Buying Real Estate in the Cayman Islands

5 December, 2016

Purchasing a residential property is often the single biggest financial transaction of a person’s life. An acquisition of this magnitude is very important and needs to be taken seriously, regardless of whether it is your first or final house purchase.

A purchaser needs to be aware of all pitfalls, whether obvious or only potential, associated with the asset being sought. A shrewd purchaser will ensure all necessary steps are taken to minimise or remove risk. To ensure one does not fall prey to misrepresentation requires a combination of effective drafting, due diligence and proper use of the rights and options available to a purchaser.

Despite the fact that the purchase agreements used for most residential properties are standardized, purchasers should still be vigilant in assuring that their rights are protected.  One such right which is often not appreciated is that the purchasers typically are permitted under the contract to make enquires and requests of the seller concerning the property.  This provides a purchaser with a limited number of days to make queries once an offer has been accepted.  It also offers the purchaser the opportunity to negotiate with the seller regarding any flaws or deficiencies in the property or the chattels being sold (e.g., air conditioning unit may be out of order).  In the circumstances where there are deficiencies, the seller may elect to either fix the problem or the purchaser can request that there be a corresponding reduction in the purchase price.

The following are the types of enquiries that should be made by a purchaser:

  1. Has there been any previous damage by hurricanes or other otherwise and what was the extent of that damage?
  2. What insurance currently covers the property and how much are the annual premiums?
  3. What is the estimated time between hurricane damage and restoration, based on the previous experience of the owners?
  4. What are the monthly utility and maintenance costs associated with the property?
  5. Is the property prone to flooding and have the owners had previous issues with infestation?

Further queries that can be raised in respect of strata properties include the following:

  1. Clarifying the size and composition of the strata corporation.
  2. What are the monthly and/or annual payments required for the unit and what do the payments cover?
  3. Who are the current property managers and who sits on the strata’s executive committee?
  4. Please provide details respecting the accounts of the strata and what is the current financial standing of the strata?
  5. What current or upcoming projects will be engaged in and have they already been financed by the monies currently available to the strata?

When dealing with strata property buyers also need to understand the strata by-laws so they are aware of their right and obligations.

Another aspect of the contract that needs to be given proper consideration is whether any conditions beyond what one finds in the standard contract are necessary.  The following example is intended to illustrate how important it can be to incorporate terms specific to one’s own circumstances.

Buyer A has made an offer to Seller B to purchase B’s home for a total value of $300,000 including chattels.  Buyer A is intending to fund the purchase from monies to be generated from the sale of his existing home valued at $280,000 after which he intends to use his personal savings to satisfy the balance. As per standard residential contracts, he has been required to pay a 5% deposit at the time of signing to secure the purchase. Thus he has paid $15,000 upfront to Seller B.

As the parties move closer to the date for completion of the transaction, Buyer A has not been able to secure the sale of his existing home so has insufficient funds to close the deal.  Seller B can either grant an extension to Buyer A so that he may have more time to sell his existing home or secure funds elsewhere or Seller B enforce the provision under the contract that “time is of the essence”, effectively forcing Buyer A to complete the purchase.  If Buyer A fails to complete the transaction, he shall lose the $15,000 deposit and will remain liable for the balance of the purchase price if Seller A elects to file a claim under the contract and is successful in obtaining a judgment. Had Buyer A incorporated in a simple condition that the offer to purchase the property of Seller B was subject to him selling his current property then Buyer A could have avoided this current predicament altogether.

Further matters which a buyer should be cognisant of in respect of the purchase agreement includes the right to rescind (cancel) the contract and negotiating who is responsible for costs associated with the sale/purchase of the property.  Additional factors, such as what stamp duty shall be payable should also be considered. Stamp duty is currently set at 7.5% of the purchase price with the only current exemption applying if the property is being purchased by a Caymanian who is a first-time buyer and certain other criteria are met.

Buyers also need to be mindful of the following additional considerations as part of the property purchasing process:

  • ensure that you have sufficient funds or that you will qualify for financing to complete the purchase;
  • consider any restrictions, easements or covenants that run with the land;
  • determine that seller is in fact authorised to sell the property, (i.e., is the property owned by more than one party from whom you require additional consent or is the property owned by a company in which case a directors or shareholders resolution may be necessary);
  • confirm that the transfer documents, discharges of security against the property and any other required transactional documents have been properly drafted; and,
  • ensure that any additional closing costs for the completion of the purchase have been obtained.

Purchasing a property is not an easy process but purchasers and sellers can significantly reduce their exposure to risk by retaining an attorney with solid experience in this area of the law. The attorneys of Broadhurst LLC have acted on property transactions in Cayman for over twenty-two years and can assist you in buying or selling properties. For further information on how we can assist you in this challenging process, please enquire with Tanya Meyerhoff at or Kirstin Micucci at


This publication and the material on this website was prepared for general information purposes only to provide an overview of the subject matter. It is not a substitute for legal advice nor is it legal opinion and should not be taken as such. It deals in broad terms only and is subject to change without notice. If you require legal advice, please contact us and arrange a consultation.

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