respect of the hotel, by instrument in writing cancel that license, if an hotel is in default as alleged by a notice and the operator thereof fails within the time specified in the notice to remedy the default complained of by the Board.

Section 23 of the Hotels Act establishes the application of a fine for hotels operating without a license and the non-payment of hotel guest tax which includes:

• A fine of $500.00 each day of operation without grant of a hotel license (S23)
• A fine of $600.00 or, (at the election of the Minister) treble the amount of unpaid hotel tax unpaid.

Supplementary Licenses

Apart from the grant of a hotel license a hotel operator may also want to have other tourist based businesses as part of the hotel operation. Most Bahamian hotels provide at the minimum, the sale of food and alcoholic beverages, while larger hotel operations will have more operations (i.e. gambling facilities, beauty/ massage parlors, city tours, etc.) which are either contracted to local Bahamians or operated by the hotel establishment. It is important that either the contractor or hotel establishment has obtained the legal right to conduct any business services by obtaining the necessary business licenses to do so.

Determining which licensing authority to apply to will depend on the type of business the applicant will want to establish. Hotel operations wishing to operate gambling facilities must apply to the Bahamas Gaming Board in order to obtain a license, while hotel operations wishing to sell liquor must apply to the Liquor Licensing Board for an operating license