Legal Issues

In Barbados, property passes by conveyance of title, evidenced by the recording of title deeds and certified survey plans at the registry of title. A purchaser will require a registered Barbadian attorney to search the register and establish title to the property prior to the completion of a sale.

The purchaser agrees terms with the vendor and enters into a contract prepared by the vendor's attorney, which provides for a deposit to be made securing the property. This deposit is held by the vendors' attorney in escrow until completion, when the balance of the purchase price is paid and the title passes to the purchaser by way of the conveyance. Between the time of executing the contract and the completion of the sale, the legal representative of the purchaser will search the title, and ensure that there are no encumbrances, charges, encroachments, or other impediments to the sale.

The title may be taken in an individual's name or through a corporate vehicle set up to own the property. It is usual in the case of non-residents of Barbados that they purchase property through a company which may be incorporated outside Barbados, but which must be registered to do business in Barbados.

In many cases, non-residents use such a corporate vehicle in order to make the onward sale of the property simple.

Transaction Costs

In 1998 the Government abolished property transfer tax for non-national purchasers, which was previously set at 10%. Sales commissions costs are borne by the vendor. Each party bears their own legal fees, which are based on a scale of fees ranging between 1.5% - 2%. On average, the cost would be approximately 1.5% for the purchaser. This is the only purchase transaction cost other than incidental costs of forming and registering a company if a corporate vehicle is to be used.

When selling a property the vendor would normally incur sales commissions of 5%, transfer tax of 7.5%, stamp duty of 1% and legal fees of approximately 1.5%. This is unless the property is owned by an offshore company in which case the vendor simply sells the company, not the property, and therefore avoids the stamp duty and transfer tax.

Operating Costs

The owner of land in Barbados will have to pay an annual land tax at the following rates:

• Up to BDS$350,000: 0.2%
• BDS$350,000. - BDS$800,000: 0.7%
• Over BDS$850,000: 1%

The main other operating costs would include insurance, which ranges from 0.4% for residences; 0.6% for commercial buildings; 0.9% for hotels, and in all cases would depend on characteristics of the building and the site. Other major costs would include metered utilities, and any common assessments applicable to master planned communities.