Leasing and Renting Definitions

1. GROSS LEASE: A gross lease is one in which the landlord agrees to pay all charges against the property leased which are normally incurred through ownership.

2. NET OR FULL REPAIRING LEASE: A net or full repairing lease is one in which the tenant assumes payment of all property charges, including the rents, taxes, insurance, all service maintenance and repairs.

3. PERCENTAGE LEASE: A percentage lease is one in which the payment is measured in full, or in part, or is dependent upon the gross business in dollars, transacted by the tenant through the use of the property.

4. WHEN COMMISSION IS EARNED: A commission on a lease is earned when, through the agency of the broker, the terms of the lease have been agreed upon as evidenced by a cash deposit or written agreement.

BUSINESS PROPERTIES: On month-to-month, summer, winter, or yearly tenancies, the rate of commissions shall be 10% of the total rental. The minimum commission shall be $50.00.

1. On leases up to 30 years the charge shall be not less than 10% of the rental for the first 5- year period or part thereof, 5% of the rental for the next 5-year period or part thereof, and 3% of the rental for the next 20-year period or part thereof.
2. Leases for 30 years or longer shall be treated as sales. If the lease is a net lease, the value of the property shall be the fair market value as of the date of execution of the lease, and the com- mission shall be the applicable rate for that type of property.
3. Net Leases For Under 30 Years: The annual taxes and insurance on the property shall be added to the annual rental and the sum of these shall be used as the basis for computing the commission as provided in Paragraph I above.
4. On Percentage Leases With Minimum Guaranteed Rental: The broker shall charge the same commission that would be received if the minimum guaranteed rental were a fixed, straight rental for the full term of the lease. Furthermore, the broker shall charge a percentage commission on all additional rental paid to landlord by tenant during the term of the lease. The percentage to be charged on the additional rental for any given year of the lease, shall be the percentage applied to the minimum guaranteed rental for the same year. The commission is to be paid as the additional rentals are received by the landlord.
5. Straight Percentage Lease Without Minimum Guarantee: The broker shall charge a percentage commission on all rentals received in any lease year. The percentage to be charged on the excess rental for any lease year shall be the same percentage that was applied for that year to the rental on which the initial commission was computed, payable as payments are received by the landlord and an agreement covering these payments shall be made in writing at the time the lease is executed. f. Leasing Fees - Agriculture Leases: The commission for leasing agricultural property shall not be less than 10% of the total rent. If the lease is on a crop-sharing basis, the commission shall be computed upon the cash rental value of the real property. If the Realtor elects to collect the commission when the crop-share is received by the landlord, the commission shall not be less than 10% of the landlord's share of the gross rental.
6. Option To Renew Lease - Within Six Months:
   1. If the lease gives the tenant an option to renew or extend the term, and the tenant exercises said option and/or remains in the premises or leaves it temporarily for six months or less and returns beyond the time specified in the original lease then the landlord shall pay the Realtor an additional leasing commission computed at the same rate that would have applied had the renewal period been a part of the original term.
   
   2. If any lease for a shorter period than 5 years does not contain an option to renew, and the tenant renews his lease for a fixed time or remains in the premises on a month-to-month basis, the Realtor who negotiated the original lease shall be considered the procuring Realtor for the renewal or extension period up to a total term of 5 years, and the landlord shall pay said Realtor a leasing commission computed at the same rate as if the renewal period had been a part of the original term.

5. OPTION OR FIRST REFUSAL TO PURCHASE: If a lease contains an option or first refusal to purchase, the Realtor shall collect the regular leasing commission and, in addition, shall have a written agreement from the landlord agreeing to pay full sales commission in the event the property is sold under the option or first refusal rights in the lease.

6. CANCELLATION CLAUSE IN LEASE: If a lease contains a clause permitting cancellation by tenant without penalty, the Realtor may charge only for the non-cancelable term of the lease. If the tenant continues in possession then the period beyond the cancellation date shall be considered as a renewal or extension. If the lease contains a clause permitting cancellation by the landlord, the Realtor shall charge for the full term of the lease.

7. SUB-LEASING: A Realtor shall handle each lease or sub-lease as a new transaction, and shall charge the established rental commission on total gross rent.

Rules Governing Sales

GROSS PRICES: A price given to a broker by an owner shall be deemed to be gross and the broker shall charge the regular commission on such price.

NET PRICE: Acceptance of net listings by brokers is not allowed.

WHEN COMMISSION IS EARNED: A commission on a sale is earned and payable when, through the agency of the broker, the minds of a seller and a buyer have met on the terms of sale, as evidenced by a cash deposit or written agreement.

BUYING REAL ESTATE: The same commission rates and rules which apply to sales apply to purchases in which a broker is employed to purchase property, and the broker shall collect a commission based on the total cost to the purchaser if he or she is authorized to buy property at public auction, forced sale or private sale (Article 13, part 2, Code of Ethics).

OPTIONS TO BUY PROPERTY SECURED BY BROKER: If a consideration, cash or otherwise, has been paid for an option arranged by a broker and the option is not exercised, the broker shall charge the principal granting the option one-half of the consideration received, but in no event shall this amount exceed the sales commission to which the broker would have been entitled had the option been exercised. If a broker is engaged by a prospective purchaser to secure options, the broker shall have an agreement in advance for compensation by the prospective purchaser, and he or she shall charge compensation accordingly, whether the options are exercised or not the same commissions rules and customs which apply to exchange.

EXCHANGE OF REAL ESTATE: Commission shall be paid by each owner on full sales price of each property and shall be stated in the exchange contract.

Real Estate (Brokers & Salesman) Act 1995

The Bahamas Real Estate Association (BREA) strives to foster, promote and maintain high ethical and professional standards of conduct for its members. On January 2nd, 1996, the Parliament of The Bahamas realized the efforts of BREA and the necessity to regulate the real estate profession by enacting the Real Estate (Brokers and Salesman) Act, 1995.

The Act incorporates BREA, provides for the registration, licensing and membership of individuals as real estate brokers and salesmen, and empowers BREA to regulate and control the practice of real estate in The Bahamas.

Engagement vs. Non-engagement

A person engages in the practice of real estate business if such a person receives or is to receive compensation or valuable consideration for services rendered or attempts or agrees to offer services to appraise, auction, negotiate the sale of, exchange, purchase, management or lease of any land or otherwise functions as a real estate broker or sales- man in relation to any land, advertises or holds out by any representation to any other per- son. A person also engages in the practice of real estate business if such person takes any part in procuring of prospects, sellers, purchasers, landlords or tenants in any land transaction. Owners and developers may, however sell their own property. A person shall not be regarded as engaging in the practice of the real estate business if in the scope of that person's employment or profession, such a person does not accept a commission or payment for services rendered in addition to payment received in the ordinary course of that person's employment or profession. Any person found guilty of engaging in the practice of real estate business without a valid license, or any licensed real estate broker found guilty of employing an unlicensed person to engage in such business, shall be liable on summary conviction to a fine or to imprisonment or both.

Registration, Licensing, Membership

Once BREA is satisfied that an applicant has complied with and is qualified under the provisions of the Act, BREA will either: (a) unconditionally approve the registration, license and membership of the applicant as a real estate broker or salesman, or (b) conditionally approve the registration, license and membership of the applicant as a real estate appraiser, auctioneer or developer.

BREA & "The Board"

Annually a Board of Directors and Officers is elected by its licensed members, and such Board is empowered by the Act to regulate and control the real estate business and to enforce the provisions of the Act on its licensed members. To promote and maintain high ethical standards of conduct between its licensed members and the general public, the Board offers courses in real estate business to all BREA licensed members. The Board also conducts a real estate course and examination as a pre- requisite, for those persons wishing to enter into the real estate profession. By empowering the Board with such duties, the Act enables the Board to generally take lawful measures to carry out its functions and to protect the mutual interests of the general public.

Investigations & Discipline

The Act provides for the establishment of both an Investigation Committee and a Disciplinary Committee. The members of each committee are appointed by the Attorney General of The Bahamas. The purpose of the Investigation Committee is to receive written complaints of professional misconduct and to afford hearings to any BREA licensed members or any other persons who may have submitted such a complaint. It is the function of the Investigation Committee to decide whether a complaint ought to be referred to the Disciplinary Committee, to be dealt with in accordance with the provisions of the act. Upon hearing of any complaint against a person, the Disciplinary Committee makes recommendations to the Board on each complaint. The Board, acting on recommendations from the Committee, shall either dismiss the complaint or make an order of a disciplinary nature whereby the person's registration, license, and membership may be cancelled, suspended or censured. For example, should it be found that a BREA licensed member falsely procured his/ her license and registration under the Act, or should a licensed BREA member be convicted of an offense under the Act, or convicted of any offense involving fraud or dishonesty, then the Board can cancel, suspend, or censure the registration, license, and membership of that BREA licensed member. Should any party be aggrieved by a decision of the Board, then within three months after the decision of the Board the aggrieved party may appeal against the decision of the Board to the Supreme Court. However no further appeal shall be allowed from the decision of the Supreme Court. If the license or registration of any BREA member has been suspended or revoked by the Board, the Board may require such person to return his/her registration, license and membership certificates. Any person who shall fail this shall be liable upon summary conviction to a fine or imprisonment or both.

Clients' Money / Clients' Account

The Act requires every real estate broker to maintain a client's account at an authorized financial institution. Every real estate broker or salesman who receives a client's money is required without delay to pay or deposit such money into this account. Such money shall not be available for payment of any debt or liability of the real estate broker or sales- man, or to any person other than the person for whom the money is being held in trust.

Conclusion

This article is only intended to give the reader a general overview of important provisions of the Act with respect to licensing, discipline, clients' money and the powers of the Board. Therefore, any specific references to these provisions should be referred to the Act. The purpose of the Act is to: (i) empower the Board to regulate and control the business of real estate in The Bahamas, (ii) to empower the board to conduct such examinations and courses as it deems necessary to promote and maintain high ethical and professional standards of conduct between BREA licensed members and the general public in real estate transactions, and most importantly, (iii) to give the general public the assurance and understanding that all BREA licensed real estate brokers and Salesmen are professional, accountable and liable under the provisions of the Real Estate (Brokers and Salesmen) Act, 1995.

Schedule of BREA Commission Rates, "Minimum Rates" Sales Commissions

All Real Estate Commissions in the Bahamas are based on the total gross sales price of property, not on equities or partial payments.

BUSINESS OPPORTUNITIES
10% of total sales price, including inventory. If property is also sold at time of sale of business, use applicable rate for property.

CAR PARKS
10% of total sales price.

DEFERRED SALES COLLECTIONS
On collection of deferred payments, 2 1/2% of the amount collected. When the broker has a mortgage service agreement, this condition need not apply. The minimum charge is $1.00 per collection.

FARMS, GROVES, UNPLOTTED LAND
10% of total sales price. Minimum commission is $100.

IMPROVED PROPERTY
6% of total sales price.

LEASEHOLD
For the selling of leaseholds, the charge shall be 6% of any consideration, paid by the purchaser for the leaseholds plus the regular brokerage commission on the unexpired portion of the lease, calculated as a new lease.

OUT ISLAND SALES
Undeveloped property - 10% of total sales price. (15% is applied in Freeport)
Developed property - 6% of total sales price.

History of the Bahamas Real Estate Association

The Bahamas Real Estate Association (BREA) was formed in 1959. The following persons attended the first meeting: H. G. Christie, Edgar Bain, Frank Christie, D. Lester Brown, Jack Hughes and Bert L. Roberts. The objectives of the Association, as established by its founding members, are as follows: (1) To unite the Real Estate Brokers, and their associates in The Bahamas for the purpose of exerting effectively a combined influence upon matters affecting their profession; (2) To promote and maintain the highest standard of conduct in the transaction of the Real Estate Profession as expressed in the Code of Ethics adopted by the Association and to enforce the Code among its members in their dealings with one another and the public; (3) To prevent infringements by foreign brokers or any other unauthorized person, or Company not 100 percent owned by Bahamian Nationals, to transact the business of real estate brokerage or, in the case of a Company not 100% Bahamian owned, to employ brokers, and benefit financially thereby.

In the early years BREA addressed a number of issues affecting its members, such as the problem of foreign brokers listing and selling real estate in The Bahamas without authorization; or the ethical conduct of its members. These issues and many others initiated early attempts to have the real estate industry regulated by introducing suitable legislation. Unfortunately, these initial efforts were not successful and by the end of 1960, BREA was no longer active. In 1962, a group of Realtors came together to reorganize the Bahamas Real Estate Association. This group included Mr. Frank Christie, John Morley, Geoffrey Brown, Sr., Joe Thompson, Chester Thompson, Bert Roberts, Neil MacTaggart and Calvin Cooper. Having the same ideals as the previous group, these men set about to enhance the real estate industry by having regular weekly meetings in the Lightbourn Building. BREA grew steadily as it strove to foster high ethical standards for its members. This group again made an attempt at drafting legislation for the industry. Many hours were spent in the preparation and gathering of information. It has been 40 years since BREA was formed, and we are very proud of our progress! Major milestones include the passage of the International Persons Land Holding Act -1993, which facilitated the holding of land by non-Bahamians and companies; The Real Estate Brokers and Salespersons Act -1995, giving BREA the authority to license and register all brokers and salespersons in the Bahamas and products for a disciplinary committee; Bi-lateral agreements with the US Association of Realtors and the Realtor Association of Greater Miami and the Beaches and the long awaited achievement of the Multiple Listing Service in 1998. Over those years The Bahamas Real Estate Association has been fortunate to have outstanding leaders who have continued to uphold the high standards that the Real Estate Industry demands. Those who have served as BREA President from its inception include: 

(Some have served 2 terms.)

The real estate industry is growing at a fast pace and the Board of Directors of BREA faces the serious challenge of promoting and maintaining high ethical standards, and offering further education for its 400 members.