In The Bahamas, a mortgagee may foreclose on real property by commencing formal foreclosure proceedings or exercising rights of the power of sale.

Formal Foreclosure

The formal foreclosure process asks the court to extinguish the mortgagor’s right of redemption. This process consists of two parts: the foreclosure nisi and the foreclosure absolute. The process includes the commencement of a court action proving default, declaring the amount due, fixing a redemption deadline, and warning that failure to redeem within the deadline will lead to a foreclosure being made absolute. The repayment period between the foreclosure nisi and the foreclosure absolute is usually approximately three to six months. Should the debt not be extinguished by the end of the repayment period, the foreclosure nisi can be made absolute. Foreclosure is rarely used in practice because it involves extinguishing the underlying debt, preventing the mortgagee from pursuing the mortgagor for the balance of the debt, if any. In addition, the court takes a strict approach to the foreclosure process.

The Power of Sale

Utilising the power of sale is generally characterised as a self-help remedy and is commonly used. Therefore, once the power has arisen, the mortgagee may sell the mortgaged property without the need for a specific order of the court. Nevertheless, mortgage enforcement and the recovery of real property is, in practice, largely judicial in nature. The process is governed by the terms of the mortgage instrument, the relevant provisions of the Conveyancing and Law of Property Act and the Supreme Court Civil Procedure Rules, 2022.

The Homeowners Protection Act

Where the mortgagee is a licensed financial institution, the enforcement process is subject to additional statutory safeguards under the Homeowners Protection Act, 2017 (HOPA). HOPA prescribes mandatory pre-action requirements which must be satisfied before proceedings may be properly commenced. In particular, section 4 requires that a demand letter be served upon the mortgagor at least 30 days prior to the institution of legal proceedings. Bahamian jurisprudence confirms that compliance with this provision is a vital step in the recovery process, as failure to issue a demand letter which satisfies the statutory requirements may significantly prejudice, or potentially derail, a mortgage enforcement action. Upon the expiration of the requisite 30-day period, the financial institution is thereafter at liberty to commence proceedings before the Supreme Court for recovery of the secured property.

In addition to the above, a creditor may appoint a contractually agreed receiver, or apply to the court for the appointment of a receiver/receiver manager who can take possession of the collateral property.

Where a pledge is clear, in writing, has an irrevocable power of sale, allows enforcement without a court order and includes transfer instruments held in escrow, judicial intervention is not required. It is incumbent upon whoever drafted the pledge to detail the manner in which the pledge will be enforced. This will only typically happen after the borrower defaults, and the lender issues a demand for repayment along with a notice that enforcement proceedings may be commenced. The pledge may also incorporate a power of sale in accordance with the Conveyancing and Law of Property Act, or contain power of sale provisions, thereby allowing the lender to sell the property to satisfy the outstanding debt.

Judicial assistance will be required where the pledge lacks a clear power of sale, default is in dispute, or there are allegations of bad faith. The judicial process includes the commencement of an action by a claim form for the enforcement of the pledge and declarations of default.

For mortgages executed between non-financial institutions, the terms of the mortgage will govern how much notice is required. However, in the case of financial institutions, section 4 of HOPA requires the mortgagee to give at least 30 days’ notice prior to commencing the foreclosure action. In practice, actions are not typically commenced immediately after the expiration of the 30-day notice period, but additional time may be added in an abundance of caution.

Pursuant to section 2 of the Mortgages Act, a mortgagor retains the right of redemption at any time before foreclosure is made absolute by paying the full amount due. The right persists even when the mortgagee commences legal proceedings. The mortgagor may satisfy the debt either by paying the mortgagee directly or by paying the money into court if acceptance is refused. Upon such payment, the mortgage is discharged and the court may compel the mortgagee to execute a satisfaction of mortgage.

In principle, a lender may pursue the equity of the property owner and foreclosure of the mortgage at the same time. Pursuant to section 2 of the Mortgages Act, the mortgagor’s equity of redemption remains preserved until a final foreclosure order is granted, at which point, the right of redemption is extinguished. The lender may also advance claims against the borrower and any affiliated obligors concurrently with the foreclosure proceedings, subject to the requirement that no double recovery of the secured indebtedness is obtained. The mortgage instruments typically provide that a lender may pursue any and all remedies in the event of a default.

The process for a judicial foreclosure action can take from six to 18 months to be completed. The length of time depends on the complexity of the matter, the interlocutory application filed, the contentious nature of the case and the availability within the court’s calendar.

The time to complete the non-judicial process is likely to be between three and 12 months. Once a purchaser is located, the process may be completed within a three-month period, which also depends on the regulatory requirements that may be imposed. 

Where a deficiency arises, the same is calculated as the difference between the outstanding mortgage debt and the net proceeds realised from the sale of the property. Once a mortgagee elects to foreclose, the mortgagee is generally barred from suing on the covenant for payment. This restriction does not apply, however, where the property is sold pursuant to the mortgagee’s power of sale or under a court order, in which case the mortgagee remains entitled to recover the shortfall from the mortgagor.

Real estate joint ventures in The Bahamas are most commonly structured through private companies incorporated under the Companies Act or international holding vehicles under the International Business Companies Act. Limited partnerships, governed by the Limited Partnerships Act and Partnership Act, are used less frequently, typically where one party acts as sponsor or developer and the others as passive investors. The Bahamas does not offer a limited liability partnership regime.

Companies are generally preferred for their limited liability, clear separation of ownership and management, flexible governance, and familiarity to lenders and institutional investors. Joint ventures are usually implemented via a special-purpose vehicle (SPV), with governance set out in the articles of association and a shareholders’ agreement. These agreements regulate capital contributions, reserved matters, transfer restrictions, distribution policy, and exit mechanisms.

Shareholders’ and partnership agreements typically require good faith co-operation, information sharing, and adherence to agreed business plans and funding obligations. Key provisions address capital calls, approval thresholds, development milestones, deadlock resolution, and non-compete restrictions. In limited partnerships, limited partners’ obligations are usually confined to funding and consent rights, with management reserved to the general partner.

Duties

Duties owed by joint venture participants depend on the chosen structure. In company-based ventures, directors owe fiduciary duties to the company, including acting in good faith, exercising powers for proper purposes, avoiding conflicts of interest, and not making secret profits. These arise from common law, equity, and statute. Shareholders generally do not owe fiduciary duties to each other, but in closely held or quasi-partnership companies, equitable principles may impose duties of good faith and fair dealing.

In limited partnerships, general partners owe fiduciary duties of good faith, loyalty, and accounting for profits. Limited partners, as passive investors, are typically bound only by the partnership agreement.

Remedies

Remedies for breach include damages, account of profits, injunctive relief, specific performance, derivative actions, minority shareholder oppression remedies, removal of directors, and winding-up on just and equitable grounds. In partnerships, remedies include accounting, damages and dissolution. The “just and equitable” winding-up jurisdiction is frequently invoked where trust and confidence between participants have broken down.

Where governing documents are silent or unclear, statutory and common law principles apply. In companies, management powers rest with the board, subject to shareholder resolutions. Majority rule applies to ordinary decisions, while fundamental changes require special resolutions. Equally held ventures, deadlock or exclusion from management may prompt court intervention, including equitable relief or a winding-up order.

In limited partnerships, management is vested in the general partner. If governance fails, dissolution and winding-up may be sought. Given the limited statutory default mechanisms, careful drafting of deadlock-resolution provisions, such as buy-sell clauses, escalation and arbitration, is market standard.

Provisions for “automatic” entry of judgment are not self-executing; enforcement requires judicial confirmation. The courts will scrutinise such clauses to ensure they are not penal and are consistent with public policy. Provisional remedies, such as injunctions, are discretionary and subject to established equitable principles, though contractual acknowledgement may support an application.

Winding-up may be voluntary or by court order, with a liquidator appointed to settle claims and distribute assets. In partnerships, dissolution may occur on expiry, on specified events, by court order, or on the absence of a solvent general partner. Real estate ventures require attention to ongoing obligations, unsold inventory, lender security, purchaser protections and tax implications. Careful drafting of exit and liquidation provisions is essential to mitigate uncertainty at the winding-down stage.

Bahamian real estate finance, especially for development and hospitality projects, commonly features a range of guarantee structures that reflect negotiated risk allocation. The most prevalent are:

• Full payment guarantees – the guarantor is liable for all principal, interest and enforcement costs.
• Limited guarantees – liability is capped by a fixed sum or limited to specific debt components (eg, interest only).
• Shortfall guarantees – these cover any deficiency after enforcement against secured property.
• Completion guarantees – these require the guarantor to ensure project completion per approved plans and budgets.
• Non-recourse carve-out (“bad boy”) guarantees – these convert non-recourse loans to recourse upon specified misconduct.

Bahamian law distinguishes between guarantees (secondary obligations) and indemnities (primary obligations). Modern guarantees often combine both, with “principal debtor” language to bolster enforceability. No statute governs guarantee categories; enforceability is determined by contract and common law.

Non-recourse carve-out guarantees are enforceable as a matter of contract. Lender recourse is limited to the secured asset unless trigger events – such as fraud, misapplication of funds, unauthorised transfers, voluntary insolvency, environmental breaches, or failure to maintain separateness – occur, at which point personal liability arises.

No statutory limitations apply, but general principles govern as follows:

• the guarantee must be in writing (Statute of Frauds);
• trigger events must be clearly defined; ambiguity is construed against the lender; and
• the penalty doctrine may apply if obligations are punitive, but well-drafted carve-outs are generally upheld.

Bahamian courts will generally enforce clearly drafted contractual provisions that convert otherwise limited liability into recourse liability upon specified misconduct.

For completion guarantees, enforceability hinges on:

• a clear definition of “completion” (eg, occupancy certificate or architect’s sign-off);
• defined timelines and budgets;
• an express obligation structure (payment v performance);
• notice and cure provisions; and
• treatment of cost overruns and force majeure.

If structured as a payment obligation, enforcement proceeds as a debt claim; if structured as a performance undertaking, remedies may include damages or injunctions. Defences may arise if the underlying contract is materially varied without the guarantor’s consent, unless waived.

Unconditional guarantees are recognised and enforceable. Liability typically survives amendments, extensions, or invalidity of the underlying obligation, and is not contingent on prior enforcement. Requirements include:

• a written and signed agreement (Statute of Frauds);
• ambiguities are construed contra proferentem; and
• equitable defences (eg, misrepresentation, undue influence) remain available.

Indemnity and “principal debtor” language strengthens enforceability and limits surety defences.

Waivers of defences are generally enforceable, especially for sophisticated guarantors who have received independent advice. Common waivers include those for contract variation, time extensions, release of security, and set-off. However, waivers cannot exclude liability for fraud, and equitable doctrines (eg, undue influence) may still apply. Independent legal advice is typically required for non-commercial guarantors.

No guarantee-specific expedited procedures exist, but creditors may seek summary or default judgment in the Supreme Court. Liquidated claims may be enforced as straightforward debt actions. For corporate guarantors, winding-up proceedings are available.

There is no statutory “election of remedies” rule; lenders may enforce guarantees, pursue the borrower, enforce security, and/or commence insolvency proceedings concurrently, subject to contract. The general limitation period for contractual claims is six years (Limitation Act). Statutory avoidance provisions in insolvency may affect recoveries but do not bar enforcement of properly drafted guarantees.

In The Bahamas, arbitration clauses are not common in residential real estate transactions, particularly those involving routine purchases of single-family residences, multi-family residences, or condominium units (“Residential Real Estate Transactions”). These Residential Real Estate Transactions are typically domestic in nature, and litigation before the Supreme Court of The Bahamas remains the default forum for resolving these disputes. Arbitration provisions are rarely included, and disputes are more often addressed through attorney-to-attorney negotiation or court proceedings.

Arbitration is, however, more common in complex or high-value real estate transactions which typically involve multimillion-dollar property acquisitions, resort or luxury residential developments, or transactions with foreign investors (“High-Value Real Estate Transactions”).

Accordingly, while arbitration is legally established in The Bahamas by the Arbitration Act, its use in real estate transactions remains largely limited to complex High-Value Real Estate Transactions rather than routine Residential Real Estate Transactions.

The key advantages of arbitration in real estate transactions are:

• The expertise of the arbitrators – Arbitrators in real estate disputes are often selected because they have specific knowledge and experience in property law and commercial real estate practice. Their familiarity with complex property structures and market practices enables them to properly appreciate the commercial context in which High-Value Real Estate Transactions arise. Consequently, arbitration may produce decisions that are more commercially grounded and better suited to the realities of sophisticated real estate developments.
• Confidentiality – Arbitration in The Bahamas is conducted in private and the documents that comprise the arbitration file do not form part of the public record. Arbitral awards are generally not reported in law books or posted on the official judicial website of the Supreme Court of The Bahamas, and access to both the award and the full arbitration file is limited exclusively to the parties involved. Unlike litigation, where judgments and rulings are publicly available, arbitration ensures that sensitive commercial or personal information remains confidential throughout the process.

The two main disadvantages of arbitration in real estate transactions are:

• Cost – The Bahamas does not have an ADR centre. As a result, parties must pay separately for a venue to hold the arbitration. In arbitration, parties are responsible for paying the arbitrators’ fees, venue expenses, and any applicable administrative costs. By contrast, in litigation before the courts of The Bahamas, parties are generally responsible only for their attorneys’ fees and certain administrative costs, such as filing fees. Accordingly, the cumulative costs of arbitration can make it a less economically practical dispute resolution mechanism.
• The decision is not final – Although a party may only challenge an arbitral award on limited grounds under sections 89–91 of the Arbitration Act, such as lack of jurisdiction, procedural irregularity, or contravention of public policy, an aggrieved party may still appeal the award to the Supreme Court of The Bahamas. Consequently, even when a dispute is resolved through arbitration, it may ultimately return to the courts if a party seeks to challenge or set aside the award. This underscores that arbitration, while generally final and binding, is not entirely insulated from the judicial system.

In The Bahamas, mediation is not prevalent in real estate transactions. Most disputes arising from real estate transactions are resolved through litigation, arbitration, or attorney-to-attorney negotiation rather than through formal mediation.

Although mediation is recognised and encouraged under the Supreme Court of The Bahamas Civil Procedure Rules (CPR), its use in real estate matters is largely procedural rather than transactional. Specifically, Rule 27, Part 27.3(8) of the CPR provides:

“Notwithstanding any provisions of this rule, the Court shall at the first case management conference consider mediation either by agreement between the parties or by Court referral.”

This provision embeds mediation within the case management framework of the Supreme Court. However, mediation typically arises only after proceedings have commenced and the matter is referred to case management conference before a judge.

Accordingly, in the context of real estate transactions in The Bahamas, mediation is generally limited to circumstances where the court directs the parties to consider or participate in mediation, rather than being a routinely utilised dispute resolution mechanism at the drafting or pre-completion stage of real estate transactions.

In the course of proceedings concerning real estate disputes, a party may seek provisional remedies which preserve the property’s current condition and protect parties’ contractual rights. Such remedies are particularly appropriate where there is a clear risk of irreparable harm, including, without limitation, the unauthorised sale, transfer, mortgage, or encumbrance of a property, or any other act that could compromise the enforceability of legal entitlements. The principal forms of provisional remedies available in The Bahamas include the following.

Prohibitory/Mandatory/Freezing Injunction

An injunction, including a freezing injunction (see the Bahamian case of Walsh and Others v Deloitte & Touche Inc [2002] 4 LCR 454 at page 459), also known as a freezing order, is typically sought from the courts in The Bahamas to restrain a party from selling, transferring, dealing with, or otherwise disposing of property. This ensures that a party’s contractual rights are preserved and remain enforceable while a real estate dispute is pending (see section 21(1) of the Supreme Court Act 1996 and Part 17 Rule 17.1(1)(a) and (j) of the CPR). While prohibitory and mandatory injunctions require a party to refrain from certain actions or to perform specific acts concerning a property, a freezing injunction specifically prevents a party from disposing of assets or real property wherever in the world the assets may be, thereby safeguarding a party’s ability to enforce any future judgment.

Equitable Receivership

The court may appoint an independent third party, such as a receiver/receiver manager, to manage the property during the pendency of a dispute. This remedy is commonly used to prevent the asset from deteriorating and is particularly relevant where the property is income-generating. The receiver ensures the property is properly maintained and that any income is collected and held in an independent account, protecting the interests of all parties until the dispute is resolved (see Part 21(1) of the Supreme Court Act and Rule 53 of the CPR).

Prohibitory/Mandatory Injunction

When applying for a prohibitory or mandatory injunction, the applicant must make an application to the court. The party seeking the injunction must satisfy the court that they have met the test as laid down in American Cyanamid Co v Ethicon Ltd [1975] UKHL 1, which is:

• whether there is a real issue to be tried;
• whether damages would be an adequate remedy;
• whether the claimant is willing to provide an undertaking in damages if it is determined that the injunction ought not to have been granted;
• whether the balance of convenience lies in favour of the applicant; and
• whether there are any special factors to consider?

Mareva Injunction

When applying for a Mareva injunction, the applicant must make an application to the court. The party seeking the injunction must satisfy the court that they have met the common law test (see the English Court of Appeal case of Ninemia Maritime Corporation v Trave Schiffahrtgesellschaft mbH und CoKG [1983] 1 WLR 1412 and the Bahamian Supreme Court case of Sunset Equities Ltd v Sterling Asset Management Ltd et al – 2020/CLE/gen/00329), which is:

• the cause of action must exist at the time the order is to be granted and the claimant must have a good and arguable case;
• the defendant must have assets within the jurisdiction of the court;
• the balance of convenience must be in favour of the applicant being granted the injunction;
• the claimant must establish that the defendant lacks probity and that there is a real risk of the dissipation of assets; and
• there has been no delay in applying for the injunction.

Equitable Receivership

The test for determining whether to appoint an equitable receiver in The Bahamas is set out in section 21(1) of the Supreme Court Act, which provides that the court may appoint a receiver in all cases where it appears to the court to be “just and convenient” to do so. This statutory provision reflects and preserves the court’s equitable jurisdiction. This “just and convenient test” was affirmed in the Bahamian Court of Appeal case of AML Foods Limited v Craig Butler (SCCivApp No 160 of 2023), at paragraphs 6–8, reiterating that the appointment of a receiver is a discretionary remedy guided by the “just and convenient” standard.

A plaintiff who improperly invokes a provisional remedy such as an injunction or the appointment of a receiver is likely to expose themselves to significant financial loss and strategic disadvantage in litigation proceedings.

Firstly, interlocutory injunctions are ordinarily granted subject to an undertaking as to damages. If it is subsequently determined that the order should not have been made, the plaintiff may be required to compensate the defendant for any loss occasioned by the injunction or receivership. Regarding real estate disputes, this may include loss of a sale, delayed completion, lost rental income, financing penalties, or other consequential losses.

Secondly, the court may award adverse costs against the plaintiff. Where an application is deemed unnecessary, or based on incomplete or misleading disclosure, especially in the context of a without-notice hearing, the plaintiff may be required to pay the defendant’s legal costs, potentially on an indemnity basis.

Beyond the financial implications, the improper use of provisional remedies can undermine the plaintiff’s credibility. Given their discretionary and equitable nature, the court expects applicants to approach such remedies with “clean hands”. If the court finds that the relief was sought without proper justification or on an inadequate evidential basis, this may adversely affect the plaintiff’s standing and shape the court’s view of their conduct throughout the remainder of the proceedings.

The courts are willing and prepared to issue temporary or preliminary injunctions in connection with real estate transactions. Real estate transactions are commonly recognised as instances in which temporary injunctions are appropriate as they are designed to maintain the status quo and to prevent irreversible harm.

The Supreme Court Civil Procedure Rules provide statutory guidelines for an application for an injunction.

The procedure includes establishing that:

• there is a serious issue to be tried;
• damages are not adequate; and
• the balance of convenience favours granting the relief.        

The Bahamas follows common law principles in establishing what constitutes irreparable harm in a real estate scenario. The court will consider, among other things, the uniqueness of the property (eg, a waterfront property is more valuable than property located inland).

Mechanic’s liens are not recognised in The Bahamas. Contractors are required to commence legal proceedings to obtain relief.

The Rent Control Act governs dwelling homes with values not exceeding BSD75,000. The Board enforce the regulations.

Generally, The Bahamas does not have an act dedicated to the REITs regime but instead, a patchwork of legislation to address different aspects. The Companies Act provides guidance regarding the use of special-purpose vehicles to hold assets. The Securities Industries Act and Investment Fund legislation govern the use of securities and capital markets in The Bahamas. Regulations are enforced by the Securities Commission of the Bahamas and the Central Bank of The Bahamas. There is also the suite of Revenue legislation that provides guidance on the imposition of taxes on real estate transactions, and real estate acquisitions made by investment vehicles generally.   

The Conveyancing and Law of Property Act governs real estate transactions, mortgages and conveyancing procedures and enforcement legislation is governed by the Supreme Court of The Bahamas pursuant to the Supreme Court Civil Procedure Rules, 2022, which provide the procedure by which these cases may be commenced.

The “public interest” conversation impacts the manner and lens through which the court views each case. Public interest affects housing stability, residential displacement, and inequality in bargaining power. The courts will scrutinise motive and pattern, and not just the documents. The public interest element also reduces tolerance for sharp practices, and litigation timelines may also be affected.