FAQ & Glossary

  1. May non-Bahamians purchase property in The Bahamas?
  2. What is required of non Bahamians to purchase property in The Bahamas?
  3. Is an Attorney needed when purchasing property?
  4. Is title Insurance available in The Bahamas?
  5. What costs are involved in buying or selling property?
  6. In what form is title to property given?
  7. May the proceeds of a sale be repatriated after purchase?
  8. Is special approval needed to build or to renovate?
  9. Can you provide a list of qualified Bahamian architects, contractors and engineers?
  10. May I use the services of a non-resident architect?
  11. Are Bahamian Real Estate Brokers and Sales Agents licensed?
  12. What is the cost of construction?
  13. Can non-Bahamians or permanent residents get financing locally?
  14. What taxes are there in The Bahamas?
  15. How do you obtain residency in the Bahamas?
  16. What are the benefits of permanent residency in The Bahamas?
  17. How to obtain Bahamian citizenship?
  18. How to obtain a work permit in The Bahamas?
  19. How would my property be advertised?

Q1 - May non-Bahamians purchase property in The Bahamas?
Yes. The International Persons Landholding Act, 1993, provides for the sale of real property in The Bahamas to non-Bahamians.

Q2 - What is required of non Bahamians to purchase property in The Bahamas?
The International Persons Landholding Act requires non-Bahamians to have a Permit, if the property being purchased is greater than 5 acres.

The objective is to encourage commercial property development. Non-Bahamians who purchase land for which a permit is not required must register their purchase with the Foreign Investment Board under the mentioned Act. Non-Bahamians also have to register their investment with the Exchange Control at the Central Bank of The Bahamas to ensure that on resale they will be able to remit the net proceeds of sale outside the Bahamas in the currency of the original investment.

Q3 - Is an Attorney needed when purchasing property?
No, but the appointment of a local attorney is highly recommended. Apart from insuring that the documents of title are properly prepared and are in good order the local attorney, when representing the buyer, gives an Opinion on the title to the property. This Opinion is considered to be the same as title insurance as the lawyer is liable should the purchaser find that there is a defect in the title. Local lawyers carry indemnity insurance.

Q4 - Is title Insurance available in The Bahamas?
Yes. There are companies in the Bahamas offering Title Insurance. The risk premium generally runs between .20% - .27% of value.

Q5 - What costs are involved in buying or selling property?

Q6 - In what form is title to property given?
The vast majority of property is sold Freehold. There are a few exceptions of leasehold properties which are generally Crown Lands (Government owned properties) leased for agricultural or development purposes. The Bahamas Government generally, does not sell its properties.

Q7 - May the proceeds of a sale be repatriated after purchase?
Yes. You will be able to repatriate the entire proceeds including any profits provided you register the purchase with the Exchange Control Department of the Central Bank at the time of purchase.

Q8 - Is special approval needed to build or to renovate?
Yes. You will need to obtain approval from the Town Planning Board and a building permit issued by the Ministry of Works. A local architect or engineer is able to assist with this.

Q9 - Can you provide a list of qualified Bahamian architects, contractors and engineers?
Yes. Most if not all architects in the Bahamas were schooled either in the United States, Canada or the United Kingdom and have international accreditations. There is a local licensing Board for architects. The construction industry is also regulated, but the qualifications for licensing are not nearly as rigorous. The leading contractors are all civil engineers with international accreditations or have certified engineers on staff. Many of the smaller contractors are products of a good apprentice system and are very adept and skilled at efficiently carrying out residential construction. Civil, mechanical and electrical engineers in the Bahamas, like the architects were schooled in other countries and hold international accreditations from those respective countries and must also have a license issued by their respective local Boards

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Q10 - May I use the services of a non-resident architect?
Yes, but that architect cannot work in the Bahamas without a permit to do so. All building plans submitted to the Town Planning Board and the Ministry of Works must be signed off by a local licensed architect and local engineers. As in any jurisdiction there are local customs and procedures required in getting the job done and it is recommended that you utilize the services of the local professionals.

Q11 - Are Real Estate Brokers and Sales Agents in The Bahamas licensed?
Yes. Brokers and sales agents are licensed by The Bahamas Real Estate Association (BREA). Qualifications for licensing include sitting a written exam. BREA is an international member of The National Association of Realtors (NAR) and many BREA members are International Members of NAR and hold various accreditations offered by NAR including GRI, CRS, CRB, CIPS and CCIM. A few members are also members of the International Federation (FIABCI). The public is urged to ask and only use the services of a BREA member

Q12 - What is the cost of construction?
Construction costs in The Bahamas, as you might imagine, vary widely depending on the location of the construction site, the design of the building, the materials used and the finishes. Costs may be as low as $65.00 - $80.00 per square foot for low cost housing. However, a modest or minimum structure consisting of concrete block construction, timber roof framing and asphalt roof shingles cost $100.00 to $150.00. An average home will cost from $150.00 to $200.00, but not with top of the line finishes such as marble tile and granite or Corian countertops. An above average home with a good finish, would range from $200.00 to $400.00. For a luxury home the cost would be $400.00 or more per square foot for the finest finishes and details. On average you can count on the cost being approximately 40% higher than a similar home in south Florida. This is mainly due to freight, duty and delivery cost to site representing approximately 65% of the F.O.B. material cost. It should also be pointed out that building standards are higher in the Bahamas than in South Florida. The majority of homes in the Bahamas are made of concrete block or poured concrete construction and are built to meet a very strict building code.

Q13 - Is local financing available to non-Bahamians and/or permanent residents?
Yes, but the loan facility may only be given in US$'s at international rates and the down payment required is generally on the order of 40% of value.

Q14 - What taxes are there in The Bahamas?
First and foremost we have no income tax, capital gains taxes or inheritance taxes. There is no sales tax with the exception of the Stamp Duty paid on the conveyance of real property. The Bahamas Governments main source of revenue is from customs duties on all goods imported into The Bahamas. This tax may be as low as 7 % as in the case of raw lumber, computer software and as high as 75% in the case of luxury automobiles, 160% on raw tobacco and 210% on cigarettes. There is an additional 7% stamp duty payable on these goods. The typical rate of duty is around 35%.

Q15 - How do you obtain residency in the Bahamas?
Yes. The Government of the Bahamas has set specific guidelines that allow non-Bahamians to establish permanent residency in The Bahamas. There are two categories of permanent residency:- Permanent residency with the right to work and permanent residency without the right to work. One of the criteria for permanent residency is the investment of a minimum of $500,000 in The Bahamas. This investment may take the form of the purchase of real property with a minimum value of $500,000. Non-Bahamians who own property in The Bahamas may apply to the Director of Immigration for an annual homeowner's residence card. This card is renewable annually and entitles the owner, spouse and any minor child/children endorsed on the card to enter and remain in The Bahamas for the validity of the card. It is intended to facilitate entry into The Bahamas with minimal formalities.

Q16 - What are the advantages to establishing permanent residency in The Bahamas?
Apart from the opportunity to live and work in a warm and pleasant environment there are also significant tax advantages for citizens of countries with high personal and corporate income taxes as well as inheritance taxes. The advantages vary depending on the citizenship of the applicant and the tax laws of the applicant's home country.

Q17 - How to obtain Bahamian citizenship?
Yes it is possible, but it is a long and involved process. Typically favour is given to long-term permanent residents and spouses of Bahamians.

Q18 - How to obtain a work permit in The Bahamas?
Yes. But you must appreciate that The Bahamas has a small young population. The total population of the Bahamas is less than 300,000 with a total land area of 10,000 square miles spread over 700 islands. The policy of the Bahamas Government is to protect the well being and provide maximum employment opportunities for Bahamians. In a nutshell in order to obtain a work permit to work in The Bahamas an employer must demonstrate that there is not a Bahamian ready willing and able to fill the position. Quite obviously the Bahamas would be overrun overnight if these safe guards were not in place. This material is based upon information that we consider to be reliable, but we cannot represent that it is accurate and complete, and it should not be relied upon as such. When buying, selling or listing property for sale in The Bahamas one should first consult with the relevant local authorities or request an attorney to do so on your behalf.

Q19 - How would my property be advertised?
Depending upon the marketing strategy chosen, Adler Realty & Investments Co. Ltd., uses the following publications and their Internet sites to promote your property in addition to placement on its own Web Site and that of its affiliates:

The Tribune, ZNS Radio & Television

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Real Estate Glossary

Amenity:a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, Woods, water) or man-made (like a swimming pool or garden).

Amortization:  repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years)

Annual Percentage Rate (APR):calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.

Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

Appraisal: document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly -payment amount, however, is usually subject to a Cap.

Assessor: a government official who is responsible for determining the value of a property for the purpose of taxation.

Assumable mortgage: a mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage.

B

Balloon Mortgage: a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower.

Bankruptcy: When someone owes more than they have the ability to repay.

Borrower: a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Building code: based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.

Budget: a detailed record of all income earned and spent during a specific period of time.

C

Cap: a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Cash reserves: a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.

Certificate of title: a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Closing: also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing costs: customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.

Commission: an amount, usually a percentage of the property sales price, that is collected by a real estate professional as a fee for negotiating the transaction..

Condominium: a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Conventional loan: a private sector loan, one that is not guaranteed or insured by the U.S. government.

Cooperative (Co-op): residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.

Credit history: history of an individual's debt payment; lenders use this information to gouge a potential borrower's ability to repay a loan.

Credit report: a record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history.

Credit bureau score: a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

D

Debt-to-income ratio: a comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.

Deed: the document that transfers ownership of a property.

Deed-in-lieu: to avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process doesn't allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.

Default: the inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.

Delinquency: failure of a borrower to make timely mortgage payments under a loan agreement.

Discount point: normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.

Down payment: the portion of a home's purchase price that is paid in cash and is not part of the mortgage loan.

E

Earnest money: money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.


Equity: an owner's financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s)from the fair market value of the property.

Escrow account: a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

F

Fair Housing Act: a law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair market value: the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fixed-rate mortgage: a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Flood insurance: insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.

Foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

G

Good faith estimate: an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.

H

Home inspection: an examination of the structure and mechanical systems to determine a home's safety; makes the potential homebuyer aware of any repairs that may be needed.

Home warranty: offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner's insurance; ,overage extends over a specific time period and does not cover the home's structure.

Homeowner's insurance: an insurance policy that .combines protection against damage to a dwelling and Is contents with protection against claims of negligence )r inappropriate action that result in someone's injury or )property damage.

HVAC: Heating, Ventilation and Air Conditioning; a home's heating and cooling system.

I

Index. a measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage.

Inflation: the number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar's value.

Interest: a fee charged for the use of money .

Interest rate: the amount of interest charged on a monthly loan payment; usually expressed as a percentage.

Insurance: protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.

J

Judgment: a legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor's claim by providing a collateral source.

L

Lease purchase: assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

Lien: a legal claim against property that must be satisfied When the property is sold


Loan: money borrowed that is usually repaid with interest.

Loan fraud: purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan-to-value (LTV) ratio.- a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.

Lock-in: since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.

Loss mitigation: a process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan

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M

Margin: an amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.

Mortgage: a lien on the property that secures the Promise to repay a loan.

Mortgage banker: a company that originates loans and resells them to secondary mortgage lenders like :Fannie Mae or Freddie Mac.

Mortgage broker: a firm that originates and processes loans for a number of lenders.

Mortgage insurance: a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price.

Mortgage insurance premium (MIP): a monthly payment -usually part of the mortgage payment - paid by a borrower for mortgage insurance.

Mortgage Modification: a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

O

Offer: indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.

Origination: the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.

Origination fee: the charge for originating a loan; is usually calculated in the form of points and paid at closing.

P

Partial Claim: a loss mitigation option offered by the FHA that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date.

PITI: Principal, Interest, Taxes, and Insurance - the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

PMI: Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.

Pre-approve: lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.

Pre-foreclosure sale: allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.

Pre-qualify: a lender informally determines the maximum amount an individual is eligible to borrow.

Premium: an amount paid on a regular schedule by a policyholder that maintains insurance coverage.

Prepayment: payment of the mortgage loan before the scheduled due date; may be Subject to a prepayment penalty.

Principal: the amount borrowed from a lender; doesn't include interest or additional fees.

R

Radon: a radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.

Real estate agent: an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.

Realtor a real estate agent or broker who is a member of The Bahamas Real Estate Association.

Refinancing: paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Rehabilitation mortgage: a mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages - like the FHA's 203(k) - allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.

S

Settlement: another name for closing .

Special Forbearance: a loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.

Subordinate: to place in a rank of lesser importance or to make one claim secondary to another.

Survey: a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.

Sweat equity: using labor to build or improve a property as part of the down payment

T

Title insurance: insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers.

Title search: a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

U

Underwriting: the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.

NB The information presented is sample data only

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