Time shares have always enjoyed a profitable niche within The Bahamas. Widely known for hosting high quality accommodations and service within its vacationing facilities, the time share business has increasingly crystallized its presence all throughout the burgeoning islands of the archipelago. The flexibility and cost effectiveness offered by time share resorts have played beneficial role in the success of its business model since its inception in the 1960s and in The Bahamas, more than 28 time-sharing projects with more than 900 time-share units and more than 48,000 unit weeks operating in the islands since establishment of the Vacationing Plan and Time-Sharing Act came into force in the year 1999. It is estimated that timeshare resorts inject about $87 million annually into the Bahamian economy, and employs in or around 1,000 persons.

Function and Powers of Time Share Regulators

Vacation and time share developments are regulated by the Bahamas Investment Authority (BIA) in which the Prime Minister sits as its Chairman. The BIA serves as both regulator and as a central advisory for persons of international community willing to invest in the designated economic areas reserved for foreign investment. In accordance with the Vacationing and Time Share Act, all persons or corporate entities engaged in constructing or developing, marketing, selling or managing a time share project in The Bahamas are required to obtain a license from the BIA. Along with the power to grant licenses for development projects, the Vacation and Time Share Act provides the BIA with the authority to conduct a number of additional functions which include:

• Implementing conditions for the grant of a license;
• Approving the transfer of  a license;
• Revoking or suspending the grant of a license;
• Determining the financial abilities of all applicants;
• Authorizing the inspection of time share facilities;
• Providing an exemption of customs duties for the construction of time share facilities;
• Impose and enforce penalties;
• Suspend licenses granted to managing agents;
• Appointing an interim managing agent for time share facilities

Pre-sale Requirements

Conditions for Grant of Approval of Time Share License

As previously mentioned those individuals involved in the construction, marketing, selling, or managing a time share development in The Bahamas are required to be licensed as a developing owner, marketing or managing agent. Licenses granted by the BIA remain in effect throughout the life of the time share project and at the discretion by the BIA. It is important to note that the time share developers should refrain from taking any action which could in any way be interpreted as advertising, marketing or selling time share interests in The Bahamas without authority approval; otherwise, it may face severe penalties under the act, including jail for the principals and substantial monetary fines.

In constructing time share facilities, the applicant must satisfy the BIA that it has the financial ability to complete the development with all of the requisites necessary for its proper operation. In addition to this obligation, the BIA will not grant a developing owner’s license unless satisfied that purchasers of the timeshare interests will have a right to occupy and use those accommodations and facilities for certain periods, not in excess of six (6) months in any year over a period of years not exceeding forty (40) years.

Generally speaking, whether the applicant wishes to construct, market, manage, or sell a time share in The Bahamas are required to satisfy the BIA that the time share development has made provision for, a summary of which can be found here .

Licensing Fees

Licensing fees currently range as follows, depending on the number of units in the timeshare project:

Developing Owner License Fees

Where project consists of:

• not more than 10 units ………………………………………………………….. $1,000.00
• more than 10 but not more than 20 units …………………………………..$2,000.00
• more than 20 but not more than 50 units …………………………………..$3,000.00
• more than 50 units …………………………………………………………………$5,000.00

Marketing Agent License Fees

Where project consists of:

• not more than 10 units …………………………………………………………….. $    500.00
• more than 10 but not more than 20 units ……………………………………..$1,000.00
• more than 20 but not more than 50 units ……………………………………. $1,500.00
• more than 50 units ………………………………………………………………………… $2,500.00

Managing Agent License Fees

Where project consists of:

• not more than 10 units ……………………………………………………………… $   25.00
• more than 10 but not more than 20 units ………………………………………$   50.00
• more than 20 but not more than 50 units ………………………………………$   75.00
• more than 50 units …………………………………………………………………….$100.00

Appointment of a Managing Entity

The Vacationing and Time Share Act provides that a managing agent must be appointed by the time share developer prior to the first sale of a time share interest., The developing owner will be considered the managing agent of the timeshare plan in the absence of an appointment or upon resignation of a managing party, unless and until it clearly provides in the public offering statement that a different party will serve in such capacity, who has acknowledged in writing that it has accepted the duties and obligations of serving as the managing agent. The developing owner will continue to be jointly and severally responsible for the obligations of the managing agent unless and/or until:

• the time share project is completely sold out;
• the developing owner no longer retains any estate, right, title or interest in or to the time share project; or
• the developing owner has voluntarily divested itself of its license.

Statutory Duties Held by the Managing Entity

The managing agent has a legal duty to manage and maintain all accommodations and facilities within the time-share project along with providing to all purchasers an itemized annual budget which includes all estimated revenues, expenses, and collecting an assessment of all common expenses held by the time share plan. The managing entity must also ensure that all books and financial records are maintained in accordance with International Accounting Standards and are made available for inspection by any purchaser or any authorized agent of such purchaser. Other statutory duties held by the managing agent include:

• scheduling occupancy of the time-share units, when purchasers are not already entitled to use specific time-share periods, so that all purchasers will be provided the use and possession of the accommodations and facilities of the time-share plan with respect to which they have purchased;
• performing any other functions and duties which are necessary and proper to maintain the accommodations or facilities as provided in the time-share plan and as advertised; and
• the managing agent shall maintain among its records and provide to the BIA upon request a complete list of the names and addresses of all purchasers and owners of time-sharing interests.

Right to Deny Delinquent Purchasers

The managing agent of any time-share plan have the statutory right to refuse the use of the time share accommodations and facilities to any delinquent purchasers (or parties claiming under the delinquent purchaser) who fail to provide payment of any assessments made by the managing agent. According to the Vacationing and Time Share Act, a purchaser is considered delinquent in the payment of a given assessment upon the expiration of sixty (60) days after the date the assessment is billed to the purchaser or sixty (60) days after the date the assessment is due.

Public Offering Statement

The act requires the developing owner to file with the Bahamas Investment Authority a public offering statement that contains all of the pertinent documents used in connection with the time share development, including all sales, marketing, and registration materials to be used in jurisdictions other than The Bahamas. The public offering statement is subject to the BIA’s approval, unless the authority provides an exemption from this requirement which can be obtained via application. The BIA may grant either a partial or complete exemption if it is satisfied that the applicant is financially sound, and that the foreign jurisdiction in which such time share project is advertised, marketed and sold, provides adequate legislative protection for time share purchasers. The BIA will require that this protection will be extended to any  purchaser who purchases their timeshare interests as a result of the marketing within the foreign jurisdiction.

The public offering statement must be given to each on-site purchaser prior to the execution of the purchaser’s contract. In applying for the approval for the grant of the time share license, the developer must file with the Bahamas Investment Authority a detailed public offering statement containing numerous disclosures regarding the timeshare development. The Vacationing and Time share Act has established a number of statutory requirements which must be included in every public offering statement, the details of which can be found here .

Time Share Agreement

The developing owner or its managing agent must apply to the registrar of vacation plans and time-sharing for the purpose of registering each purchaser’s rights in the Register of Time-Sharing Interests within sixty (60) days of execution of the purchaser’s time share agreement, and holds a duty to inform the Registrar of changes in the ownership of time share interests. The contract must be submitted and approved by the Bahamas Investment Authority, and upon its execution, the developing owner holds the obligation to provide each purchaser with a certificate or other evidence of such purchaser’s time share interest within sixty (60) days of the execution of the contract in a form approved by the BIA. Legislative commitments held by the time share developer may be delegated to management agent provided that the developing owner will remain jointly and severally liable for compliance with this requirement.

The Vacationing and Time Share Act provides an outline of conditions which must be included in a purchaser’s time share agreement including the disclosure of the purchaser’s seven-day rescission right, and any variation to the conditions of the time share agreement require the written approval of the BIA. In accordance with the Vacationing and Time Share Act each seller shall utilize and furnish each purchaser with a fully completed and executed copy of a contract pertaining to the sale which shall include the following information which can be found here .

Non-disturbance Clauses

At present, the Vacation and Time Share Act proscribes any foreclosure, exercise of power of sale, or any right or remedy under a mortgage or other debt instrument covering all or any portion of the time share project. The Act also prohibits the extinguishment or impairment of any purchaser’s interest in the time share project, regardless of whether the mortgage is given or filed for record prior to completion of any such development. If the time share developer finances the acquisition of the property on which the time share development will be located pursuant to a mortgage, or any other debt instrument encumbering the time share property, a non-disturbance clause must be included in the underlying debt instrument for the sake of protecting the interests of time share purchasers.

(To be Continued…)

Mario L. McCartney [esq.], B.A [Hons], LLB [Hons.] practices as Founder and Principal of the Chambers of LEX JUSTIS, a boutique law practice in Nassau, New Providence, The Bahamas. While presently engaged in general legal practice, Mr. McCartney’s specialty lies in debt recovery and offshore financial and corporate services, and is currently registered as a Compliance and Anti-Money Laundering Reporting Officer (CMLRO) for his Chambers. Mr. McCartney is also the present editor and main contributor of LEX JUSTIS blog site and welcomes all opinions and comments to his articles.

For further information on all legal services provided by Mr. McCartney please visit the LEX JUSTIS website @ www.lexjustis.com or email him at mmccartney@lexjustis.com, mario.l.mccartney@gmail.com.