As if the reputation of the Bahamian lawyer has not suffered enough, according to this report by the Nassau Guardian, the former President of the Bahamas Chamber of Commerce suggests that local banks should establish facilities for funds intended to be held in escrow, the suggestion made on the ‘rise in court cases involving money held in escrow and the lawyers tasked to oversee it’. This crisis is seen primarily in commercial transactions in which monies paid expenses are held in escrow by attorneys representing both parties, who are held responsible for making the appropriate disbursements to the vendor and supplemental expenses attached to the property (i.e. stamp duty fees, real property tax, utilities).
Traditionally, local attorneys have held monies in escrow in order to ensure that the appropriate disbursements are made prior to payment, and in order to ensure that their legal fees are paid for the all necessary services provided for the transaction. In dealing with any legal action or commercial transaction, clients should either receive notice of the intended disbursement from their attorney, or obtain a summary of all expenses to be paid (i.e. commercial transactions).The use of escrow funds other reasons apart from the benefit of the client however, is a serious breach of fiduciary duty held by the attorney and will normally lead to disciplinary actions exercised by the Disciplinary Committee of the Bahamas Bar Association.
Ultimate control of an escrow account however, may exist in circumstances whereby the attorney and client become joint signatories to a designated account, the arrangements of which can be made by the local bank or financial institution. This ensures the complete communication and review of the disbursements made between an attorney and a local client, but may prove more tedious for foreign clients, and unacceptable by attorneys from larger law firms. Foreign clients who hold concern for funds held in escrow by a local attorney for commercial transactions should speak to their attorney to determine whether separate payment of the consideration for the property and payment for expenses (i.e. government fees, legal fees, etc.) could be paid separately and directly to the respective parties. The attorney may agree to this, save for the direct payment of the deposit, which would be required to be held in escrow by the attorney in order to ensure that legal fees are paid. Bear in mind that there are no set rules concerning escrow arrangements between the client and their legal representative.
The suggestion of local banks and financial institutions providing an escrow facility may prove to be beneficial, but issues of confidentiality, ‘institutional red tape,’ and increased risk of third party liability automatically become immediate hurdles for this kind of service. Perhaps the call for greater swift disciplinary penalties for dishonesty and fiduciary negligence are a better suggestion for this concern.
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There have been a number of noteworthy legislative changes this 2010 year, the most significant of all being the increase in stamp duty to be paid in real property conveyances in The Bahamas. The amount of stamp duty charged is based on the purchase price of the property and can be paid by either the vendor or purchaser, or can be shared equally between the parties involved in the transaction. The new stamp duty rates are:
