Monday, April 14, 2008

Jamaican Real Estate - Money and Foreign Exchange Issues

One of the issues foreign purchasers/vendors often concern themselves about is the money aspect of the real estate transaction in Jamaica.

This is due to a number of reasons. Such as:
  1. Money will have to be transmitted to Jamaica from a foreign country
  2. Money will have to be transmitted away from Jamaica to a foreign country
  3. Money laundering laws require persons to declare the movement of large sums of money to bank accounts
  4. Foreign Exchange rates can affect the cost of the transaction or the value of the proceeds of sale.
If you are obtaining your funds from abroad. You should confer with your attorney as to the logistics of the process. In addressing this issue it is important to bear in mind that if a buyer’s cheque is drawn on a foreign account then it will take upwards of 20 working days to clear at a Jamaican bank depending on the particular bank. 20 working days is equivalent to a calendar month so this can delay a transaction seriously. There are other alternatives to having quick access to foreign funds such as, wiring the funds to an account in Jamaica. It is therefore necessary to discuss this with your attorney to address the best method available to facilitate the purchase.

If you are a seller and the funds are to be sent from Jamaica you must consider the customs requirements to declare any funds above a certain amount if you are traveling with the money. Again you may choose the better option to wire same from Jamaica and you will be required to classify the funds. In this case you would identify them as proceeds of sale of real estate. Remember money laundering laws are in effect and large sums of deposits attract attention. Also bear in mind that there are bank costs associated with wiring funds.

The value of Jamaican currency fluctuates regularly and sometimes the movements can be alarming. Yesterday the value relative to the US currency was J$71.06:US$1.00. You can consult the Bank of Jamaica to learn more. The important issue however is to remember that at the beginning of the transaction the cost of the transaction in the case of a purchaser and the value of the sale proceeds in the case of the vendor could be higher or lower than the cost or value at the end of the transaction depending on the exchange rate. One method often used by the parties to avoid the uncertainty is to transact the business in the foreign currency. Consult your attorney about this and discuss how the local costs are to be calculated if the price payable is in foreign currency.