Virgin Islands (British)
Real Estate Practices in the British Virgin Islands
BRITISH VIRGIN ISLANDS
PRESENTED BY: SMITHS GORE LIMITED
Overview of Real Estate Practices in the British Virgin Islands
All overseas investors, including citizens of the United Kingdom, require a Non-Belongers Land Holding License to purchase property in the BVI. Agreements to purchase property are therefore made contingent upon such a license being obtained by the purchaser. A license gives an entitlement to own a specific property and is non-transferable. Application for a Non-Belongers Land Holding License is made to the Government of the BVI and must be supported by two character references, a financial reference, a police certificate of good standing plus other supporting documentation. The purchase of a property by a Non-Belonger is required to be advertised locally for four consecutive weeks in a local paper prior to submission of the License Application to Government.
If the application for a License relates to undeveloped or partly developed land, the applicant will be required to make a commitment to the BVI Government to expend a specific sum on development within a specified period which will normally be three years. The development commitment required will normally be not less than $250,000 and can be proportionately more according to acreage. Environment and other planning considerations will determine the appropriate level of development. Sub-division of land is not encouraged except as a part of a comprehensive development scheme.
Undeveloped land cannot be resold until such a development commitment has been fulfilled or a penalty paid on closing to the Government. Generally, the penalty will be 25% to 40% of the sale contract price. The purchase of developed property for residential purposes will generally not incur a development commitment. The objective of the licensing regulations is to prevent speculation on undeveloped property. Applications for all licenses are referred to the Executive Council for approval. There is a license filing fee of $200 for each person named in the application and $300 for companies. The fee for the grant of the License is $600 for each person or company named in the License as well as for each director or shareholder of a company. This $600 fee is also applicable to each director or shareholder of a company.
An overseas investor is free to let a property on a long term or short term (holiday let) basis subject to approval by the Executive Council as part of the License application and the granting of a trade license. Such approval by the Executive Council will be stated on the License and will automatically grant approval of the relevant trade license.
The following represents the typical sequence of events for a purchase and sale transaction:
Earnest Deposit: It is normal practice for a prospective purchaser to pay a 10% earnest deposit to the vendor’s agent to be held in escrow prior to signing of a purchase and sale agreement. Although payment of a deposit does not bind the vendor or their agent legally it is taken as a clear indication that a purchaser intends to sign a purchase and sale agreement forthwith. Interest earned on this deposit goes to the purchaser in the event that the purchaser withdraws prior to signing contracts. If the purchase proceeds to contract, interest goes to the vendor and the deposit is nonrefundable.
Purchase and Sale Agreement: Once agreement in principle has been reached between the purchaser and the vendor, a legally binding purchase and sale agreement drawn up by the vendor’s attorney is signed by the parties. This will normally contain a condition that completion of the purchase is contingent upon the purchaser obtaining a Non-Belongers Land Holding License.
Application for a Non-Belongers Land Holding License: Generally, purchasers are contractually required to submit their Licence Application within a specified period following signing of the purchase and sale agreement.
Completion of the Sale and Transfer of Title: This will normally take place shortly after receipt of a Non-Belongers Land Holding License. Payment of the balance of the purchase price is due at this stage.
Neither purchaser nor vendor need be present in the BVI at any stage of the transaction.