Talking with LizaLaw - Property Purchase & Trusts

In this episode, Sean interviews three lawyers at Harridyal-Sodha & Associates, also known as Liza Law. They are Liza Harridyal-Sodha, Keisha Porchetta, and Ayo Barnard-Rawlins. LizaLaw is one of Barbados’ leading legal firms, dedicated to servicing primarily international business clients requiring advice on setting up corporate and trust structures in Barbados and other jurisdictions, as well as providing a range of other essential corporate services. The firm also handles a significant number of real property and finance transactions. That's why they offer the perfect introduction into buying property here in Barbados!

Find out more about Stewart and Co Realty via www.stewartcorealty.com

Transcript

Liza 0:00

I actually love the three of us. No, because it add a little bit of flavor to the regular podcast.

Sean 0:24

Hi everyone, Sean here at Stewart and Co Real Estate. Today I'm joined by not one, not two, but three members of the law firm Harridyal Sodha. Liza, Keisha, and Ayo are going to tell me all about various aspects of law. We're going into things like trusts, company formations, wills, all the exciting stuff having to do with property purchases and sales. I'm looking forward to getting into it, and I hope you are as well. So without waiting another moment, let's go. I am delighted to be joined by the team at Harridyal Sodha Associates, better known as Liza Law. Lisa Harridyal, accompanied by Keisha Hyde Porchetta and Ayo Barnard Rollins, are going to give me the lowdown on all things legal and answer some questions that I hear a lot and I'm sure that they do as well. So, welcome everyone. Great to have you here.

Ayo 1:21

Thank you, for having us.

Sean 1:22

I guess my first question, which is I hear all the time, it's on the lips of a lot of people to whom I speak. For someone buying or investing in Barbados for the first time, what's the biggest thing they should understand about how the legal process works here?

Liza 1:37

Okay, Sean. So I guess you you mentioned Ayo and Keisha. I just want to give you a little bit of idea of what they do in the firm.

Sean 1:44

Yes.

Liza 1:45

I am the principal of the firm. Ayo is actually the vice principal, but she's also the head of our real estate. And Keisha is actually the head of our corporate. Um, because we're a medium-sized firm for Barbados purposes, we tend to be a jack of all trades. Our firm just specializes in uh commercial company law and real estate and immigration and those sort of things. But we all have knowledge of what's going on in the firm and the different areas of practice. Right. Io um deals with real estate, sleep with real estate, and breed real estate. Keisha, I really am not sure what she does.

Sean 2:26

But she does it well.

Liza 2:27

But she does it totally well. And I am there with a big stick. Fantastic. Um, so we would we would we are delighted to be here and be happy to share our experiences with our clients who affectionately refer to us as Charlie's Angels.

Sean 2:44

I like it. So for someone buying or investing in Barbados for the first time, what's the biggest thing they should understand about how the legal process works?

Liza 2:53

I think I'm gonna give that question over to Ayo because she she gets it from the ground up with real estate. Yeah.

Ayo 3:00

Okay, I would say um the first thing they need to understand is that it's very different from their jurisdiction. We get lots of international clients from, you know, USA, Canada, and the UK. Yeah. Um, and the process over there is a lot different. It could happen in a week. Um, I think time, just knowing that the time, timing is going to be different in Barbados.

Sean 3:23

Yes.

Ayo 3:23

That's the major, major, uh, one of our major um questions.

Liza 3:27

And yeah, and it's and it's not from lack of the professionals, meaning the attorneys, trying to fast track that time. It's just the process is so indulgent that sometimes it's very difficult for us to fast track because we're dependent on different government agencies or other personnels like that are outside of our controls.

Keisha 3:48

Our process is more manual than it is. We literally have to do searches and get things going as opposed to it being you know a more digital process.

Sean 3:58

Fair enough. And I'm assuming that that's well worth knowing if your purchase or sale here is in any way aligned with a transaction in your home country, because there could be frustration on the other end if everyone is not aware of how things work and the timing. Exactly.

Liza 4:16

So we we spend a lot of time perfecting this memo that we send out to clients, just addressing every possible in our head, every possible thing that it could encounter while they're purchasing. And I mean, some clients probably don't read the memo, but because we get asked the question over and over again. But we feel that you know we have discharged our duty by actually letting them know from it A to Z what the process involves. Um, sometimes even that because it's such a foreign thing for them. Um, for example, our exchange control, which a lot of people are not, you know, familiar with. Um, so they would they would see that and just breeze through it because it doesn't, it doesn't resonate.

Sean 4:55

Yes.

Liza 4:56

Um, so we have to then, as we're going through the um the whole process, we kind of do a bit of a whole hand holding experience.

Sean 5:04

Right.

Liza 5:04

So they're very much aware at each stage. And we're very good, I think, as a firm of being on top of things all the time and sort of, you know, kind of giving clients a little bit more than they probably need in terms of information.

Sean 5:17

Okay.

Liza 5:18

But it's kind of predicting what the questions questions are going to be and what the challenges they're going to encounter. So we with that in mind, with a prediction, we tend to sort of address it before it even comes to us.

Sean 5:30

I'm sure that minimizes a lot of frustration.

Liza 5:32

It does, it does. And in a real estate purchase or sale is an emotional thing. So we try to minimize that for them, right? And um, Io has done a great job with that. Keisha has done a great job with that. I personally don't actually handle real estate um in the firm, but these two do.

Sean 5:50

Right, understood. And and I guess that that leads me on to the question where, and you you touched upon it when when you introduced everyone, you each lead different areas of the firm. How do your departments typically interact during a property transaction or development project? Is there a formula by which you follow, or does it is it individual to each transaction? How does it work interdepartmentally?

Liza 6:16

Um, so I guess it depends on if a client is buying a straight real estate as opposed to using a corporate vehicle like a company or even a trust or whatever to do the purchase. So um IO, you know, has over the last 16, 17 years, have pretty much figured out every aspect of real estate purchases and what could be coming at at her. So she may not need to sort of interact with us, with us as much, you know, um during the process. But we we we are, like I said, a small firm or a medium-sized firm. So we're very accessible to each other and we and we have figured out what each other's expertise, you know, is and and one of the other things is maybe not so much expertise, what we like and what we dislike, you know. So we um but we do sort of communicate among ourselves quite a lot. I mean, there's only three of us here, but there are five of us uh at the firm working as we speak. So we we're very good with that.

Keisha 7:18

Most of our business is generated from existing clients who come here and you know they're doing um international transactions and fall in love with this beautiful island and decide that they want to do something. And so, you know, it we may refer it to IO to work on if necessary, or I would work on it, or Lisa would work on, you know, that different aspect. That must also help, I'm sure.

Sean 7:42

When you have a point of reference, as in a person with whom you've dealt before. Exactly. And so there's it it makes the whole thing a little bit smoother, doesn't it? Yes, it does.

Liza 7:50

It does provide a comfort level for us because we could understand from a due diligence perspective where the wealth has been generated for that particular kind of thing. Absolutely.

Sean 8:01

And that's obviously becoming every day more and more of a factor.

Liza 8:07

It has always been there, we're just managing it differently now.

Sean 8:10

Right.

Ayo 8:10

So the real estate department would interact with the corporate department if there is a sale and purchase of shares, as Lisa had mentioned, of an offshore entity or a local entity. Right. Um, if it's a straight-out real estate purchase, then there's no need to interact with the corporate department unless the buyer is in cooperating a company to purchase the real estate. Right. Okay. Makes sense. That would be the crossover. Yeah.

Sean 8:33

Okay. What are the most common legal misconceptions foreign buyers have about purchasing property in Barbados?

Ayo 8:41

I think we kind of alluded to it in the case. I think time is the first thing. That's always something that I find is always the first question. It's always the most pressing matter. Yeah. I need to close this on Friday when we started with a draft agreement for sale on Monday. Because of our legal process, the way our system is set up, that's not possible, even with a cash purchase. You have to do your due diligence on the property. And furthermore, if the you know um buyer is already seller, um, they're selling or purchasing shares of an offshore entity, yeah, then the due diligence is expanded even further because you're looking at due diligence being conducted on the real property as well as two companies, one company in Barbados and one company in a foreign jurisdiction. Right. Um, and that structure is mainly used to um and legally so to avoid paying the property transfer tax on the stamp beauty in Barbados.

Sean 9:36

Yeah. So the layers become they increase as you as you get further into the corporate setup.

Liza 9:42

If I always come back around structure, right, that's been around for years. I've I noticed more buyers are not necessarily opting for that structure anymore because of EML and because of EST. Because of the cost of maintaining two entities as well. And yeah.

Sean 9:57

So you save in one hand, but you're spending in the other.

Liza 9:59

Exactly. And then it depends also on what is the purpose of your real estate purchase. You know, is it that you're intending to reside in that property? Is it that you're buying it, you flip it right away, you know, things like that, yeah, which would determine the structuring.

Sean 10:14

Right, understood. Okay.

Ayo 10:16

So again, so time is one thing. Um, and I mean, financing is also another thing that persons need to consider. Some people are cash purchasers, others aren't. I mean, even the wealthy borrow money.

Sean 10:28

Yes. Um, they don't use their own. Yeah, absolutely.

Ayo 10:31

And that financing that adds another layer of time.

Sean 10:35

Right. Yeah. Which again is is out of everyone's control apart from the person who's lending, the entity that's lending the money. Make sense. I mean, what what I've found as well, uh, which is is, I'm not sure if it's unique to Barbados as a jurisdiction, but it's definitely not the case in the UK where I've I've uh sold property uh is the uh the difference in expectations and timelines, etc., as far as exchange is concerned, and completion, where in the UK you have exchange happens and you know you've pretty well bought or sold that property, completion is you're cleaning up. Yeah. Whereas here, exchange is just one stop before you start to do a whole set of other work. Yes. Um, and that completion date is movable.

Liza 11:29

And because we don't have the registered land system like the UK does, right? I mean, I did do my legal degree in in the UK, and at that time they were actually moving towards registering all of their lands. I think there's still some parts that are not, but because we don't have that, we have to go and investigate title and all of that, which which is time consuming. It's a manual search, right? So it's um, you know, whereas like I I was, you know, I was buying property in Florida, for example, and you just go on their website and you see all the owners and everything on the property, the entire history of the property is there. Wow. And it's it's you know, nobody could lie to you when they sold a property for whatever, it's all there, all the owners, everything, whether it's a mortgage, any encumbrance. I mean, that's a lay person doing this search, right? Then complete the search. You don't need a lawyer for that, right? Um, but here it's it's obviously very different.

Sean 12:27

So, in summary, I I would say that when you're selling or buying in the Caribbean or in Barbados, you come equipped, in addition to everything else, with a sense of humor and some patience.

Ayo 12:38

Yes, most definitely. Okay. All right, fair enough, fair enough.

Sean 12:42

Take note. Taking into account the various steps in a standard property sale from offer to completion, where do buyers or sellers tend to stumble?

Ayo 12:52

For sellers, sometimes persons don't know where their original title deeds are. Because we are on an unregistered land system, you need to have your original title deeds. Right. So investigation of title, I usually describe it to clients as a family tree. You know, if that property changed hands 100 times, you have a hundred deeds. And if you're the current owner, you have to have all 100. I mean, our property at the say title goes, you can go up to 20 years, but sometimes it may go even further. Right. Um so sellers need to know where their original title deeds are. Okay. Because if you don't have those, then they have to be restored as another layer of time.

Sean 13:34

Yeah, understood. And and and as an agent, really, uh as far as I'm concerned, best practice is for me to start managing that expectation when I take a seller on as a client. Exactly. That's me. Because you're only going to say the same thing. If they haven't already spoken to you, they will, and that will be uh first and foremost.

Liza 13:52

And one of the other things we have seen is that people are left property in a will, and they just assume they own it because they have they ever left it in a will. And so they proceed to sell it without actually having the will probate it. So they don't actually own it. So then you have that estate issue, all of that estate issue. And as you know, it takes a little bit while to probate.

Sean 14:14

It's interesting you say that because again, from an agent's perspective, if I haven't done my due diligence and I've taken a property on not knowing that it's able to be sold, I've wasted time, emotions, money, everything when we get to this stage that an offer has been accepted and it's been accepted on something that actually is not even close to being sold or being able to be sold. Or they're so I I take that.

Liza 14:40

And these mistakes happen because you may know somebody, a potential seller, and you've known them for years, they've inhabited this property for years, they have you know said they're the owner, you know, you have no reason to believe they're not, and indeed they are, is just a step that needs to be taken to get the probate done.

Sean 14:55

Right.

Liza 14:56

So you go on their word, and and you know, that happens a lot.

Sean 14:59

And is there a is there a particular normal or usual time frame that probate would take, or does it really depend on the complexity? Oh I'm I'm I'm seeing some smiles, so that sounds as though there's no real straight answer.

Liza 15:12

It depends that you know Ayo has some very interesting cases. We always have very interesting cases.

Sean 15:17

Yes, but we should do a separate conversation once about the weirdest, strangest.

Ayo 15:25

Oh, we're gonna have to have stories. Right. So I mean, estate planning is always a good idea, first and foremost.

Sean 15:32

Yeah.

Ayo 15:33

Um, estates, I mean, the time frame for estates can be anything. It depends on whether or not, you know, there's a will or there is no will.

unknown 15:42

Okay.

Ayo 15:42

Um, we usually advise clients anywhere between two years, three years. One to two years.

Sean 15:50

Okay.

Ayo 15:51

Um you know, I I personally I feel that uh a probate of an estate with a will should take no more no more than three months.

Sean 15:58

Okay.

Ayo 15:58

And an administration, um, this is without a will, should take no more than six months.

Sean 16:03

Okay.

Ayo 16:03

Um, but we do know we have um, you know, we have a few challenges with the public service in terms of, you know, staffing and whatnot. So um there, you know, there's some challenges there. That have to be have to be met and overcome.

Keisha 16:19

Yeah, and they're cross-border um challenges too, where the the deceased probably was not resident here, and then also complexities that add to the timing and stuff like that.

Sean 16:33

So this leads me to an interesting point. Is there anything that you would recommend someone do to mitigate the amount of time it takes when someone passes away, which is inevitable? Uh so for instance, yes, making a will is going to reduce that time.

Ayo 16:52

This that would be episode six, yeah.

Sean 17:01

Okay, right. Okay, there are episodes. There are things you should do in advance. Okay, fair enough. Watch out for episode six. When a buyer is choosing their attorney, what should they be looking for beyond their credentials?

Ayo 17:15

Effective and clear communication.

Sean 17:18

Okay.

Keisha 17:18

Because yeah, we are all lawyers, so we already have passed that bar, but you know, there are certain things that will um make your process a lot easier. Understood. Someone who is willing to ask you the right questions, understand where you're coming from, and also explain the process to you.

Sean 17:37

And keep you updated. And keep everyone in the loop. That's so important.

Liza 17:41

Yeah.

Sean 17:41

Fair enough.

Liza 17:42

Credentials obviously go a long way and whether you're dealing with a single person as opposed to um a firm, for example. And um in dealing with a single person, you have to know chances are that person is gonna get sick, that person is gonna travel. Very good point. They're not going to be available all the time. So, what we do in the firm, we always present ourselves as this dynamic trio because if one of us is missing, the two of us can take over. And no, I I mean, my idea with the firm is that nobody should call and say, Oh, I always on vacation, so we have no idea what's going on. You know, things have to continue, their work has to continue. They didn't hire Lisa, they hired everybody else, the whole firm. So that's why I think sometimes I'm I'm not advocating for a firm by any means, but you have to bear in mind the advantages and disadvantages of dealing with a firm versus a single person. And um, you know, and then we have had reputational issues as well with client funds and things like that.

Sean 18:44

Well, yeah, so the the two two things I I take from that, or uh one being I've experienced frustrated transactions where uh a lawyer has gone on holiday or been sick and everything comes to a grinding halt. And it's no fault of let's say the lawyer who's off sick, you're only human, but if there's no one there to back it up, it can it can uh cause a lot of frustration for everything and everyone involved. Uh and and the other good point which is well worth noting, especially to a foreign buyer, is to double check, and and please correct me if I'm wrong, that not all law firms, especially the small ones, may have a foreign currency account. That's true.

Liza 19:35

There are ways to get around it, obviously, but um we have facilitated that for the other side sometimes.

Sean 19:41

Right.

Liza 19:41

Um but there are ways to get around that, but yes, it does also very important. It does present a challenge because we, you know, the other side end up with funds that should have been in trust or in escrow, we would then have access to that, right?

Sean 19:55

Understood.

Liza 19:55

So it's not the ideal thing, but it they're definitely, depending on which law firm you're dealing with and which law if you trust them and things like that, if you have a good professional relationship, then yeah, okay.

Sean 20:07

How is the legal landscape around property title issues, land ownership structures changed in the past few years, if at all?

Keisha 20:15

I think the due diligence part of it has been the biggest, you know, because real estate agents now have to make sure that they vet their clients before and each lawyer acting for the buyer and the seller. So that has become sometimes an area of challenge because several clients can get frustrated everybody asking them for the same information. And right now we are not able to rely on another service provider's due diligence. We kind of have to make sure we have our own and to make sure it's adequate and we do our searches. So that to me, I think, is one of the biggest.

Liza 20:52

Yeah, and I mean the AML stuff has been around for a while, but it's now more enforced because you know, firms, us as service licensed service providers, can get fined and so on for not having that information on track. Plus, again, going back to reputation, we want to make sure that we're dealing with wealth-table clients. So that's the only way. And and one of the good news, as Ayo mentioned earlier, is that a lot of the clients that we have or existing clients, so we would have checked them out quite a bit before you know we decide to go ahead with a real estate purchase. Obviously, there is a lot of red flags depending on how this person wants to move money around or things like that. But um, we are always very vigilant um with with that.

Sean 21:38

Estate agents uh having a part now versus before is is relatively new and it people are still coming to grips with with an extra layer of of administration that they never exactly uh never had to entail.

Keisha 21:55

Yeah.

Sean 21:56

And and when I worked in London, uh we Definitely noticed frustration when we had to start doing due diligence on the buyer.

Keisha 22:05

Yeah.

Sean 22:06

Where before you know we had to do due diligence on the seller with whom we had a legally binding contract, the the buyer was was less so. And then when that was introduced, it was very, very interesting how easily frustrated the buyer became simply because they weren't used to it. Yeah. And and agents by the same token were frustrated because it wasn't something they were doing for a buyer. Now all of that due diligence has to be done again with the buyer. And so agents are frustrated, the buyer is frustrated simply because it's something new. I see that obviously things are evolving here. And as an agent, it will slowly but surely become the norm. But as a law firm, I guess you're used to it and how to manage that appropriately. And it's probably, well, highly likely, much more seamless than it is.

Liza 22:59

Yeah.

Sean 23:00

Versus the agents who are still trying to make it work effortlessly.

Liza 23:05

When we as lawyers manage the due diligence process, it's actually a lot easier than if we have our AML person, our department there manage it. They are so strict.

Sean 23:15

Right.

Liza 23:16

I mean, we're a little bit more, okay, your passport is going to expire tomorrow. We're going to give you a chance to renew your passport. They were like, nope, we're not taking it. You know, we have um an inflexibility as well within our firm that we have to work with sometimes. Right. Yes, you know.

Keisha 23:33

Because we get audited. And of course. So it's very understandable. Yeah.

Ayo 23:37

There's another change that is um there were a few colloquiums held during this year where the government is proposing to implement a digital system for um conveyance in Salem, purchase a property.

Sean 23:51

Okay.

Ayo 23:51

Um, I think that I mean, it is some way away, but at least they've opened up the conversation. Okay. So, number one, resuming the registration of land process, which would help greatly in terms of doing the due diligence on properties. Because with the registered land system, you get one document, a certificate of title that states all of your covenants and it states everything that you need to know as opposed to those 100 type deeds, right?

Sean 24:16

Yes. Yeah.

Ayo 24:16

That would be very helpful. For example, there was a proposal to all the condominium developments. When a developer is submitting an application to for a condominium development, they should go straight to registered land. It makes doing titles so much easier because you have one piece of land with 10 units on it.

Sean 24:35

Yes. Right? Right.

Ayo 24:36

Um, so those are some things that were mentioned in the colloquiums early up this year, um, as well as the ability for the land registry to have a system where attorneys can do their due diligence um electronically, do searches at the land registry electronically, you just like how you do it with Kuipo. Um, so those are those are not in place right now, but they're proposals that I am very keen to see when they will start and um to work with them.

Sean 25:05

It starts with the idea, let's try and get it done, which is which I guess is is something to hold on to.

Keisha 25:12

And I think one of the things that happened informally was uh the exchange of documents electronically. Right. Because before we literally were delivering our agreements to different firms. The small island, so that was big.

Ayo 25:27

But now but we still need legislation that governs electronic signatures, right?

Sean 25:33

Interesting. Okay, right.

Ayo 25:34

Um so because you still on a convenience, for example, you still need a wet signature. You can't have an electronic signature, so you still you're still dealing with you know sending that document to the client in Switzerland via Federal Express, right?

Sean 25:45

Yes, yeah.

Ayo 25:46

Um, so I guess that legislation will come when it when they're looking at it.

Sean 25:52

Yeah. And I mean, again, another interesting point because that particular step, which is a wet signature versus electronic, that is a layer of time that that someone just is not taking into consideration.

Keisha 26:05

Yes, notarization without make appointments with the notary.

Sean 26:09

So that that's days.

Keisha 26:10

Not only that, notaries in different, especially civil jurisdictions, they actually act not just as a witnesser. They literally need to understand the documents and get pushed back or don't. Yeah, and yeah, so we've had some interesting um uh scenarios.

Sean 26:30

Yeah, I mean that that's I mean it it's so interesting how much time can be affected without even thinking about it. And that's just one element between the city. Yeah, yeah.

Liza 26:44

Yeah. I mean, one of the other good news though is that we've seen a slight relaxation of exchange controls, okay, which allow foreign currency to come into the island, be registered, remain in foreign currency. So you're able, like the property market becomes a little bit more competitive because you're able to pay in US currency, notwithstanding the fact that Barbados is, you know, legally Barbadian dollars, but you're able to do that. So foreign purchasers um or sellers, really, because they're the ones that need the US currency back when they bought in, right? Yes, of course. It it does kind of help that the whole system a little bit to become a little bit simpler, uh, at least that's what I've noticed.

Sean 27:26

Um slowly but surely. So we're getting there. We're getting there. Right, fair enough. We're seeing more people using companies or trusts to hold property. In what situations does that actually make sense and when is it unnecessary?

Speaker 27:41

What is your intention with those things?

Ayo 27:50

What is your intention with the property? We touched on it a bit earlier. So, your estate planning, you're leaving this to your kids, you want to have it in a trust. Are you going to rent it or are you going to live there? Right. Are you going to keep it for five years and turn it over? Um, so it's we have driven. Yeah. Right, yes, because we we spoke about the offshore structure, yes. Right. And yes, you do um not pay the property transfer tax and stamp duty, but you also have to maintain two companies.

Sean 28:19

Yes.

Ayo 28:19

So you're looking long-term um spending versus the short-term payment. Right. So what is what is your intention is the first thing a normie asks.

Sean 28:30

Am I right in in understanding that your personal tax circumstance in your home country will also dictate what you do with your purchase and ownership here.

Liza 28:42

Yeah, and that would be the first thing we tell any potential, you know, purchaser that makes sure that you get tax advice in your put in your jurisdiction.

Sean 28:51

Right.

Liza 28:51

Yeah. And also to do a separate will in Barbados if you ever leave if you have Barbados.

Sean 28:56

Of course, yes, exactly. A lot of buyers from the US, UK, and Canada are exploring Barbados. What kind of tax or residency considerations typically come up in those early discussions with your team?

Liza 29:07

It goes back to intention. What is it that you're buying the property for? If it is that they want to move to Barbados, then there are various ways that they can move here and reside here. One, we have the special entry permit for people who are buying properties for US 2 million or more. Yes. And has five million or more in assets, you know, worldwide, which would include the two million. Um, they are allowed to reside here as I guess the first instance, depending on their age for five years, and then it can be renewed. Um, if they need a work permit during that time as well, they can also apply for a work permit. Okay. But most of the times people are buying, especially post-COVID, what we've seen is that a lot of people are buying properties to go on your Airbnb market, for example, right? And then it doesn't even it doesn't really depend on the level of the property or what value it is. Every everyone wants to rent out their property because it is expensive to maintain property, especially if it's not your primary home. So they want to at least have some of their expenses offset. Yes, right. So um so we've seen a lot of um buyers who are really keen to establish relationships with the same agent they might be using for property management as well going forward. So we do see that a lot.

Keisha 30:30

And the the truth is Barbados does not have um citizenship by investment. So we to those persons who have heard that, you know, the islands offer that, that's one of the things we have to let them understand. Yes, of course. But we are also one of the jurisdictions where there are no restrictions on foreigners purchasing property here, so they can purchase it and you know reside here if they want. So that's a uh there are quite a few benefits.

Sean 30:59

And that's a yeah, that's a that's a big factor that doesn't exist here and exists in other jurisdictions.

Ayo 31:06

We have exchange control considerations. So, I mean, the uh non-resident purchasing property will get um permission from the Central Bank of Barbados, the extra exchange control department. Yep. Um, but it's really a formality. I mean, it we we do that, the attorney does that. Um, it's just really rubber stamp saying, hey, you know, you brought in the funds, okay, you can go ahead and purchase. Right. Yeah. But it is not the equivalent to permit or approval, right? The landholding license in some of the jurisdictions, like some insurance or whatnot, is what I'm saying.

Sean 31:36

Understood. For someone looking at Barbados, not just as a second home, but as part of their wider relocation or tax planning, when should they involve their league and financial advisors across jurisdictions?

Ayo 31:47

From the time they found about it. Yeah.

Liza 31:53

Right. Because they can't do anything without finding out what is possible, right? And uh so yes, and and we would definitely recommend that they see their tax advisor first in the jurisdiction from where they're from before they, you know, stumble into Barbados. I mean, we're we're good at sorting them out once they get here, but it's making sure that they get here in in the cleanest possible way for them to exit wherever they're from.

Keisha 32:19

And also they need attorneys to do the legal process of purchasing property here.

Sean 32:25

Yes.

Keisha 32:25

So that's something that um they need to, because maybe that's not required in other jurisdictions, but it's a requirement.

Sean 32:32

Okay, understood.

Liza 32:33

And then we tag on the work permits sometimes and the land purchase or the special entry permits. So everything is like a whole package at the same time.

Sean 32:41

Right, okay.

Liza 32:42

We have quite a few of those actually that are working on at the moment.

Sean 32:45

What are the biggest red flags you wish buyers and sellers would pay attention to earlier in the process?

Ayo 32:51

Yeah, knowing where your needs are. Yes, knowing where your money is. Yeah. Okay. Yeah, how you're purchasing. How you're purchasing. Right. You need financing.

Sean 32:59

Yeah.

Ayo 32:59

And what does that mean? And if you need financing, make sure you actually go to the bank to find out how much you qualify for prior to looking for a property. Because you may say, hey, I wish I I want this one million dollar property, and you only qualify for a hundred thousand.

Sean 33:12

Right.

Ayo 33:12

So that's the right thing.

Keisha 33:14

Sellers need to understand that too. That that you know, the person purchasing does have the financing because of course absolutely, absolutely. You don't want to go down there.

Ayo 33:23

Maybe helpful for a seller to perhaps have a valuation, be it formal or informal, yes, of their property to put it on the market.

Sean 33:30

Yeah, price to putting it on the market. Very good advice.

Keisha 33:33

That eliminates a lot of the back of the efficiency and great advice. Yeah, and um the property.

unknown 33:41

Yeah, yeah.

Keisha 33:42

And know the property, yes.

Liza 33:44

Know what you're buying, get service in a property. Very well done here, actually. Right. A lot of people don't, they do a walkthrough and then they just kind of go, Oh, I love this property, and and we're gonna get it. They don't really go to the nitty gritty of that property like they do in other jurisdictions, right? So um that might be a new thing for you guys, Sean. That's gonna be level two.

Sean 34:05

Absolutely. Exactly. Yeah, yes, exactly. Yeah, and you're right. I mean, I was surprised when when I moved back here, the lack of expectation of a survey, which again, you know, in in other jurisdictions, that is that is the norm. It's an expectation. It's just it's all part of the process. Not the land, this is not the this is this is a structural survey or you know, something to show that the building isn't gonna fall down tomorrow. Yeah, and as you said, Lisa, um I was surprised that it it wasn't something that I that is the norm in the transaction here.

Liza 34:41

I I feel there's gonna be a move towards that, right? To be honest, uh, that's one of the things you were if you were asking earlier what do we see coming? I think that's gonna be coming because there's a lot more sort of condominium type of product going on in the market. Yes, yeah, and you're gonna see that. I I just think that's going to happen. People are gonna want to understand how how this building works, right? And uh things like that, which will get very deep into the actual fabrication of the building.

Sean 35:09

Makes sense, yeah.

Keisha 35:10

And and it comes back to what I said earlier, the communication is important when we the initial talk with the clients. Absolutely, yeah. Things like are you purchasing the property with furniture or no furniture? Right. Like, what's your understanding of what it is that you're actually purchasing? Because that has uh created issues.

Liza 35:29

Listen, I think the color of painting, yes, it's meaningless, but it's it has meaning to the color and to the buyer sometimes. Well, the buyer has no meaning to my painting, you know, it's like yes, so but they get stressed out over this one piece of painting missing from the wall that they can fail quite easily, and then we'll hold up a transaction. I I and I've had this experience in our episode six, we'll share this with you.

Sean 35:54

I can't wait for this.

Keisha 35:57

Yes, it's you know, it it becomes a thing for the buyer where they walk in and they see a painting on the wall and they automatically think that's part of it. Because you say you're selling the furnished. So, what does that mean? That kind of conversation.

Sean 36:11

Yes, you know, another good point where I personally having experienced some of this frustration that you, your team experience probably more than I do, but the value of an inventory of what's being sold.

Speaker 36:28

Detailed inventory.

Sean 36:29

Detailed inventory is just, you know, I in my mind as an agent, it is worth its weight in gold. That's correct.

Liza 36:37

Absolutely. And and this is where the problem actually arises a lot of times, Sean, is from the agency with that little offer letter that they sign, furniture is included, but there's no room for exclusion or of anything in there, right? Um, always should be subject to a few pieces being removed or whatever. So this becomes, does that document form a part of an legal agreement? Right. So because so we've had a few challenges, and that's why we insist on an inventory, especially where furniture and fittings are uh quite right.

Sean 37:08

When it comes to development projects, villas, apartments, small communities, what are the biggest legal hurdles developers underestimate?

Liza 37:16

I don't know about legal hurdles, but I'll just tell you some of the hurdles that I've seen them experience. One, it's budget, always, you know. Two, it's timing, never completing a project on time. Um, in terms of legal, the legal part will be iron out at the beginning of the project, like you know, and doing a condominium declaration and all of that. But I don't know that time changes.

Ayo 37:42

Time because your your buyer has an expectation. Um, everybody had it has an expectation set out in this contract, your building agreement, your sale agreement.

Sean 37:52

Yes.

Ayo 37:53

If you don't stick to those timelines, then a buyer who has plans to rent out their property by X date can't do that because the developer's not finished. So how am I going to be compensated by the developer for having to wait another six months for my project to be completed? Right.

Liza 38:12

Um at that stage, the developer would have had substantially all of the proceeds. I mean, maybe less 10% or something like that. And you know, these extended delays. So it's, you know, is it fair?

Sean 38:25

With the developers with whom I've worked, uh, there have been penalty clauses built into those contracts. Is that standard or is that something that can sometimes be there or not?

Keisha 38:38

Liquidated damages. Right. That's where we're going out. Yes. I mean, we advise our clients to anticipate all of these different challenges that will come possibly come up because I know we are optimistic and we want to get it done. Yeah. But some of it like it's out of their hands sometimes. Yes, yeah, you know, material material. Exactly. So for sure. You you know, you try to think of every eventuality and how that ties into what you're offering and making sure that your product is the best it can be. And so people want to purchase it, you know.

Sean 39:19

And again, that will differ and be the difference between a mediocre and a good thorough law firm. Yeah. Because they are going to cover their client as best as they tell you.

Liza 39:32

I mean, sometimes we get pushback, right? Because you're having these documents in a development that applies to every single purchaser. So, you know, they're not gonna normally accept our pushback on certain things because 90% of their other purchases happen.

Sean 39:49

Don't get put right, understood.

Liza 39:50

So they um so sometimes we get stuck even though with the best advice we can't go any further. Then the client has to decide whether they still wish to proceed based on, you know, understood on this. But I do think developers should be a little bit more realistic with their timing, like um, understanding, you know, most of them this is not the first time they're doing a project. Yeah, so they they they would anticipate all the ex the things that could go wrong and things can go right too, right? And then just kind of add a little time into there. So people are not always saying, well, this project is going to be late. It's you know, it's somebody says to me something is completing in June, I'm thinking, okay, December. Right. Why do I naturally go there? Yes, no, no, it makes sense.

Sean 40:33

Makes sense better under promise and over deliver. Exactly. Yes. Makes sense. Can foreign buyers obtain a mortgage or other financing in Barbados?

Liza 40:40

There obviously some challenges, but most of the banks will offer uh a sort of 50% maybe um financing. Okay. Maybe not as you know, 90%, but a 50% depending on and the home and the and the collateral and the security and all of that. But they can. I mean, I think sometimes foreign uh purchases have a better time with the banks than they do. Because they have um the the banks can see their assets a little bit better, which is of course you know, then it does it's a bit more transparent. It's a bit more transparent, yes. The foreign purchases they also find the banks a lot challenging to deal with in terms. Everything is timing, and I think this is kind of like the thing we're talking about. The common theme, just timing, timing, timing. And just because a bank says, oh, if you're good for a mortgage, don't listen to them. Wait till everything is and wait till you have the you know, it's it's it's crazy. Right. They're the ones that definitely overpromise.

Sean 41:43

I've witnessed it many a time. Again, just to back up what you're saying, you know, you may be approved based on what the bank sees you as an individual can afford. Nothing to do with the value of the property, which doesn't happen until you see the property. So you think you can you can borrow this amount, but actually uh as far as the property is concerned, you can't, because it's not worth what you think you can spend.

Keisha 42:06

Once they do the evaluation, then they're like, sorry, this is what we think it is, and so you were gonna have to put more money or yeah, and then it gets challenging. Okay, well worth noting.

Liza 42:17

And a lot of times the foreign uh purchases they can buy the property outright, they you know, with their funds. It's just a just that extra layer of tax planning that they introduce into their whole structure to make sure that they their financing is working for their benefits, right? So it's um it's as efficient as possible. It's as efficient as possible. I'm getting a 4% you know more uh mortgage rate where I'm making 15% on this investment, right? So it's it's in some cases a no-brainer.

Sean 42:46

Understood.

Liza 42:47

Not everybody that goes to ask for a mortgage actually needs to need a mortgage, yeah.

Sean 42:51

Yeah, makes sense. Absolutely. I've heard that Barbados may be considering residency by investment through property ownership. Do you see this happening and is this attractive for investors?

Liza 43:00

Um it's a good rumor. Um and we certainly hope that that's the case because with the influx of property coming on the market, you know, a lot of condominiums sort of type of property um which has a lesser value than most single homes, but still carry a high value depending on where it's located, you know, in the ocean. A lot of those purchases, even if their intent is not actually to reside in Barbados, it still is a good benefit for them, something that they can think about for the future. It's a bit of peace of mind. Um, and residency, you know, it's very different from citizenship that other islands also that uh other islands, you know, deal with. But we the residency here would meet I own a property, I have a right to live in it.

Sean 43:48

Understood. What about real estate investment trusts or REITs? Do you think that given the difficulty in obtaining financing by developers, that this should be considered?

Liza 43:57

Absolutely. Um, this is something that I I wrote an article in 2013 about so you know when I was a wee child. And I recognize the importance of it, mainly because it's been used so widespread in North America and Singapore and Europe and those places. Okay. But REITs kind of focus a lot on commercial properties too, not necessarily residential, but a development like a sort of condo hotel type of development would be perfect for REITs because they just allow all sorts of people to be able to invest. People with, you know, five dollars, it can set the limit, obviously, right? And they make a good return on their investment without necessarily owning any property, but they're investing in the infrastructure of so I think this is the way to go. I think when the banks are starting to have issues with financing a certain project, maybe one developer has overextended its you his his or her um how should I say capacity, then they can look for um you know REITs to help them. And and REITs can come in so many different ways. It could be a trust, it could be a partnership, it could be a company. I mean, it's a very, very flexible thing. It can set investment parameters, it can do, you know, it it can be a lot of scope. It's a lot of scope for it. And I am a I am definitely an advocate for it because is there an appetite uh that that you've seen?

Keisha 45:23

I think more people are asking the question. Yes. Okay. So um we're hoping that the policymakers will really take it on board. Start taking it on board. I know that that was something that would have been considered in the past, and hopefully we will see some action because I think it will bring foreign foreign investment to the island in a in a very big way, especially for those properties that you know we see sometimes around that could really do with somebody taking on the challenge and the real refurbishing and even the historical properties. You know, if we could get some stuff going on there that would really help.

Sean 46:02

And it's an interesting point, actually.

Keisha 46:05

Because the little man can also get his benefit from investing.

Sean 46:10

Make money from whatever money they have. Yeah, exactly.

Liza 46:12

Because as Barbadians living here, um, we have very limited things that we could invest in, yes, you know, in Barbados. So that would be a very good thing for us. But you know, it's like they say, oil don't spoil, soil don't spoil either, right? So I like that. So, you know, we that's a good to me, that's a guaranteed investment. Um, and you know, it's a no-brainer.

Sean 46:35

Interesting.

Liza 46:36

And it's if this is if this podcast is a plug for it, by all means.

Sean 46:40

Fair enough, fair enough. I think I've covered pretty well everything I wanted to ask. I have no doubt there'll be other questions uh at some point. And if if there are people watching that want to hear things, by all means let me know. I'm very open to suggestions as to what you want to hear. But for now, I really want to thank wholeheartedly Lisa, Keisha, Ayo, for taking the time to come and have a chat with me and just give some invaluable info, which I know uh people find uh extremely helpful. So thank you so much. Going forward, if someone wants to get a hold of you in the firm, how do they do that?

Liza 47:21

We have a website, Sean, that has all the our you know, all the lawyers, our qualifications, um, lisalaw.com. Um, but you know, just Google my name, Google I say. Perfect. It's there, it's all there.

Keisha 47:35

Our email address is info at LisaLaw.com.

Sean 47:38

Info at LisaLaw.com. Fantastic. Thank you so very much for joining me here. And I think another episode's in the work.

Speaker 47:50

Absolutely. Absolutely. Thank you for having me. Thank you very much for it. It's been a pleasure.

Keisha 47:54

Thank you.