THE BAHAMAS Law and Practice Contributed by: Alistair Chisnall and Erica Paine, Graham Thompson
combination of the two, or even the contractor’s (or developer’s) own standard terms. 7.2 Assigning Responsibility for the Design and Construction of a Project See 7.1 Common Structures Used to Price Construction Projects . 7.3 Management of Construction Risk See 7.1 Common Structures Used to Price Construction Projects . 7.4 Management of Schedule-Related Risk See 7.1 Common Structures Used to Price Construction Projects . 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance It is possible, albeit rare, for owners to require formal guarantees or other additional forms of security as surety for a contractor’s performance on a project. Such matters predominantly arise in the case of pre-construction condominiums, particularly those being developed by a devel - oper/owner that is also the construction com - pany or directly affiliated with it. In such projects, letters of credit or performance bonds from a financial institution are generally relied upon, rather than other forms of security. 7.6 Liens or Encumbrances in the Event of Non-payment Under Bahamian law, contractors and/or design - ers are not permitted to lien or otherwise encum - ber a property in the event of non-payment. A contractor seeking to recover payment of a debt due would be required to enforce their contrac - tual rights by commencing an action against the owner/customer in the Supreme Court of The Bahamas (or such other jurisdiction contractu - ally agreed between the parties to be the appro -
priate forum for disputes) and obtaining a judg - ment against that debtor party. 7.7 Requirements Before Use or Inhabitation Before use or inhabitation, a Certificate of Occu - pancy must be issued under the Building Regu - lations Act, 1971. The certificate is issued by the building control officer upon being satisfied that a building operation has been completed in accordance with the building permit issued by the Ministry of Works, and it certifies that the building is fit for occupation and use. As noted in 2.10 Taxes Applicable to a Transac- tion , all sales and transfers of land between third parties, whether direct or indirect, attract VAT payable to the Public Treasury under the VAT Act, except for certain, specifically exempted transactions. In a typical sale and purchase transaction, it is customary for a buyer and seller to agree to share the payment of the applicable tax equally, but this is a business decision for the parties and is not required by law. In the absence of an agreement to the contrary, the liability under the VAT Act to pay VAT falls jointly and severally on the supplier and the recipient of the real estate. The VAT payable on supplies/sale of real estate (charged at 10%) may not be accounted for as input tax deductions. 8.2 Mitigation of Tax Liability As a matter of general good commercial prac - tice by prudent buyers, and particularly in large purchase transactions, it may be advantageous 8. Tax 8.1 VAT and Sales Tax
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