Getting the deal done - real estate transactions in the Cayman Islands during the Covid-19 lockdown15 Apr 2020
There is no disputing that Covid-19 is creating new challenges to every aspect of our professional and personal lives. The impact of social distancing measures imposed in the Cayman Islands has resulted in a significant proportion of the workforce working from home and, like so many other countries across the globe, all non-essential travel has been banned.
In this briefing we consider these new unprecedented challenges and explain why this does not necessarily mean that real estate deals must be put on hold. We also share some helpful tips on getting a real estate deal "across the line" during the Covid-19 lockdown.
Brief overview of the Cayman Islands real estate market
The Cayman Islands real estate market is growing rapidly and shows no signs of slowing down. The absence of taxes (save for Stamp Duty) and lack of restrictions on foreign ownership of land makes investing in the Cayman Islands very attractive.
The steady increase of property prices in Grand Cayman continued its trajectory over the last 12 months with a significant increase in the sale prices of properties throughout the Island but particularly along Seven Mile Beach.
Cayman Islands Lands and Survey Department's response to Covid-19
The Cayman Islands Lands and Survey Department ("Lands") was quick to respond to the inevitable disruption caused by Covid-19 and, on 23 March 2020, issued a new protocol to ensure real estate transactions could still be completed and then registered at Lands during the lockdown. The main points from the new protocol are set out below:
- Section 107 of the Registered Land Law (2018 revision) requires an individual executing an instrument to appear before a "public officer or other person as is prescribed" (often a notary) who must verify the individuals' identity and ascertain whether he/she freely and voluntarily executed the instrument. The notarisation is usually done during a "face to face" meeting, with the individuals bringing a form of Government issued ID to the notary's office and then signing the instrument before a notary who also notarises the instrument. The new protocol recognises that this is not possible during the lockdown due to social distancing rules and allows the notarisation of instruments to be conducted over a video call (e.g. Zoom, FaceTime or WhatsApp). The notary must satisfy itself that the individual's ID is valid and that the individual is physically present in the Cayman Islands during the video call. Lands will also accept instruments that are executed and witnessed contemporaneously in counterpart meaning a purchaser could sign a Transfer of Land RL1 (a "Transfer") and a notary could notarise a separate counterpart Transfer that has not been signed by the purchaser.
- Lands normally require the registration of instruments and the payment of Stamp Duty within 45 days from the date of notarisation of the instrument or late filing penalties and interest will be applied. However, Lands have agreed to increase this period from 45 days to 90 days for instruments executed between the 1 February 2020 and 15 April 2020.
- Ordinarily Lands do not accept online registration of instruments. However, under the new protocol Lands will accept online registrations that are submitted by email from Attorneys in private practice, category A financial institutions and the credit union. Emails must include scanned copies of the instrument and the usual supporting documents, confirmation of payment of the relevant application fee and a completed statutory declaration which states the Attorney will submit the original documents to Lands within two weeks from completion of the registration. The statutory declaration is in a prescribed form and can be found on the Lands website.
- Under the new protocol Lands no longer require the original signed applications for a stay of registration (which freezes the title to the land prior to closing for a period of 14 days from registration) in relation to each block and parcel. Scanned copies of the applications for stays of registration can now be submitted by email instead when registering the instruments.
Top tips for getting the deal done
- Make full use of video calling apps such as FaceTime to assist with the execution of documents and instruments. Lands has already confirmed that during the lockdown period notaries will be able to witness and notarise instruments over a video call as long as certain requirements are met.
- Ask your Attorney to email you the closing documents so that they can be printed and signed by you remotely so as not to cause any delays to your transaction.
- Attorneys should submit applications for stays of registration in good time prior to the completion date, given that Lands is no longer accepting "express" applications.
- Attorneys should, where possible, submit completed applications for registration using the Lands' online registration email address as soon as possible following completion or there is a risk that the period protected by registered stay will lapse.
In summary, there is no reason why you cannot complete a real estate transaction during the lockdown period, provided your Attorneys are working remotely and all of the parties are motivated to do the deal. It may involve some creative thinking on everyone's part but we have found that if you have a motivated vendor and purchaser then anything is possible.
We have completed a number of transactions since lockdown commenced, including a large volume of real estate finance work as well as high value residential purchases and disposals. Should you require any further information please do not hesitate to get in touch.