How many days to close a real estate purchase in the Bahamas? When can I expect to receive funds from the sale of real estate in the Bahamas?
This question comes up regularly over the past 16+ years I have spent working in the real estate biz in the Bahamas. The answer is not a simple one. Most real estate transactions in the USA or UK for instance will have a set date for completion. The closing date is the closing date in many parts of the world and the parties involved have to get everything in place before that date. Here in the Bahamas the completion date on real estate transaction is more a guideline or target to aim for than it is a hard and fast point in time. More often than not, the expected timeframe for completion will pass by while the final details and activities of the purchase and sale agreement are still being worked out. After spending 2 or 3 months working on and waiting for the legal sale process to move along, there are very few people who will walkaway. Most will instead happily hold on for a few more days or perhaps weeks to allow the final steps to be worked through.
The usual answer you will get from an experience Realtor in the Bahamas is “2 to 3 months depending”. Most “Offer Letters” or ‘LOIs’ will have a projected 60 or 90 day completion time frame. The reality though, is that if there is a bank mortgage involved, it often takes 30 to 60 days just to get the mortgage financing approved. It is not until the buyer has a loan commitment letter in hand that the transaction can proceed to the next stage which is usually the title document search. Keep in mind though that many cash transactions can and do complete in 60 days or less. In a discussion today with fellow real estate pros, one mentioned they had a sale transaction close in 6 days, and another said they had a closing 4 days over a weekend. I must state categorically that this is a terribly wild outlier and cannot be used as guidance as nice as it would be.
The Bahamas’ legal system is based upon British Common Law, not that this should have any bearing on how long it takes to take ownership in a home or property here in the Bahamas. It does mean that ownership of land and proving good title to the land is the responsibility of the land owner. Just because a document was recorded in the Registrar of Records does not guarantee title. Indeed it has occurred on more than one occasion where 2 competing title documents were recorded and the ownership was battled in court. In practice, the document which was ‘Recorded’ first takes precedence so make sure you get your documents stamped and recorded in a timely fashion – follow up with your lawyer constantly until they can give you the receipt from the Registrar showing the recording is completed.
Using the invaluable information contained in the Bahamas Mulitiple Listing Service (BMLS) I was able to get my hands on some real world data of actual real estate transactions here in the Bahamas and how long it took to complete each transaction. I must preface by saying the data is only as reliable as the persons entering it. This data is provided by the individual professional real estate agents working the trenches in the business with proper licensing to do so. My hats off to my fellow licensed and trained agents and brokers in the Bahamas.
I also preface by mentioning that this year 2020 has been a wild ride which has impacted many people all over the world in many different ways. It has directly impacted the livelihoods of real estate sales pros here in the Bahamas to quite a severe degree. A sales agent only gets paid upon the successful completion of the transaction. If the sale never completes the agent never gets paid. The Bahamas Government and the ‘Competent Authority’ has essentially hog-tied the real estate business and I’m sure you might find some of my colleagues on the food dole soon if things don’t ease up. Why and how you ask? Well every single real estate transaction in the Bahamas needs to have a legal professional involved to ensure that all the I’s are dotted and T’s are crossed (otherwise you are almost guaranteed to have problems if you ever go to sell the property again and you will become one of those sale transactions that take a year or more, but I digress). Typically the buyer and seller each have their own attorney to represent them. Many times the buyer and seller will stick with one law firm but different attorneys within the firm. Occasionally and more often than it should one lawyer will enter dual representation and work for both sides of the sale transaction. For the record (2nd time) I do not think it is a good idea and generally try to encourage clients to get their own lawyer. Again I digress.
In March 2020 the Bahamas Government essentially told all law firms to close up shop and not conduct any further real estate matters. This has continued off and on for the past 6 months much to the inconvenience of all the people involved. But it is what it is – better to be alive and healthy than dead and wealthy right?
On top of the restrictions on law firms conducting business, The Bahamas Registrar General was closed in March. The Registrar has been opened and shut with limited services available and the priority is given to births and marriages while the office operates on reduced hours and limited staff. If you can’t conduct a title search you cannot verify that the title is good and therefore the buyer cannot be expected to conclude the sale – make sense? On top of that there have been closures of the property tax office, the Treasury and Inland Revenue have been on restricted hours and services. The Covid-19 pandemic has had a myriad of implications for real estate as well as many other professions and industries around the world. In summary, the virus has essentially put real estate closing into a holding pattern for 6 months. The word on the street is that hardly any sales have closed in the Bahamas this year – I would think the Bahamas Government would want to receive the revenue from the taxes on these sales, but I guess they are busy borrowing money instead of allowing business to operate here, again I digress.
TO GET TO THE POINT – the craziness of 2020 has lead me to ponder whether my notions of a reasonable time frame for a real estate sale to complete are valid or not. I starting thinking about it and decided to crunch some numbers. Before getting into this exercise I had thought that I was involved in the longest real estate transaction on record at 20 months from start to finish. But then I discovered another instance where the parties involved had to endure a grueling 23 months to reach the end of the tunnel. It must have been a really good opportunity for the buyer and seller to stick it out that long.
I ran an analysis of the past 480 transactions recorded on the BMLS in Nassau and another 470 transactions in Abaco (since I live and focus on the Abaco market). Before starting this project, I had thought that real estate sales took longer in Abaco due to the distance and need to work with government offices and departments in Nassau. It turns out that I was again straight up wrong on that notion.
To conclude the data suggests that the raw average number of days to complete a sale in the Bahamas is 118 days. This time frame does not include the weeks prior when the parties have to provide compliance documentation and the buyer to get a deposit into escrow AND the couple of weeks of back and forth to finalize the purchase and sale agreement. So add on another 2 to 3 weeks on top of the 118 days.
It turns out the average Days to Close for Nassau/New Providence real estate sale is 116 days while the average is 120 for a property in Abaco.
The bar chart below shows the number of months it took to complete the 900+ real estate transactions. The take away here is that your sale should not take more than 4 to 5 months. If it does you have other problems to deal with.
What potential problems can delay the completion of a real estate sale in the Bahamas?
The reasons behind delayed closings are many and varied. It can be a title defect that needs correcting. Maybe one of the past sale documents was never recorded or tax not paid. A sampling of issues that come up include: Unpaid Real Property Tax, Missing Central Bank Approval, Unsettled Will, Unrecorded documents, Lack of subdivision approval, getting a mortgage release, replacing lost documents, missing dower release, etc. etc. The list of legalities is extensive and is why you need to have a good attorney on your team to ensure you don’t have any problems.
It is my suggestion that when retaining an attorney for your sale or purchase, ask them how long they typically take to conclude a transaction. Ask for recommendations from friends and colleagues. Ask the lawyer how many transactions they have in process at that moment. Ask if they have enough time to devote to your matter. As we all know Time is Money and Knowledge is Power.