Dramatic amendments to Bermuda's immigration legislation have raised fresh considerations for any Bermudian married to a non-Bermudian ("Couple") when acquiring or otherwise dealing with local real estate.

The amendments to Part IV of the Bermuda Immigration and Protection Act 1956 ("the Act") were made by way of the Bermuda Immigration and Protection Act 2007 and the related guidance notes and policy (together "the Amendment Act").

While the Amendment Act did not affect the general ability for a Couple to acquire a property in joint names with the benefit of a licence granted to the non-Bermudian spouse, it has affected (i) the acquisition of more than one property by a Couple; and (ii) acquisition and financing transactions conducted in the Bermudian's sole name where the non-Bermudian provides financial assistance to the Bermudian spouse in respect of the property ("Financial Assistance") or "benefits" from the property.

Financial Assistance and "benefit" are widely defined within the Amendment Act. Financial Assistance relates to any contributions, including mortgage payments or acting as guarantor against a loan. "Benefit" includes but is not limited to being able to physically occupy the property as a result of the acquisition.

The Amendment Act precludes a Couple from acquiring more than one property (for investment purposes for example) and it also precludes the non-Bermudian spouse from providing Financial Assistance or benefiting from a property held in the Bermudian's sole name without a licence.

Thus, where a Couple now seeks to acquire property, a licence must be obtained regardless of whether the non-Bermudian is taking ownership together with their Bermudian spouse or simply providing Financial Assistance. The only exception is in rare cases where the Bermudian can demonstrate to the Department of Immigration's satisfaction that the acquisition is possible with no Financial Assistance from the non-Bermudian spouse.

Similarly, where a Couple is already in possession of a property, either in the sole name of the Bermudian or in joint names, and wishes to secure funds by way of a loan against it, a licence from the Department of Immigration is now required if the non-Bermudian spouse is to be a party to the borrowing. The same test applies in this instance – the licence is necessary unless the Bermudian can enter into the loan entirely independently of his or her non-Bermudian spouse. In the normal course, a licence concerning land from the Department of Immigration carries with it a number of restrictions:

¦ the land is only to be used for the purpose set out in the licence application;

¦ the land may not be developed or altered so as to add to the number of potential residential valuation units;

¦ the land may only be rented out or used for profit with the prior written consent of the Minister of Labour, Home Affairs and Public Safety;

¦ the land may not be sub-divided or the boundaries changed;

¦ and, the licence holder shall dispose of any other land in Bermuda held by him or on his behalf, to an independent third party, within 12 months of the date of approval of the licence application.

Where a licence is issued by the Department of Immigration for a Couple, however, these restrictions fall away due to the involvement of the Bermudian spouse. As such, the property will be capable of development post-acquisition or at any time during the period of ownership by a Couple. Equally, the property can be rented and sub-division of the property (where possible under planning regulations and with the appropriate planning permissions) can be pursued.

However, it is important to note that the above restrictions will become valid and enforceable in the event that the Bermudian spouse ceases to be an owner of the property and the non-Bermudian spouse therefore becomes sole owner. This could happen, for example, upon the death of the Bermudian spouse or on a transfer of the property pursuant to a matrimonial divorce order. It is also encouraging for a Couple to note that spousal applications are only subject to an application fee (which would apply in any event) of $1,335, rather than the full licence fee of 25 percent of the market value of the property (in the case of freehold properties such as free-standing houses) or 18 percent (in the case of condominiums) which would be payable in the case of a standard non-Bermudian licence application, thus creating a tax saving.

One well-publicised area of concern that has been raised by the Amendment Act involves the acquisition of more than one property by a Couple. A Couple may not acquire a second property without having disposed of the first unless they are able to demonstrate to the Department of Immigration's satisfaction that subsequent properties are being acquired without Financial Assistance by the non-Bermudian spouse. As such, although the Amendment Act has created additional steps for a Couple, expense has ultimately been minimised and the overwhelming number of restrictions that would ordinarily apply under a licence from the Department of Immigration will not apply unless the Bermudian party is removed from title at a later date.

Attorney Stephen Males is a member of the Property Practice Group of Appleby. Copies of Mr. Males' columns can be obtained on the Appleby website at www.applebyglobal.com. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.