TURKS & CAICOS Law and Practice Contributed by: Christopher Smith, Dentons Turks and Caicos
3.2 Typical Security Created by Commercial Investors For the most typical forms of security for the financ - ing of real estate, see 3.1 Financing Acquisitions of Commercial Real Estate . 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions on granting security over real estate to foreign lenders. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Stamp duty is payable at 1% of the secured amount (with a current cap on stamp duty on security instru - ments of USD50,000) on debentures and legal or equitable mortgages, or charges for immovable or movable property. Where the amount of money to be advanced on the security of any property by way of mortgage is unlim - ited, the security is to be available for such an amount as the ad valorem duty paid thereon extends to cov - er. If any advance is made in excess of the amount covered by that duty, the original instrument may be stamped up with the additional ad valorem duty required to cover the total amount then to be secured. A mechanism exists to avoid double duty on sepa - rate security instruments that secure the same debt. In such cases, the ad valorem duty may be paid on the primary security instrument, and the other security instruments can be described as “collateral”, “auxil - iary”, “additional” or “substituted”, attracting a fixed rate of duty of USD10. Most other instruments and documents are subject to a fixed rate of stamp duty in comparatively nomi - nal amounts. Registrable instruments (such as legal charges over real estate) are also subject to relatively immaterial registration fees. It is customary for stamp duty and registration fees to be paid by the borrower.
• where the permanent secretary of finance certifies that the lease or transfer is not made for valuable consideration to a sibling or grandparent or grand - child; • transfers to a group company; and • transfers between trustees where no change in beneficial ownership occurs. 2.11 Legal Restrictions on Foreign Investors There are generally no restrictions on foreign own - ership of real estate in the Islands, although certain formalities may apply to different types of purchasers. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate The most typical forms of security for the financing of real estate are: • legal charge; • debenture (corporates only); • legal or equitable mortgage/charge over shares in a company that holds the real property; • assignment of any rental income; • assignment of any sale contracts and/or any devel - opment contracts (usually for developments); • assignment of insurance proceeds; and • guarantees from directors, shareholders, related companies or individuals. All legal charges over real property must be registered at the Land Registry, and all security interests grant - ed should be recorded in the company’s register of mortgages and charges, and recorded with the Deeds Registry. Assignments by way of security are usually created by deed, and notice must be given to the counterparty to perfect the security. Due to the relatively small size of the Islands’ real estate market, it is generally not common to see large portfolios of real estate held by funds or investment trusts.
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