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1)
Undeveloped Residential Land
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There
is a prohibition on the disposal of undeveloped land to non-Bermudians
with the exception of:
a)
a non-Bermudian spouse where the property is owned by the other spouse
who is Bermudian; or
b) a
non-Bermudian child of a Bermudian where the property in question is owned
by the Bermudian parent; or
c) any
person who within the three-year period ending with the date of application
would have qualified under paragraphs (a) and (b) above.
Land acquired
by specific gift in a will or inheritance must in normal circumstances
be vested in a private individual or individuals. A license may be issued
by the Minister for trustees to hold residential property, but this would
only be for the lifetime of the beneficiary of the trust and provided that
the beneficiary could have acquired the property under the principles outlined
in paragraphs (a), (b) and (c) above. Within three years of the death of
a lifetime beneficiary, the property must vest in or be sold to a Bermudian
or a non-Bermudian who has acquired a license for the purpose.
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2)
Houses
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It
is possible for a non-Bermudian to purchase a house, but only where the
Annual Rental Value (ARV) is at least the minimum established by legislation
from time to time. The effect of this is that only the highest valued properties
are available to non-Bermudians. The current minimum ARV of houses available
to non-Bermudians is $126,000. The effect of this limitation is to limit
the stock of houses available.
It is not possible
for a non-Bermudian to acquire a license to hold real estate in Bermuda
by way of voluntary conveyance, deed of gift, joint tenancy, tenancy-in-common,
devise, inheritance, purchase or lease in excess of five years or any other
means of acquisition unless the ARV of the property exceeds $126,000.
There is a general
prohibition for Non-Bermudians on the acquisition of multi-unit properties
owned by Bermudians (including properties with more than one separate dwelling
unit). An exception may be made when the property is held in joint ownership
with a Bermudian spouse, Bermudian parent or Bermudian child or where the
property passes to the widow or widower of the Bermudian. In very exceptional
cases, consideration may be favourably given, but this will be purely on
the merits of the particular case submitted.
It is possible,
however, for non-Bermudians to acquire multi-unit properties from other
non-Bermudians provided one of the units at least has an ARV in excess
of $126,000.
In general,
non-Bermudians will not be permitted to own more than one residential property
at any one time. The idea of the regulation is to provide for non-Bermudians
to be able to acquire properties for their own residence alone and not
to speculate in residential property.
In certain cases,
however, non-Bermudians will be permitted to purchase a second property,
but only on the condition that the original property is disposed of within
twelve months and the license issued for the acquisition of the second
property will be issued on that basis alone.
Non-Bermudians
will not normally be allowed to subdivide land, but will be obliged to
sell the whole property as a single unit with the exception of property
where:
a) the
property in question has more than one separate dwelling; and
b) the
sub-division results in the non-Bermudian retaining at least one dwelling
with an ARV above the minimum ($126,000); and
c) the
portion being divided for sale is sold immediately to a Bermudian only.
A non-Bermudian
who owns a house must obtain the permission of the Minister in order to
let the house. Permission will seldom, if ever, be granted for letting
periods in excess of twelve months in the first instance. Renewal of the
permission will be considered on its merits at the time of application.
Rental may be to non-Bermudian visitors, in which case a Government tax
is levied at the rate of 5% of the rent paid or $50.00 whichever is the
greater. There is no tax on rentals to Bermudians or to bona fide residents
of Bermuda. Permission to rent will not be granted where the owner of the
property remains resident on the Island, again, to support the fundamental
premise that the property is intended as the bona fide residence of the
owner.
Exempted companies
with staff in Bermuda may lease any residential house, the construction
of which they or another exempted company have financed, provided the property:
a) is to be
occupied by a person who is in the company’s full-time employment in Bermuda;
and
b) the property
is rented for a period of no more than 21 years.
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3)
Condominiums and Apartments
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In
general, non-Bermudians may acquire an apartment or condominium in Bermuda
only if:
a)
they are the non-Bermudian spouse of a Bermudian and the property is owned
by the other spouse; or
b) they
are the non-Bermudian child of a Bermudian where the property is owned
by the Bermudian parent; or
c) they
are a person who within the three-year period ending with the date of application
would have qualified under (a) or (b) above; or
d) the
non-Bermudian seeking to acquire the property possesses a Residential Certificate
and the apartment or condominium has an ARV equivalent to or greater than
the minimum set out by the Government from time to time (which at present
is $28,800).
However, non-Bermudians
who do not meet the above qualifications may still be permitted to acquire
a condominium where the unit has an ARV of at least $28,800 and is in one
of the designated developments.
As with freehold
property, non-Bermudians will not be granted a license to hold condominium
properties by way of voluntary conveyance, deed of gift, joint tenancy,
tenancy-in-common, devise, inheritance, purchase, lease in excess of five
years or any other means of acquisition unless the ARV of the property
reaches or exceeds the minimum laid down by Government.
Non-Bermudians
will only be permitted to purchase a second condominium property under
exceptional circumstances, again, on the condition that the acquisition
is related to the disposal of the first property within twelve months.
A non-Bermudian
who owns a condominium must obtain permission from the Minister in order
to let the condominium or apartment. Permission will seldom, if ever, be
granted for periods in excess of twelve months in the first instance and
renewals of permission will be considered on their merits.
In addition,
a license to let a condominium or apartment will only be granted if the
lessee is a Bermudian or a bona fide resident of Bermuda. In particular,
licenses will not be granted for rentals to tourists. There is an exception,
however, if the property is jointly owned by a non-Bermudian with a Bermudian
spouse or with a Bermudian parent or Bermudian child.
As in the case
of a house, an exempted company with staff in Bermuda may lease an apartment
or condominium, the construction of which it or another exempted company
has financed, provided the property:
a) is
occupied by a person who is in the company’s full-time employment in Bermuda;
and
b) has
an ARV of a minimum of $28,800; and
c) is
leased for no more than 21 years.
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4)
Application for License
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application for a license to the Minister by a non-Bermudian in respect
of the acquisition of one of the permitted categories of property described
above must be in the prescribed form and should be accompanied by a written
statement, normally given by the selling agent, that Bermudians have been
given a fair opportunity to acquire the property and that the property
has been advertised on the local market.
Applicants will
be required to supply a banker’s reference and two personal references
from persons who have known them for at least three years. The referees
need not be Bermudian, but where they are not, the application should make
a statement as to why Bermudian referees are not being used. Referees must
be of a sufficient standing in their own community to be satisfactory to
the Minister, whether they are Bermudian or non-Bermudian.
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5)
Fees
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application fee for all licenses is currently $1,097.00, which is payable
when the application form is submitted. When a license to purchase is granted,
the application fee will be refunded.
In respect of
purchases, once approval has been given, the fee for the grant of a license
in respect of a non-Bermudian’s acquisition of property in Bermuda is 22%
for permitted freeholds and 15% for permitted leasehold condominium properties.
These percentages are applied to the value (usually the purchase price)
of the land and the buildings in each case. The fee so calculated is payable
by the applicant to the Bermuda Government upon notification by the Minister
of his approval in principle of the application. The fee must be received
by the Minister before the license is issued and the license should be
in the possession of the purchaser’s attorney prior to the closing of any
purchase transaction as it is appended to the deed of transfer of title
to the purchaser.
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6)
The Mechanics of a Purchase
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non-Bermudian having chosen a property within one of the permitted categories
will be invited to sign a purchase agreement. This will normally be prepared
by the vendor’s attorney or by the selling agent, but should not be signed
by the purchaser until he has had the opportunity of having the terms and
conditions explained to him by an attorney of his choice. The purchaser
will not be bound by any discussions or verbal agreements made directly
with the vendor or with the vendor’s agent, but will be bound by an agreement
suitably signed and accompanied by a deposit of 10% of the purchase price.
In normal cases, for a non-Bermudian purchase, agreement should be conditional
upon certain events, the principal of these being the grant of a license
to acquire that particular property and, if necessary, the obtaining of
finance if a mortgage facility is required.
An attorney
will be able to advise the prospective purchaser as to any other specific
conditions which should or should not be inserted in the agreement to protect
the purchaser’s interest in any particular circumstance.
The agreement
can provide for the payment of the purchase price to be made in either
Bermuda or United States dollars depending on the terms negotiated and
agreed upon between vendor and purchaser.
The matter of
costs will also be referred to in the agreement. It is usual in Bermuda
for the costs of the agreement, the preparation of the conveyance (i.e.
the deed of transfer) and the stamp duty to be divided equally between
vendor and purchaser.
It should be
noted that the fees covered by such a provision are those of the vendor’s
attorney only and that the purchaser will be expected to pay separate fees
for his own attorney’s work relating to advice specifically given to the
purchaser and to protect the purchaser’s interest.
There is attached
to this Memorandum a schedule setting out the incidental costs (other than
legal fees) involved in a purchase. Legal fees are not fixed and are essentially
a matter for negotiation between the client and his attorney. The attorney
will be able to provide a full quotation at the outset and give some indication
of any variation or additional unforeseen expenses as the matter proceeds.
Stamp duty,
in addition to the license fee, is payable on the conveyance or assignment
of lease by reference to the agreed purchase price. The mortgage deed also
bears stamp duty by reference to the amount of the advance being made.
By agreement, the stamp duty on the conveyance is usually shared equally
between the vendor and the purchaser.
In Bermuda,
it is possible and quite common for the vendor and purchaser to be represented
by the same firm of attorneys or even the same attorney within a specific
firm. The purchaser has the choice of attorney, however, and if he wishes
to be separately advised, he is of course at liberty to choose whomsoever
he wishes.
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7)
Residential Certificates
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This
topic merits a brief mention here, since any non-Bermudian seeking to retire
in Bermuda will usually wish to purchase a property here and to apply for
a residential certificate. Such certificates have no specified duration
and represent an open-ended permission to reside in Bermuda. The Minister
may, in his discretion, revoke such permission, subject to the rules of
natural justice. To our knowledge, he has very rarely, if ever, done so.
To be eligible for consideration, a non-Bermudian wishing to apply for
a residential certificate must be:
a) a
retired person with substantial means; and either
b) the
spouse of a Bermudian; or
c) a
person who was employed in Bermuda for at least five years; or
d) a
person who owns property in Bermuda
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