The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

While the Bahamas will continue to rank among the world’s worst when it comes to the ease of registering property unless it moves to a “registered title system” and reduces its reliance on Stamp Tax derived from real estate transactions, an attorney said yesterday that the situation was “not alarming”.

Adrian White, chairman of the Bahamas Bar Association’s real estate committee, responding to the World Bank’s Ease of Doing Business report 2013, which ranked the Bahamas 179th out of 185 nations when it came to registering property deals, said one area that could be targeted for improvement was the speed with which title documents/conveyancings were returned by the Registry of Records.

Registering property was the category where the Bahamas fared worst, the report saying: “According to data collected by Doing Business, registering property [in the Bahamas] requires seven procedures, takes 122 days and costs 13.5 per cent of the property value.”

This ranked the Bahamas not only behind the US (25th) and the UK (73rd), but also regional competitors such as Jamaica at (105th) , Antigua & Barbuda (125th), and Barbados (154th).

While the Bahamas was in line with the Latin American and Caribbean average on the number of property registration procedures, the cost and time taken were well in excess of both regional and global benchmarks.

This was even after the Bahamas received credit for introducing a computerised system at the Registry of Records, which reduced the time taken to lodge and record title deeds by 55.2 per cent, from 272 days to 122 days.

But Mr White, a partner at Delaney Partners, said the Bahamas’ 179th ranking was not as “alarming”as it seemed, given that the report’s methodology favoured countries that had a registered title system and did not rely heavily on taxes on real estate transactions.

“The 2013 Report factored its rankings based on three component indicators - number of procedural steps involved in a transfer, the time it takes to go from an agreement of sale to receiving transfer documents back from the Registry of Records, and the costs involved in a transfer,”Mr White told Tribune Business.

“While being ranked at (179th, the Bahamas has not lost its footing in the international market by any means; quite the contrary, as it remains a destination of choice for developers and investors, and provides stable investment opportunities both in the commercial and residential property markets. “

He suggested that the Bahamas target the time and cost associated with real estate transactions to generate “immediate practical improvement”.

Noting that the Ease of Doing Business report based its rankings on registering a commercial property valued at $434,982, Mr White said the Bahamas was likely to gain immediate credit in next year’s version for reducing the top rate of Stamp Tax from 12 per cent to 10 per cent.

The increase in the 2010-2011 Budget was seen as a negative factor by the report, and Mr White said the change - impacting properties valued at over $250,000 - should “reflect positively with a better placement ranking in a future report”.

As for the time component, Mr White said: “Currently, the time component calculated for the Bahamas in the 2013 Report totals four- five months, and includes one-two months for the first phase of a transaction, to get it from an agreement of sale position to a lodging of documents at the Registry of Records position, and then includes an additional two-three months for the second phase of a transaction - to have the transfer documents returned from the Registry of Records.

“While the additional two-three months of the second phase of a transaction is an area that the Bahamas is arguably prejudiced by having included in its transfer time component, as both transfer and protection of title priority in the Bahamas are completed on lodging documents at the Registry of Records during the first phase, and unlike a registered title system, transfer is not dependant on the immediate return of title documents from the Registry, it remains an area of the time component in the 2013 Report that could be improved.”

Noting the credit the Bahamas received in the 2009 Ease of Doing Business report, Mr White further told Tribune Business: “In 2009, the Bahamas received creditable consideration for its introduction of a computerised system of recording at the Registry of Records. This brought the previous overall period to complete a transaction down by more than half.

“Improvements could still be made to reduce the second phase of the 2013 Report’s time component of two-three months for the return of lodged documents to purchasers or lenders as the case may be, by the acquisition of more scanning machines, the proper maintenance and repair of existing machines and the employment of more manpower to potentially eliminate an existing backlog of approximately one month accumulation of documents awaiting scanning.

“The faster the data is logged into the system and the documents scanned at the Registry of Records, the quicker they will be returned, resulting in a reduction of the current second phase two-three month period.”

And Mr White added: “The reality is that until such time as we no longer rely on Stamp tax/transfer tax as a main source of annual revenue, and do away with our need to search and investigate the marketability of title (which is required even in instances where title insurance is obtained), and replace it with a system of Government Guaranteed title, which is the most efficient form of registered title system, the Bahamas will likely continue to rank low in future reports that are based solely on the three component indicators mentioned.”