There are lending opportunities throughout the Caribbean, but every location has different sets of laws. Laws can be the same as in U.S.—such as in the U.S. Virgin Islands, but even there, the process to foreclose can be different. It’s critical that one understands the differences throughout the region.
One example in the Bahamas was a $5.17 million loan secured by four oceanfront residential parcels with five residences and additional land—the long-time former estate of the Parker Family of Parker Brothers games fame that will be restored and portions marketed for sale. Because of the site’s historic significance and prime location, the project required close cooperation with the local district council and Bahamian government.
And because a lending entity is required to be approved in the Bahamas, it was necessary to create a new LLC to close the loan. It had to be a Bahamian LLC, and the principals were required to provide banking references and other information, including a criminal report. While sound policy, it does delay the closing process while creating a need for lenders to be prepared and licensed in advance in order to close loans quickly. One also has to pay annual fees associated with licensing, as well as reporting related to such. Not doing so will delay the closing because of the need to again go through a 6-8 week approval process.
When it becomes necessary to foreclose, that process varies throughout the region as well. In St. Thomas, USVI, for example, a borrower has the right to redeem for up to 180 days after foreclosure. In other words, even if a property has been foreclosed and there is a successful buyer at the foreclosure sale, that buyer cannot take possession and the lender doesn’t get their money for six months because the borrower is allowed one last opportunity to repay in full.
In St. Lucia, on the other hand, a foreclosure process was begun recently, and the borrower was able to pay the lender off during a process that was reasonable. Many jurisdictions do realize that the more lender-friendly they are and more quickly lenders are allowed to foreclose on defaulted loans, the more likely that lenders will be willing to make future loans there—which benefits the country.
And in any case, those making loans throughout the region are strongly advised to have local counsel and an on-the-ground construction or property manager to provide a comfort level. For new construction in particular, it is important to be able to monitor the process and make sure the money being advanced is being well spent.