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.

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.