Thinking of buying a home in the British Virgin Islands? What an exciting prospect—beautiful beaches, year-round warm weather, dramatic views, gorgeous sunsets, exceptionally clear Caribbean waters, and breezes that make for some of the best sailing on Earth! However, before you take possession of your dream home, many factors have the potential to derail completion.
Among the most daunting hurdles is the approval process for foreign ownership of a BVI property which triggers reporting requirements to the Ministry of Natural Resources. Financing and environmental responsibilities add a further layer of complexity. For these reasons alone, foreign buyers and sellers need comprehensive legal representation throughout the process to close property transactions successfully.
Realtors vs. lawyers
In most countries, realtors connect parties, provide contractual documentation, and liaise with financiers, title companies, and lawyers to close the deal. However, in the BVI, most of these steps in the transaction are conducted by lawyers.
BVI realtors do play an invaluable role in connecting the parties and providing resources for various services, but the steps to completion are handled by lawyers who are licensed to practice in the jurisdiction.
As is customary in the United States and most other places, an initial offer for a BVI property is made through the realtor and comes in the form of a Letter of Intent. Your BVI lawyer will want to review the letter to ensure that it provides for the necessary basics, such as the timeframe to settle the contract, the conditions on which either party can withdraw from the deal, and whether the Letter of Intent is binding, or if it is non-binding and subject to contract. Typically, this review will not an incur an additional fee.
In many U.S. jurisdictions, property purchase contracts are standard forms with various options that provide for deviations and are performed by realtors. In the BVI, while there are basic terms that need to be included in every contract, specific contractual provisions that deal with the form of ownership, property type, and any special terms agreed upon between the parties need to be drafted by lawyers. For example, a property might be a freehold, leasehold, or condominium and different rules govern each type. A property may be held by a single individual or with others that have beneficial interests, such as a property held as a joint proprietorship, tenancy-in-common, or in a company or trust structure. Your BVI lawyer can walk you through these options and ensure that contract documents are viable and correct.
Much of the purchasing process in the BVI is fixed by legislation, but some items are negotiable. For example, the timeframe for and type of inspections are all matters to be agreed upon between the parties and reflected in the contract. Also, the property may have certain features that must be specifically provided for in the transfer, such as easements by agreement or marine rights, and thus, it is critical to involve your BVI lawyer at the earliest stage.
Non-Belonger Landholding licences
Buyers are often told that this is a step that they can do themselves. This is correct—the government does not require this application to be submitted by a lawyer. However, from a practical perspective, your lawyer is best placed to help you through this process. A detailed legislative structure governs foreign ownership of BVI real estate. BVI lawyers are familiar with the legal structure and the various amendments made over the years. There are also periodic procedural updates of which lawyers will be well acquainted.
Defects in title, boundaries, or other matters inspected
The BVI has no commercial title insurance providers and deeds are not used, nor is the process of deduction of title carried on or abstracts produced. Title is legislatively guaranteed so long as the buyer meets the requirements of the relevant statutes and common law. BVI lawyers are familiar with the legal requirements and have the relevant expertise to review the title documents and identify any anomalies. If any defect in title arises, there may be more than one option to resolve it. The same is true of boundaries and other matters subject to inspection, such as physical and structural surveys. Often, issues are resolved by creating new legal incidents such as easements or licences. In the U.S., these matters are usually handled between realtors and title companies, however, in the BVI, only a BVI lawyer has the appropriate expertise to advise on your options in these matters, including your rights under the contract for sale.
Closing and post-completion matters
Once the contract is in place and all matters related to title, boundaries, and inspection are settled and the Non-Belonger Landholding Licence granted, the next step is closing. The closing will usually involve not only the exchange of funds but also the discharge of mortgages and other liens, as well as the placement of new ones. The transfer of utilities and other services are handled at closing and the apportionment of taxes and other outgoings in relation to the property. In addition, the closing documents must be properly executed in accordance with BVI law. The form of execution depends on the entities and individuals buying and selling, as well as their physical location when executing the documents. You are not required to be physically present in the BVI for closing, but you will need legal advice covering all of the foregoing matters. Your lawyer will also be in the best position to attend to post-completion matters such as the payment of stamp duty and registration of the title documents and obtaining certified copies of these post-registrations.
As a full-service team, O'Neal Webster's Property & Business Department advises on buying, selling, and leasing property from inception to completion, including counseling on an array of issues from marine, environmental, and land use matters to construction contracting. We provide guidance on structuring through forms of joint and several ownership, corporate structures, and trust formation. Moreover, we can advise on joint ventures, public-private partnerships, and all levels of debt and equity financings, including vendor financing.
Overall, a variety of rules and other factors will determine the form that a BVI property contract will take, much of which will impact the successful completion of an acquisition or sale. O'Neal Webster has been serving the real estate needs of buyers and sellers of BVI properties for over thirty years. Our local roots and knowledge of the territory and its unique laws provide an efficient, friendly process for international clients.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.