Law & Society

While there may be very good opportunities for investment in St Lucia, there are several points which must be considered when one is purchasing property as a foreign investor. This guide highlights the top five. 1 St Lucia’s Legal System is unique

St Lucia’s legal system can best be described as hybrid because it is influenced by both the English common law and French civil law. As a result, while St Lucia has a Civil Code, it also utilizes the common law in instances where the code is silent. This unique system may have legal consequences on your property purchase. For this reason, always obtain legal advice before formally entering into any commercial transaction.

2 Not all Estate Agents are created equal

It is common practice in St Lucia for property owners and developers to list their properties with estate agents. There are a wide variety of local and international agents who can advise you about investments available on island. To ensure you have a hassle free purchase, ensure you choose a reputable agent.
At the very least, the estate agent should be a member of the local real estate association. This association will have their own vetting procedures for membership as well as a code of conduct which the members will be required to follow. Dealing with members means you can lodge a complaint to the association if they act in an unethical or illegal manner.

While the estate agent will most likely represent the seller, you want to ensure that they will act in an ethical, legal and professional manner towards you as the buyer. Do not be afraid to ask the difficult questions to clarify the extent to which they will act in your best interest.
Always ask for key points to be sent to you in writing and carefully read all documents before signing. If you are in doubt, consult a lawyer.

3 The seller owes you no duty of disclosure

Very often you will inevitably establish a relationship either with the estate agent or seller of the property you wish to purchase. In circumstances such as these, it is easy to forget that you are engaging in a serious business transaction in which the estate agent or seller are technically your adversary.

While a good agent will make every effort to find a suitable property for you, their allegiance is normally to the seller particularly if there is an agreement between them. This will affect the extent to which the agent can act on your behalf.

Firstly, while the agent cannot lie to induce you into the deal, they are not obliged to freely volunteer information about the property. For example, they are not obliged to tell you about any defects in the building or if neighbors are excessively noisy. You therefore need to carry out sufficient due diligence including asking all the important questions about the property. Trying to file claims against agent or seller after a purchase will be costly and time consuming, especially if you are relying on their oral word.

Any important facts which you base your purchase on should be set out in writing and that if there are any issues which you are concerned about, obtain independent third party advice.

4 A license is required in order to purchase property in St Lucia

In order to purchase property in St Lucia, you will need to obtain an alien land holding license. This is a document from the government giving you permission to buy property even though you are not a national of St Lucia.

Buying property in St Lucia is fairly straightforward. Once you have entered into an agreement for sale with a seller on a particular property, you can apply for the necessary license. The license will only apply to the specific property. A separate license will be required to obtain any additional property.

The administrative charge for applying for the license is approximately US$1,850 (£970).
The application process requires you to provide proof of identity as well as other information about your background and financial standing. This includes:
1. Four (4) Passport sized photos
2. Certified copy of data pages of passport
3. Bank References
4. Short form Curriculum Vitae or Resume
5. Police Certificate of Good Character or Police Report
6. Full set of certified Fingerprints from a Police Station (Can be done in St Lucia)

Applications can take as quick as 6 weeks and as long as 6 months to process. It is dependent on the complexity of your particular circumstances and the speed with which the relevant government bodies deal with the application.

Once you have obtained an Alien’s License, you will need to complete the process by executing a Deed of Sale. A Deed of Sale is the legal document prepared and signed before a lawyer, which transfer the property from the seller’s name to your name. If you are securing funding and require a mortgage to be secured against the property, your lawyer will also have to prepare and execute a deed to register the mortgage against the property.

Transactions do not always go according to plan and it is not uncommon for the alien license process to take longer than anticipated. Time can be a major consideration particularly in relation to property purchases where financing has been obtained or agreements carry deadlines. Always ensure to factor in additional time when contracting with third parties so as to avoid potential financial consequences. For example, when signing an agreement for sale, ensure it enables you to extend the time for completion if you have not obtained the required license in time.

5 Lawyers are not obliged to carry professional indemnity insurance
You will require the services of a lawyer in order to purchase property. You should note that lawyers in St Lucia do not generally carry professional indemnity insurance. This means that carrying out background checks are critical. If you fail to choose a reputable, competent firm, you may risk losing on your investment.

At the very least you should carry out the following checks:
• Ensure your lawyer has a practicing certificate and is able to practice in St Lucia.
• Ask for a CV or company profile which sets out the qualifications and experience of the lawyer including the work they do and type of clients they represent.
• Get references and follow them up.
• If you are not confident about the firm’s reputability but are prepared to take the risk nevertheless, do not hand over any substantial sums of money or alternatively insist that it be held in a joint account. The setting up of a joint account may be costly and time consuming but will provide you with some degree of protection.
• Be wary of lawyers offering substantially reduced fees. The old adage ‘You get what you pay for applies.’ Most reputable firms will not substantially reduce their fees without reason or justification, as it ultimately affects the quality of the service they provide. Furthermore, for lawyers it is unethical to do so.

Investment Rights in immovable Property by NRIs in INDIA

“An Overview”

Synopsis:

- FEMA Outline

- Non Resident Indian (NRI)

- Person of Indian Origin (PIO)

- Legal Counseling Issues

- Acquisition of property by NRI in India

- Transfer of Property by NRI in India

- Acquisition through Permitted Activity

- Matters Which Requires Prior Permission of RBI

v For Citizen of India residing outside India (i.e. NRI)

v For the Person of Indian origin Resident outside India(PIO)

Conclusion.

FEMA Outline:

Reg. 3:

i. It deals with acquisition and transfer of immovable property in India by an Indian citizen Resident outside in India(NRI)

ii. It grants general permission to him to acquire and transfer an immovable property in India other than agricultural or plantation property or a farm house.

Reg.4:

i. It deals with acquisition and transfer of immovable property in India by PIO

ii. It grants a general permission to him to acquire and transfer of immovable property in India other than Agricultural or plantation property.

Reg.5:

It grants general permission to a person resident outside India who has secured RBI permission To establish a branch, office or other place of business in India (excluding a liaison Office) to acquire an immovable property in India which is necessary for or incidental to carrying on the permitted activity.

Reg. 6:

It deals with the repatriation of the sale proceeds by an NRI or a PIO, of an immovable Property (other than agricultural land or plantation property or a farm house) in India subject to the satisfaction of certain stipulated conditions

Reg.7:

It prohibits the acquisition or transfer of immovable property in India by citizens of certain neighboring countries, whether such individual is a resident Of India or not.

Reg.8:

It prohibits the transfer of an immovable property in India by a person resident outside India (other than an NRI or a PIO); i.e., a foreigner, without prior permission of RBI.

Non Resident Indian (NRI):

If we Read section 2(w) r.t.w. section 2(v) of FEMA 1999

And

Para (VI) of F.E.M (Deposit Regulation 2000) together, it can be summarized as under:

- An Indian Citizen residing outside in India also

- A foreign Citizen of Indian Origin residing India is defined as Non-Resident Indians.

Person of Indian Origin (PIO):

A PIO has been broadly defined as a citizen of any country other than Bangladesh or Pakistan [certain Regulations also include Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan] if:

- At anytime he has held an Indian passport; or

- If he or either of his parents or grand parents was a citizen of India by virtue of Constitution of India of the Citizenship Act 1955; or

- The person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b) above.

Legal Counseling Issues:

- Opening of a Bank Account: Foreign national’s resident but not permanently resident in India are permitted to maintain and operate bank accounts in India only with authorised dealers.

- Acquisition, Management & Transfer of Immovable Property: Section 6(5) of FEMA 1999, provides that a person resident outside India can hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was a resident in India or inherited from a person who was a resident in India.

- Issues Relating to Borrowing & Lending: The Issues and Limitations relating to borrowings and Lending has been regulated by Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 issued by the RBI

Acquisition of property by NRI in India:

1.No special permission is required for an Indian citizen residing outside India to acquire (by purchase or gift) any immovable property in India other than agricultural land, plantation property or a farmhouse (Reg. 3(a)).

2. However, the restriction on acquiring agricultural land, plantation or farmhouses is applicable to all nonresidents. The restriction on ‘agricultural properties’ continues from the time of FERA. The RBI does not approve such collectively.

3. Under the old FERA, a declaration had to be filed giving details of the property. Now this process has been dispensed with. However the Bank should be informed about full details of the property and costs incurred. This can, in a way, help at the time of repatriation repatriation of sale proceeds of the property.

4. It is notable that only non-residents who are Indian citizens, or who are of Indian origin (referred to as NRI) have been permitted to invest in immovable properties in India. In other words, foreigners are by and large not allowed to buy immovable properties in India.

5. Further, the non-residents who are Indian citizens or persons of Indian origin can also acquire any property (including agricultural properties, etc.) by way of inheritance. This is because to bequeath a property is a natural right. It cannot be “given” by a law. As a corollary, the heir can acquire a property as inheritance. However once having acquired the property, restrictions on use or holding can be imposed under the law. Thus, even if agricultural property etc. is inherited, the agricultural activities cannot be conducted. A person may have natural plants, trees etc. on the land. However, he cannot grow the same with the intention of earning income.

Transfer of Property by NRI in India:

For an Indian citizen residing outside India, there is no permission required to transfer (whether by sale or gift) immovable property in India.

2. However, in case of agricultural properties, etc., the same can be sold only if the acquirer is an Indian resident.

3. If the proposed acquirer is a non-resident (whether Indian citizen or a person of India Origin), the property can not be sold. This is a corollary to the restriction on acquiring the agricultural land, etc. (Though not specified no property- whether agricultural or otherwise- can be sold to outright foreigners (non ONR) as they are not allowed to buy property in India (Reg. 3(b) and 3(c)).

Acquisition through Permitted Activity:

A person resident outside India who has been permitted by The RBI to establish a branch or an office or a place of business in India (excluding a Liaison Office), has a general permission of the RBI to acquire any immovable property in India who is necessary for or incidental to carrying on such an activity.

2. However, such an acquisition is subject to the due compliance with all other applicable laws, rules, regulations or directions for the time being in force.

3. Further, in all such cases, a Declaration in the prescribed Form IPI is required to be filed with The RBI within 90 days of the acquisition of the immovable property (Reg.5(a)).

4. The form IPI is a simple form which requires very simple and general information such as name and address of the acquirer, description and full details of the location, of the property, purpose of acquisition, name and address of the seller/lesser, date and cost of acquisition and details about the sources of funds etc.

5. Further such a person is also permitted to mortgage such an immovable property to an authorized dealer as a security for any borrowing (Reg. 5(b)).

6. However, such a person requires the prior permission of The RBI to transfer such a property by way of a sale or otherwise.

Matters Which Requires Prior Permission of RBI:

v For Citizen of India residing outside India(i.e. NRI):

a) To acquire agricultural or Plantation property or a farm house in India.

b) To Transfer of agriculture or plantation property or a farm house in India to another NRI or PIO.

c) To transfer any Immovable property in India to a person resident outside India (other than to another NRI or PIO).

v For the Person of Indian origin Resident outside India(PIO):

a) To acquire any Immovable property in India (other than agricultural or plantation property or a farm house) by the way of purchase.

b) To acquire Agricultural or Plantation Property or a farm House in India by way of purchase or gift (other than by way of Inheritance).

c) To acquire any Immovable property in India (other than agricultural or plantation property or a farm house) by the way of a gift from a foreign national resident out side India (other than another NRI or PIO).

d) To transfer any Residential or commercial Property in India by way of Gift to a person Resident outside India(other than NRI or PIO)

e) To Transfer any immovable property in India by way of sale to another NRI or PIO.

Conclusion:

Although the FERA act is been repealed and FEMA came into the existence but rights of Nri’s are still limited. If we talk about their Investment rights especially in Immovable property they looks very compact and vague its needs to be amended just by looking the changing approach of NRIs towards our country and needs to give more privileges to them regarding the Investment Policies.