Buying real estate in the Cayman Islands is a simple & straightforward process and unlikely matched by any other Caribbean island. With no restrictions on foreign ownership of a single property, no annual property taxes and no capital gains taxes to be paid locally on the sale of a property, buying property in the Cayman Islands is an inviting prospect and strongly encouraged by the Cayman Islands Government who guarantee title for all real estate transactions. Buying real estate in the Cayman Islands is for many not just a lifestyle purchase but a savvy and sound real estate investment.
As a member of the Cayman Islands Real Estate Brokers Association (CIREBA) Cayman Islands Sotheby’s International Realty has full access to the CIREBA Multiple Listing System (MLS). The Multiple Listing System allows all CIREBA member companies to input their properties for sale and any other CIREBA member to bring a buyer to purchase that property. The advantage of the MLS is, that rather than a purchaser having to visit every real estate agent in Cayman a buyer can choose their preferred realtor who will then become familiar with the buyers needs and preferences and can then show them any property available for sale within the MLS. This is a distinct advantage for purchasers looking for the concierge level of service offered by the realtors at Cayman Islands Sotheby’s International Realty.
Step 1 - Mortgage pre-approval
As with a property purchase anywhere in the world if a mortgage is required then ascertaining how much the bank will lend you is the first step towards property ownership. If you are resident in the Cayman Islands under a work permit most banks will require you to have been on island for at least six months before they will give you a mortgage. Within the Cayman Islands mortgage rates & terms differ from bank to bank & you will be required to meet with a loan officer to obtain some level of pre-approval for a mortgage. If you are purchasing property as a resident of another country it is still possible to obtain a local mortgage within the Cayman Islands but a larger deposit is usually required, somewhere in the region of 30%. Interest rates within the Cayman Islands follow New York prime as quoted by Citibank with local banks usually offering between 1% - 3% plus prime. When discussing a mortgage with your loan officer it is a good idea to have them provide you with a list of documents required for approval, depending on your situation, where you are from & how long you have been resident in the Cayman Islands they may require credit information or a letter of introduction from your previous bank, having this list of requirements will allow you to speed up the mortgage approval process which can take up to six weeks depending on the bank.
Step 2 - Total cost of purchase
A basic rule of thumb is to budget an additional 10% to 12% of the purchase price for closing costs depending on the area in which you are purchasing & the level of stamp duty it attracts.
Stamp Duty - Real Estate
The largest additional cost you will face at closing is stamp duty, this is a one time fee payable to the Cayman Islands Government on the real estate value of the purchase (not including chattels) which is currently set at 7.5%. There are stamp duty concessions for first time Caymanian buyers where the stamp duty is waived entirely for bare land purchases up to CI$100,000 in value (providing an owner occupied house is to be constructed) as well as for houses, apartments or other dwelling purchases up to CI$300,000 in value, for owner occupation. For bare land purchases above CI$100,000 in value but not exceeding CI$150,000 & for houses, apartments or other dwelling purchases above CI$300,000 in value but not exceeding CI$400,000 in value, for owner occupation a reduced rate of 2% is applied, the terms & conditions of the waiver & stamp duty reduction should be discussed with your real estate agent.
Stamp Duty - Mortgage
If you require a mortgage when making your real estate purchase in the Cayman Islands you will attract a 1% duty where the sum secured is CI$300,000 (US $357,143) or less, for a mortgage greater than CI$300,000 the rate is 1.5% of the monies advanced.
If you are making your real estate purchase with bank financing the banks within the Cayman Islands will require a valuation of the property conducted by an approved chartered surveyor. You should request a list of the bank’s approved valuators at your initial mortgage meeting so that a valuation of the property can be obtained swiftly once an offer has been agreed. The cost of the valuation will bear some relation to the size & value of the property but will start somewhere in the region of CI$400.00.
If you are buying a property within the Cayman Islands using local bank financing the bank will usually require you to obtain life insurance covering the amount of the mortgage, which will be collaterally assigned to the bank. You should discuss the banks requirements at your initial mortgage meeting. To obtain life insurance you will most likely be required to undergo some level of medical exam which is an additional cost for which you should budget somewhere in the region of CI$150.00
When purchasing real estate in the Cayman Islands an attorney should always be appointed to act on your behalf & prepare the necessary legal documentation for closing, you should budget around 1% for legal & registration fees. If you are obtaining a mortgage from a Cayman Islands bank they will appoint an attorney to act on the banks behalf for which you will be charged, you should discuss this fee with your loan officer at your initial mortgage meeting.
Step 3 - Finding the perfect home
Once you have established a budget for buying property within the Cayman Islands it is important to talk to your Cayman Islands Sotheby’s International Realty real estate advisor, having expert knowledge of the Cayman Islands real estate market, they will be able to make recommendations as to the location that will best suit your lifestyle & budget and the pros & cons of buying a house versus a condo. As a real estate expert within the Cayman Islands your realtor (estate agent UK) will be able to help you narrow the field quickly so that you are not wasting time looking at property that does not suit your requirements & of significant importance they will have up to date information on recent sales thus being able to offer invaluable advice as to how close the list price of a property is to a realistic market value enabling you to achieve the best value purchase possible
Step 4 - Presenting an offer
Once your Cayman Islands Sotheby’s International Realty realtor has helped you narrow the field & you have found a particular property that you would like to purchase, their real estate knowledge & expertise becomes invaluable as you move into the stage of offer & negotiation. All offers will be presented in writing using a standard CIREBA offer to purchase document, which allows the purchaser to make an offer stipulating the purchase price, deposit, conditions upon which the offer is made subject to & the desired closing date. Once both parties have agreed a price & terms the document is executed & becomes a legally binding contract. Section five of the conditions to purchase allows the purchaser to move forward with an agreed offer in place knowing that they still have an opportunity to confirm necessities such as bank financing or property inspection if stipulated in the conditions, which avoids such problems as gazumping which occur in the UK. Only at such time as the conditions are fulfilled is the purchaser liable to lose their deposit if they do not move forward according to the contract. If bank financing is required to purchase the property your mortgage lender should be presented with a copy of the offer to purchase contract as soon as it has been executed by both parties, this will inform them of the closing date & they will be able to move forward with the necessary procedures to provide the mortgage in a timely manner. Usually the conditions of purchase will set a specific date for which official approval of the mortgage will need to be given & this should be noted by the bank also. Buying real estate in the Cayman Islands is a simple & straight forward process, although as a British Overseas Territory land law is based on the British legal system the Cayman Islands does not suffer from many of the historical idiosyncrasies that slow down the buying process in the UK. In the 1970‘s Cadastral survey & mapping was completed in the Cayman Islands and each land lot now has a designated block & parcel number, the title ownership for which is recorded online & at the Land Registry, this simple & secure system has allowed the government to guarantee land title within the Cayman Islands. If bank financing is not required it is possible to complete a land transfer in a matter of days.
Step 5 - Closing
Once all the conditions to purchase have been satisfied the offer to purchase becomes unconditional & both parties can move towards closing. If chattels are included as part of the sale a list of such items & their value will be provided by the vendor to the purchaser’s attorney so that the land transfer document can reflect this. It is important for the land transfer document to note the amounts apportioned to the real estate purchase & the chattels separately because real estate stamp duty is only payable on the real estate value. Prior to closing the purchaser’s attorney will lodge a form RL27 Application for Official Search also commonly known as a search & stay which ensures that for a fourteen day period no further changes or charges can be lodged against the particular land register in question by any other party, this document requires the signature of the land owner as well as the party lodging the official search. The closing itself is a quick & straight forward process, if bank financing is being used for the purchase the closing will usually take place at the bank, with the purchaser signing the necessary mortgage documentation prior to closing. If there is no bank financing involved then the closing will usually take place at the office of either the vendor or purchaser’s attorney. Upon transfer of funds both parties will execute a Transfer of Land Form RL1 & the transaction will be complete. The purchaser should ensure that they receive a number of copies of the transfer of land document as this will be required to enable transfer of utilities. If you are purchasing a condo then your contact details should be passed to the vendor’s attorney so that they can inform the strata of the change of ownership.