BAHAMAS Law and Practice Contributed by: Alistair Chisnall and Erica Paine, Graham Thompson
is lodged for recording in the Registry of Records and recorded with it. The current one-time fee due to the Public Treasury for a permit or certificate is USD1,000. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate The manner in which commercial real estate transac - tions are financed can vary widely, depending on the size of the project and loan, and the parties involved. In The Bahamas, well-established licensed local banks and financial institutions that offer traditional financ - ing for projects of all types and commercial banking options, or that often act as security trustees, have a very strong presence. In addition, The Bahamas government has histori - cally also permitted the financing of local commercial projects by international lenders, subject to exchange control regulations and the usual vetting and approv - al procedures for foreign investors. Where a foreign lender intends to advance a loan and hold Bahamian real estate as security for it, an application is made to the Investments Board for a mortgagee’s landhold - ing permit to be issued under the IPL Act, and to the Central Bank of The Bahamas for the requisite approv - als to be issued to the lender under the Bahamian Exchange Control Regulations. Major Transactions, Including Syndicated Lenders In major financing transactions, where there may be a group of syndicated lenders, a collateral trust would often be established and the mortgages, security instruments and other Bahamian collateral securing the loan would not be held directly by any lender but would be held by a specially formed Bahamian secu - rity trustee as a collateral agent for the named ben - eficiaries of the trust from time to time. The trustee of the collateral trust is typically a Bahamian company that holds an unrestricted Banking and Trust Licence in The Bahamas. Quite often, it is preferred for the col - lateral trustee to hold the trust assets under the collat - eral trust in a wholly owned special purpose Bahamian International Business Company, the issued shares of which would constitute the corpus of the collateral
trust, with the company, in turn, holding the security instruments. 3.2 Typical Security Created by Commercial Investors Forms of security for financing the acquisition and development of commercial real estate can vary wide - ly, but the most common forms of security include: • legal charges; • debentures (by companies); • legal or equitable mortgages; • pledges/charges over shares of a land-owning company or its parent; • assignments of rent or other revenue; • assignments of insurance; • promissory notes; and • corporate or personal guarantees. The Conveyancing and Law of Property Act, 1909 Under this act, a legal mortgage of real property, per - sonal property and fixtures has the effect of conveying and transferring title to the lender, leaving the bor - rower with an equitable right to redeem the mortgage by payment of the mortgage debt. The Companies Act, 1992 and the International Business Companies Act, 2000 Under these acts, a company may by debenture charge real property and specific personal property by way of legal mortgage and create a first priority floating charge on all other present and future assets and undertakings (including intangibles), which would crystallise in the event of default. A legal mortgage or debenture must be made or issued as a deed, and should be recorded in the Reg - istry of Records in order to preserve priority against subsequent encumbrances. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Investments Board Permits While a lender is not required to hold a bank or trust licence in order to lend money to an entity based in The Bahamas, a foreign lender intending to acquire an interest in real estate as a mortgagee by virtue of a legal mortgage must obtain a permit from the Invest -
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