Cayman Islands Real Estate Guide 2023

• Published date: 01 February 2023
• Subject Matter: Real Estate and Construction, Real Estate, Landlord & Tenant - Leases
• Law Firm: Appleby
• Author: Mr Norman Klein, Adam Johnson and Tim Swallow

This country specific Q&A provides an overview of Real Estate laws and regulations in the Cayman Islands such as ownership proof, due diligence, planning and zoning restrictions, mortgages, environmental contamination and other insight into the real estate industry's most common issues.

OVERVIEW OF CAYMAN ISLANDS REAL ESTATE

The Cayman Islands maintains a title-by-registration system for real property, whereby the Registrar of Lands maintains a public register for each land parcel upon which registrable dealings are entered.

While the land registration system is primarily governed by legislation, case law will also apply and, in instances where there is no relevant local statute or case law, decisions in commonwealth jurisdictions may be considered.

The local real estate market has continued to produce strong sales and price results over the last 12 months:

1. High-end condos on Seven Mile Beach continue to sell quickly at increasing prices, prompting several major new development / redevelopment projects.
2. The leisure and tourism sector remains active despite the temporary downturn in global travel, with several projects underway. Developments of note include the Mandarin Oriental resort and residences at Beach Bay, the Grand Hyatt resort and residences along Seven Mile Beach and the Kailani Grand Cayman resort and residences along Seven Mile Beach.
3. In addition, the Cayman Islands' largest developer, Dart Realty, recently completed the renovation and rebranding of the Hampton by Hilton Grand Cayman hotel, as well as commencing construction of the Hotel Indigo near Seven Mile Beach. Dart Realty has also completed phase one of a new residential complex and nears completion of two new ten storey buildings (one residential, one commercial), both within in its self-sufficient town known as Camana Bay.
4. Remediation work on the George Town landfill site continues with plans for new waste-to-energy and recycling infrastructure that will significantly reduce the amount of new landfill.
5. Construction has commenced on a new hotel and residences in central George Town, which is set to kick-start revitalisation plans for the capital.

WHAT IS THE MAIN LEGISLATION RELATING TO REAL ESTATE OWNERSHIP?

• Registered Land Act (2018 Revision)
• Registered Land Rules (2018 Revision)
• Strata Titles Registration Act (2013 Revision)
• Strata Titles Registration Regulations (2006 Revision)
• Development and Planning Act (2021 Revision)
• Development and Planning Regulations (2022 Revision)
• Building Code Regulations (Revised)
• Stamp Duty Act (2019 Revision)
• Land Holding Companies Share Transfer Tax Act (2022 Revision)
• Property (Miscellaneous Provisions) Law (Revised)
• The Prescription Act (2018 Revision)
• The Public Lands Act (2020 Revision)
• The Limitation Act (1996 Revision)
• The Land Acquisition Act (1995 Revision)
• Roads Act (2005 Revision)
• Local Companies (Control) Act (2019 Revision)
• The Trade and Business Licensing Act (2021 Revision)
• The National Conservation Act, 2013

HAVE ANY SIGNIFICANT NEW LAWS WHICH MATERIALLY IMPACT REAL ESTATE INVESTORS AND LENDERS COME INTO FORCE SINCE DECEMBER 2021 OR ARE THERE ANY MAJOR ANTICIPATED NEW LAWS WHICH ARE EXPECTED TO MATERIALLY IMPACT THEM IN THE NEAR FUTURE?

At the time of writing, there are proposals to reform the law applicable to mortgage enforcement, which will create a more consumer-friendly environment for those securing financing over Cayman Islands real estate.

There are also longstanding proposals to modernise the Strata Titles Registration Act (2013 Revision) and update the Development Plan 1997.

The Cayman Islands Land Registry continues its work to implement e-conveyancing, and plans to propose a number of legislative initiatives to further streamline the land registration process.

HOW IS OWNERSHIP OF REAL ESTATE PROVED?

Title to real property is evidenced by registration at the Cayman Islands Land Registry. Certain real property is beyond the scope of the registered land system, such as public roads and coastal waters. Some canals and inland water are however located on registered land parcels.

The land register for a parcel of land indicates:

1. whether title is absolute or provisional;
2. whether title is freehold or leasehold;
3. whether the land is private or crown land;
4. the area of the land (approximate size only, unless a fixed boundary survey has been registered);
5. the name and address of the owner(s);
6. details of any matters of which the title has the benefit (e.g appurtenances such as easements, positive covenants etc.); and
7. details of any matters to which title is subject (e.g easements, leases, restrictive covenants, financial charges etc.).

In broad terms, the land register is definitive and supported by a state-backed indemnity, although it can be subject to rectification to deal with matters such as error and fraud. There are other limits to this principle of indefeasibility of title, such as overriding interests and overriding statutes. In addition, indefeasibility of title does not protect a proprietor who has acquired real property absent valuable consideration or from any in personam liabilities.

ARE THERE ANY RESTRICTIONS ON WHO CAN OWN REAL ESTATE?

Generally speaking there are no restrictions on natural persons, trustees, incorporated bodies or unincorporated bodies (whether foreign or domestic) from becoming a registered proprietor of real property, although certain formalities may apply depending on the type of proprietor.

However, the carrying on of business from or in relation to real property may also require local business licensing. The ownership of one residential property for personal use and up to two further residential properties for rent will not generally be deemed to be carrying on business in the Cayman Islands, whereas the letting of any commercial real estate will generally be deemed to be carrying on business in the Cayman Islands.

There are restrictions designed to protect local businesses against foreign investors proposing to carry on business in the Cayman Islands. Foreign investors in real estate development projects willing to persevere will often be granted the necessary licences if their investment is substantial.

WHAT TYPES OF PROPRIETARY INTERESTS IN REAL ESTATE CAN BE CREATED?

Real property is held as:

1. freehold - held by the registered proprietor indefinitely; or
2. leasehold - held by the registered proprietor for the term of the lease.

The Strata Titles Registration Act (2013 Revision) provides for the registration of a strata plan against a freehold or leasehold land parcel to create individual strata lots, each of which is registered with its own derivative title and the remainder held as 'common property' by a strata corporation. Strata titles are often used as a mechanism to govern multi-unit developments, such as office buildings, shopping centres and condominium developments.

The Registered Land Act (2018 Revision) allows for the registration of a volumetric plan against land parcel, a mechanism which allows the subdivision of a parcel into several three-dimensional parcels. In 2021 Appleby registered the first volumetric subdivision in the history of the jurisdiction.

A contractual licence can also be used to allow occupation or use of real property, but this is a personal right and does not create a registerable interest.

IS OWNERSHIP OF REAL ESTATE AND THE BUILDINGS ON IT SEPARATE?

Not unless otherwise agreed. Real property includes land...