BERMUDA Law and Practice Contributed by: E. Scott Swainson, Andrew Morgan and Erik Gotfredsen, Wakefield Quin Limited
Searches The purchaser’s attorneys carry out the following checks (between exchange of contracts and comple - tion) to ensure that title is good and marketable: • review the physical deeds, which must show a good root of title dating back at least 20 years; • conduct judgment and registry general searches and LTRO searches (to ensure no mortgages or registered monetary judgments exist); • verify the “Norwood Map” to ensure no cautions against first registration exist; • submit planning searches to ensure the property is not subject to enforcement action; and • review any leases or other disclosed encumbranc - es. Boundary Surveys It is market standard for the seller to carry out a boundary survey at their expense and to produce a land surveyor’s report confirming there are no irregu - larities or encroachments. The survey remains impor - tant, as the land title registration confirms indicative boundaries only. 2.5 Typical Representations and Warranties Risk on Commercial Sales It is typical for caveat emptor to apply in the com - mercial field. Matters that are discoverable by survey or inspection are rarely, if ever, warranted. Defects Liability Property developers will often hold buyers harmless against defects for a relatively short period (typically six months to two years). Warranties Warranties are common where land holding companies are sold by way of amalgamation or merger (with the resulting company inheriting liabilities of the target) but wide disclosures of matters provided to the buyer and discoverable by search or inspection tend to apply. Misrepresentation Bermuda’s General Conditions of Sale state that the sales agreement contains the entire agreement and there can be no reliance on matters discussed outside that document, unless recorded in clear correspond -
Once registered, any dealings are recorded by forms created by the LTRO. Title Warranty Whilst there is no title insurance in Bermuda, title is effectively guaranteed by the LTRO upon completion of any registration with an “absolute” title designation. A “provisional” title designation denotes potential issues that are not warranted, such as missing deeds or a pos - sessory title not perfected by court declaration (such titles can be upgraded over time). Backlogs at the LTRO have increased the need for court declarations for both adverse possession and prescriptive easements. Attorney Liability Applications to register conveyances on sale by the LTRO are submitted with an opinion signed by the pur - chaser’s lawyer that the title is good and marketable. The Bermuda Bar Council recommends a minimum scale of charges that varies with price, to reflect the law firm’s liability under such an opinion. All law firms are regulated and those that hold client funds must have indemnity insurance, based on the number of attorneys engaged. Electronic Transactions Whilst the Land Title Registration Act 2011 contem - plates electronic conveyancing of registered land, these provisions are not yet in force. Deeds generally require wet ink signatures and notarising if signed overseas. 2.4 Real Estate Due Diligence Buyer Beware Caveat emptor applies. Buyers will typically carry out a structural survey via a registered surveyor. If there are red flags, additional reports are sought (eg, signs of termite damage). Risk Risk passes at actual completion and it is rare for war - ranties to survive completion, unless expressly stated. Statutory covenants for further assurance apply but vary according to the capacity of the seller (beneficial owners owe higher duties than estate representatives). Most standard sales contracts exclude liability for anything not included in that agreement.
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