Regulations and the real estate industry

The Cayman Islands Real Estate Brokers Association (CIREBA) was established in the 1980s by a group of like-minded real estate agents to unify Cayman’s real estate industry and create a higher standard of practice within the local real estate business. One of the most important elements of CIREBA was its establishment of guidelines and its implementation of a system of checks and balances that included a set of rules and regulations to ensure solid management of the relationship between the public, member brokers and sales associates. In doing so, CIREBA managed to create an industry standard still adhered to today here in the Cayman Islands. But, as with Cayman’s financial services industry, our real estate industry is in danger of becoming over-regulated by onshore entities which seem insistent on regulating offshore jurisdictions to the ‘nth degree.’

One of the most important aspects of CIREBA regulation is that every property transaction completed by member agents ensure that all due diligence is followed and that every legal process is completed. Clients and agents alike are given the security of this extra check and this process encourages buyers and sellers alike, as they are safe in the knowledge that Cayman’s real estate industry is transparent and properly regulated. In addition, the public is also encouraged to report any incident that they may consider not in the best interest of CIREBA member companies, agents and themselves.

Over the past two decades CIREBA members have worked diligently with Cayman’s financial services regulator, the Cayman Islands Monetary Authority, to ensure that the real estate industry complies with all necessary laws and regulations as they develop. As a case in point, the Money Laundering Regulations (MLR) were issued in September 2000 under the Proceeds of Criminal Conduct Law (which has now been replaced by the Proceeds of Crime Law). The MLR places additional legal and administrative requirements on entities conducting “relevant financial business.” This is a crucial point for Cayman’s real estate industry because relevant financial business not only includes banking, trust, fund and insurance business, but it also includes:

The acceptance of deposits and other repayable funds from the public, and
Financial, estate agency and legal services provided in the course of business relating to the sale, purchase or mortgage of land or interests in land on behalf of clients or customers.

This means that real estate agents and brokers must comply with key elements of the MLR, which include the requirement to have in place systems and training to prevent money laundering; identification procedures; record-keeping procedures; internal reporting procedures, and the duty to report evidence of money laundering. CIREBA is proud to have played its part, along with other important associations, such as the Cayman Islands Bankers Association, the Cayman Islands Insurance Managers Association and The Society of Trust and Estate Practitioners (Cayman Islands Branch), to ensure that guidance notes were created to assist members with compliance of these regulations.

In short, CIREBA has been responsible, along with many other associations, for helping to create a best practice for the development of responsible anti-money laundering procedures in line with international standards. In fact, I would argue that CIREBA has created a regulatory framework for Cayman’s real estate industry that is the envy not only of the region, but of the world.

Against this backdrop of solid regulation, respectable dealings and an ethos of transparency, it is frustrating that onshore entities and regulators seem intent on placing an ever-increasing amount of laws and regulations on our industry. Cayman’s financial services industry now has entire departments dedicated to know-your-customer and anti-money laundering requirements. However, the real estate industry does not have the luxury of being able to afford such extra services and the extra administrative burden that goes hand in hand with these increasing onshore regulatory demands has to be tolerated by the real estate agents and brokers themselves.

It used to be an exceptionally easy process, though nevertheless still well-regulated, to buy and sell property in the Cayman Islands and this has always been a significant draw for overseas clients looking for their investment opportunity or second home in the sun. Placing extra burdensome regulation on buyers and sellers has, in my opinion, no benefit whatsoever when it comes to trying to catch criminal activity. Instead, legitimate buyers and sellers are in danger of becoming mired in unnecessary red tape that is of no use to anyone.

On a positive note, I see a general shift in this regard within onshore real estate industries as well. While offshore jurisdictions have generally been required to bear the burden of heavy and cumbersome regulation alone, I see onshore jurisdictions as having to slowly adapt to new additional regulation as well, thereby levelling the playing field considerably. In the end, I believe we will have to accept that additional regulation is just another process with which we must deal. Nevertheless, it is a frustration that, until it becomes embedded in the system, it will likely continue to cause irritation and possibly an increase in costs among Cayman’s real estate industry.

SHARE
Previous articleIs a preapproval regime for complex financial products feasible?
Next articleGrey matters
James Bovell
James has been a part of the real estate industry in the Cayman Islands since 1991. Born in the Caribbean and educated in the UK, he has achieved great success in listing and selling many of Cayman’s choice homes, waterfront condominiums and developments, land parcels and investment opportunities.  James has received many of RE/MAX International’s awards including The Circle of Legends, (the highest career achievement within the RE/MAX international network with fewer than 200 inductees to date).
James Bovell
Broker/OwnerRE/ MAX Cayman Islands
PO Box 30189 Grand Cayman
KY1-1201 Cayman Islands
T: +1 (345) 945 4000 E: james@bovell.ky W: www.bovell.ky 

RE/MAX

RE/MAX, which stands for 'real estate maximums', was founded in the 1970's by Dave & Gail Liniger in the United States of America. They developed a unique franchise system that allows real estate agents to maximise their potential by having the security of a franchise and at the same time having the individual freedom to run their own business. Today the RE/MAX network comprises over 6,000 offices with around 90,000 associates in 85 countries.

RE/MAX Cayman Islands is such an independently owned and operated office within the real estate network of RE/MAX International and RE/MAX Caribbean/Central America. The office at 7 Mile Shops on West Bay Road unites 21 real estate professionals and 9 administrative staff under one roof. All our associates and administrative staff are highly experienced and constantly expand their knowledge with ongoing training. Within the office, our associates use the synergy potential. Not only synergies within the office are important but we also work closely with RE/MAX offices all over the world as part of our international referral system.

Locally and internationally we are dedicated to maintain a high degree of visibility which will benefit our highly valued customers and clients as well as our Sales Associates. A comprehensive marketing strategy across all media including print and internet ensure our consistent exposure.

We are well established in the Cayman Islands real estate market as a strong office, capable of producing outstanding results. Referrals from satisfied buyers and sellers are a proof of it as well as the many awards the office has received. 

Physical address:
Seven Mile Shops
215B West Bay Road
Grand Cayman

Mailing address:
PO Box 30189
Grand Cayman KY1-1201
Cayman Islands

www.dreamfinders.com