TURKS & CAICOS Law and Practice Contributed by: Oliver Chapman and Chris Smith, Griffiths and Partners
in effect where the debt equals or exceeds the market value of the underlying assets, but as with a share transfer, the transfer of real estate attracts a duty (of 10%) and is rarely used as it is not an efficient route to enforcement. 3.7 Subordinating Existing Debt to Newly Created Debt Generally, a debt secured by a legal charge prop - erly stamped and registered at the Land Regis - try will, in respect of the proceeds of realising such asset, rank in priority to any subsequently registered legal charge, any floating charge or any unsecured debt. It is possible for lenders to subordinate debt contractually, although this is not common. 3.8 Lenders’ Liability Under Environmental Laws There are no statutory provisions in relation to environmental liability in the Islands. However, once the lender has taken possession of the premises, a civil action for environmental harm can be brought. A lender can also seek an envi - ronmental indemnity from the borrower. Because of the Islands’ lack of heavy industry, however, environmental issues have not, thus far, been a major legal concern in real estate transactions. 3.9 Effects of a Borrower Becoming Insolvent Security interests created by a borrower in favour of a lender will not be rendered void if the borrower becomes insolvent. Security may, however, be set aside; eg, where it constitutes a preference or a transaction at an undervalue. 3.10 Taxes on Loans Interest rates on most domestic lending trans - actions are calculated by reference to a domes - tic bank’s prime lending rate. To the extent that facilities reference the London Interbank Offered
Rate, lenders and borrowers would be advised to review their terms to ensure that an alterna- tive method for calculating interest has been included. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning The main legislation is the Physical Planning Ordinance and there is a development plan in effect for the Islands that is reviewed and updat - ed periodically. Land in the Islands is also sub - ject to zoning restrictions. Definition of “Developments” Any development of land requires a grant of plan - ning permission. “Development” encompasses the carrying out of building, engineering, or other operations in, on, over or under any land, the making of any material change in the use of any building or other land, or the subdivision of land, but is subject to a number of exclusions, includ - ing any works for maintenance, improvement or other alteration that only affect the interior of a building or do not materially affect the external appearance of the building. Planning Permission Planning permission may be refused, granted unconditionally or can be subject to such con - ditions as the relevant authority deems fit. The Planning Department is responsible for reviewing and considering applications to obtain planning permission. The director of planning is empowered to take enforcement action where necessary.
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