Cayman Islands: Dealing In Land

Last Updated: 9 February 2006

System of Land Registration

In 1971, the Government of the Cayman Islands enacted the Registered Land Law. This Law introduced a system of land registration which is accurate, efficient, and simple. This system is similar in a number of ways to the registered land system in the United Kingdom and to the Australian Torrens System (invented by Sir Robert R. Torrens, an Australian who on the 27th of January, 1858, introduced a bill in South Australia which later became in Australia The Real Property Act). The Torrens system has been constantly refined and, since its inception, has been adopted in many countries throughout the world in one form or another.

The Torrens System

This system of land registration consists of three fundamental principles:-

1.The Mirror Principle
Save and except for overriding interests, the Register of Titles gives a complete and accurate picture of all facts material to the title shown, i.e. a title is free from all adverse burdens, rights, and qualifications unless they appear on the Register.

2.The Curtain Principle
The proposing purchaser does not have to concern himself with any trust and/or equities which are not shown on the Register, which is the sole source of information.

3.The Insurance Principle
The title as shown on the Register is guaranteed, in favour of the existing registered proprietor, except where registration has been obtained by fraud.

Important Features of the System of Registered Land in the Cayman Islands

1. Total dispensation with the repeated need to trace title for forty to sixty years or to the root, which was often an expensive, tedious and inconclusive method, and the substitution for it of documents and plans kept in a public registry which reveal all the facts, rights and encumbrances (except for overriding interests, as defined).

2.The compiling of a comprehensive record of land owners and their titles, subject only to such encumbrances and other burdens as appear on the Register, and overriding interests, if any.

3.The provision of an accurate plan based on an ordinance map showing the location of the land and its approximate area.

4. The provision of a simple way to transfer land and to register charges (mortgages), leases, restrictive covenants and other interests.

5.The provision of a simple way to protect prospective purchasers and persons having an unregistrable interest in land by filing a Caution.

6.The provision of a simple Land Certificate (if required by the registered proprietor) as proof of ownership which certificate reflects a true and accurate picture of the Register on the date of issue.

7. The provision of the right to inspect the Register to ascertain for the prospective purchaser, chargee, or lessee its exact state and the ability to apply for stays of registration in order to protect such persons.

8. The ease with which mistakes may be detected and cured by the Land Registry.

9.The existence of an indemnity in respect of the title as reflected on the Register.

10. The reduction of litigation pertaining to title.

Overriding Interests

An overriding interest means all encumbrances, interests, rights and powers not entered on the Register but subject to which registered dispositions take effect. Section 28 of the Registered Land Law lists them as follows:-

(a) Rights of way, rights of water and any easement or profit subsisting at the time of first registration under the Law.

(b) Natural rights of light, air, water and support.

(c) Rights of compulsory acquisition, resumption, entry, search, user or limitation of user conferred by any other law.

(d) Leases or agreements for leases for a term not exceeding two years and periodic tenancies.

(e) Any unpaid moneys which, without reference to registration under this Law, are expressly declared by any law to be a charge on the land.

(f) Rights acquired or in the process of being acquired by virtue of any law relating to the limitation of actions or by prescription.

(g) The rights of a person in actual occupation of land or in receipt of the rents and profits of it save where enquiry is made of that person, and the rights are not disclosed.

(h) Electric supply lines, telephone, telegraph lines or poles, pipelines, aqueducts, canals, weirs and dams erected, constructed or laid in pursuance or by virtue of any power conferred by any law.

The Identification of Land in the Cayman Islands

All land in the Cayman Islands is registered. Each title is designated a Registration Section in accordance with its location and a Block and Parcel Number. For example, a parcel of land situated in Bodden Town may be shown on the Register as follows:-

Registration Section Block Parcel Number
Bodden Town44B 601

There are thirty Registration Sections for the Islands - twenty-five for Grand Cayman, three for Cayman Brac and two for Little Cayman.

The Land Register

The Registrar of Lands and his staff are responsible for compiling the Land Register. Each parcel of land which has been brought under the Law has its separate Register which is divided into three parts:-

1. The Property Section
This contains a description of the land, the title, i.e. absolute, provisional, or leasehold, particulars of any appurtenances and the approximate area of the land, together with an indication as to whether a Land Certificate has been issued or not.

2.The Proprietorship Section
This section contains the name and address of the proprietor and a note of any inhibition, caution, and/or restriction which affects the owner's right of disposition.

3.The Encumbrances Section
This contains notes of encumbrances and every right which adversely affects the land or lease. It is to be noted that the Register does not in any section show overriding interests and all titles taken are subject to any such interest. The Registrar of Lands may however direct registration of overriding interests.

Kinds of Title

1. Absolute
An Absolute Title is one which vests in the registered proprietor an estate in fee simple absolute in possession (which can loosely be described as indefeasible ownership) of that parcel of land together with all rights and privileges belonging or pertinent to the land, which ownership is free from all other interests and claims whatsoever not shown on the Register, save for overriding interests. All mineral rights are, however, vested in the Crown.

2.Provisional
A Provisional Title is one which vests the registered proprietor with ownership of land which is subject to the enforcement of any estate, right or interest adverse to or which may be in derogation of the proprietor's title but which must arise before a certain date or by virtue of an instrument or instruments or in any other manner specified in the Register relating to the parcel. A Provisional Title may be made Absolute by the making of an application to the Registrar which must satisfy him that:-

(a) the qualification to which the Provisional Title is subject has ceased to be effective; or

(b) the owner and his predecessors in title have enjoyed twelve years of undisturbed possession and no other effective qualification to which the Provisional Title may be subject exists.

There must be few if any provisional titles now remaining in the Register.

3.Leasehold

This vests in a person a leasehold interest which is set out in the instrument creating the lease.

Ownership of Land

(a) Sole Proprietor

A person or entity may own land in his or its name.

(b) Joint Proprietors

Persons may own land as Joint Proprietors which means that each of them has an equal (but not separate) share in the land and upon the death of any one of them, his share passes to the other(s). A Joint Proprietor of land cannot dispose of it by an inter vivos disposition unless all other owners join in the disposition, and no such interest can be disposed of by Will.

(c) Tenants in Common
Persons may own land as Tenants in Common which means that each person has an undivided share in the land. A Tenant in Common may dispose of his interest by Will, but may not deal with his undivided share in favour of any person other than another proprietor in common of the land, except with the written consent of the other proprietors, which cannot be unreasonably withheld.

Transferring Land

Any person who wishes to transfer land must complete and execute the appropriate Transfer Form and have the Certificate of Identification on the reverse side of the form executed in the presence of a Notary Public. The form must be submitted to the Registrar of Lands, along with the Land Certificate if one has been issued, and all the necessary fees payable.

No transfer of land may be allowed by the Registrar unless all persons or entities who have cautions or charges (mortgages) noted on the Register give their consent or they are removed.

Fees on Transfer of Land

The fees payable on the transfer of land are:-
(a) Stamp duty of seven and one-half percent (7%) of the higher of the total consideration paid
on, or market value of, real estate and fixtures;
(b) Registration fee, CI$10.00; and
(c) Issue of Land Certificate, if requested, CI$6.00.

Land Holding Companies
Under the Land Holding Companies Share Transfer Tax Law, stamp duty is payable on the transfer (as defined) of any shares of a company (local or foreign) which owns an interest in Caymanian land, freehold or leasehold, ("landed property"), provided in the latter case that the original lease was for a term exceeding thirty (30) years. The tax payable is seven and one-half percent (7%) of the total market value of the landed property of the company at the time of the transfer multiplied by a fraction of which the number of shares being transferred is the numerator and the nominal value of the whole of the issued equity capital of the company is the denominator.

The term "transfer" is defined to include every dealing or transaction, whether by the issue of shares, the placement of shares, the grant or exercise of any rights, the exchange of shares, the conversion of shares, the grant or exercise of an option or other means howsoever whereby equity capital undergoes a change of beneficial ownership or proportion of ownership or a change occurs in the entitlement or potential entitlement of any person to a share in the distribution of a corporation's profit or capital. Transfers between trustees or nominees where there is no change in beneficial interest are not "dealings".

Charges (Mortgages)

A person who lends money on the security of land may have the borrower complete the requisite form and the secured debt will be noted on the Register as a charge. No disposition or dealing with that parcel of land will be permitted without the consent of the person registering the charge.

Fees Relating to Charges

(a) On Registration

i. Stamp duty of one percent (1%) of the principal sum;
ii. Registration fee, CI$10.00.

(b) Other
i. Registration of Transfer of Charge, CI$10.00; plus CI$6.00 stamp duty.
ii. Registration of Discharge of Charge, CI$10.00; plus CI$6.00 stamp duty.
iii. Registration of Variation of Charge, CI$10.00, plus stamp duty of one percent (1%) of any additional sum secured or advanced with a minimum of CI$6.00.

Leases
A lease of land for a specified period in excess of two years or for the life of the landlord or tenant or a lease which contains an option whereby the tenant may require the landlord to grant him a further term or terms which, together with the original term exceeds a period of two years, must be in the prescribed form and must be registered in the Land Register. Any other lease is an overriding interest and need not be registered.

Fees Relating to Leases

1. On Registration

(1) Stamp duty is payable as follows:-

(a) where the term exceeds thirty years, the same as on a conveyance on sale of the property;

(b) where any premium or other consideration is paid (other than or in addition to rent) and the term is thirty years or less, the same duty as on a conveyance on sale on the premium or other consideration;

(c) where the consideration or any part of it is rent and the term is thirty years or less:-

i. if the term does not exceed five years, a duty equal to 5% of the average annual rent;

ii. if the term is more than five but does not exceed ten years, a duty equal to 10% of the average annual rent;

iii. if the term exceeds ten years, a duty equal to 20% of the average annual rent.

(2) A registration fee of CI$10.00

In calculating the length of any term, there must be included any period for which, by the exercise of an option or other arrangement, the tenant or his assigns have power to extend the term.

2.Other

(a)On a transfer of lease, stamp duty of seven and one-half percent (7%) of the consideration or market value and a registration fee of CI$10.00.

(b) On a registration of Surrender, CI$10.00 plus CI$6.00 stamp duty.

(c) On a registration of Variation of Lease, CI$10.00 plus stamp duty of CI$6.00 minimum. If the Variation includes an increase in rent or an extension of the term, the duty is calculated by reference to the lease as amended, credit is given for the duty already paid and the Instrument of Variation is stamped in the amount of the excess.

Minors
A person who is a minor may have his name entered on the Register. The Registrar of Lands on notification that a minor has been so entered on the Register will enter a restriction prohibiting any dealings by the minor. A minor is a person who has not attained the age of eighteen (18) years.

Trusts
A person who acquires land in a fiduciary capacity may be entered on the Register as the registered proprietor with the addition of the words "as Trustee". The instrument of trust may be deposited with the Registrar of Lands for safekeeping but does not form part of the Register. The Trustee is deemed under the Law to be the absolute proprietor of the land and no
person who deals with him in good faith and for valuable consideration is deemed to have notice of the terms of the trust.

Easements
An easement is the right or privilege which a proprietor of one parcel enjoys over another parcel of land not owned by him. An easement may be acquired by grant or may be acquired without registration by a proprietor who peaceably, openly and undisturbed enjoys a right over land for a period of twenty years.

Restrictive Covenants
A restrictive covenant or agreement is one which prohibits the user of land, such prohibition being stated in the instrument creating the restriction.

Provisions Which Allow for the Added Protection of Persons Dealing in Land

1. Cautions
When a person has an unregistrable interest in land, e.g. a contract to purchase or a licence over land, he may complete and lodge a form with the Registrar of Lands which will either:-

(a) prohibit the registration of dispositions and the making of any entries on the Register, or

(b) forbid the registration of any disposition and the making of any entry except in the manner provided by the Caution.

2. Restrictions
The Registrar of Lands may, with or without an application being made, place a restriction on any title preventing any dealings with that title. This is usually done to prevent fraudulent and improper dispositions or dealings with that parcel of land.

3. Inhibitions
The Grand Court of the Cayman Islands, upon an application being made, may make an Order prohibiting or restricting any dealings in any particular parcel of land.

Strata Titles (condominium units)
The passing of the Strata Titles Law in 1973 made it possible to obtain a registered, freehold or leasehold, title to a self-contained unit in a building. These units may be housing or business units.

All owners of such units are entitled to the use of the services of the common facilities and are entitled as tenants in common to a proportion of the common areas.

Strata Corporations
On the registration of a Strata Plan, proprietors of all strata lots contained in the Plan automatically become members of a body corporate known as the Strata Corporation. The corporation has certain statutory duties imposed by law; for example, it must see that the buildings are insured and properly maintained.

By-Laws
The management, administration, use and enjoyment of all strata lots and the common property is regulated by the by-laws of the strata corporation.

Transfers and Dealings with Strata Lots
A strata lot is transferred in the same manner as other real property, by completing a Transfer of Land form and lodging it with the Registrar of Lands. The proprietor of a strata lot may lease, charge, or otherwise deal with his lot in the same manner as any other registered proprietor.

Development of Land
The development of land in the Cayman Islands is regulated by the Development and Planning Law, the Regulations passed pursuant to that Law, and the Development Plan (1977). The Laws and the Regulations set out, inter alia, the maximum density of land use, the height of buildings and, dependent upon zoning, the type of use, i.e. residential, commercial, tourist-related developments, and agricultural.

Applications for Development
All applications for permission to develop land have to be made to the Central Planning Authority and should be accompanied with detailed plans.

Application for Approval in Principle to Develop
It is possible to make an application for approval in principle to develop land which, if granted, is usually given subject to full plans being submitted. These plans must comply with the Law and its Regulations.

Development of Hotels
The Hotels Aid Law gives certain incentives to persons wishing to build hotels, including the reduction of import duties on construction materials and furniture and equipment used in the hotel.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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