On June 22, 2007 the Bermuda Immigration and Protection Amendment Act 2007 (“the Act”) became operative. Lawyers and other professionals are still trying to come to grips with the far-reaching consequences of this new legislation. Essentially the changes were brought about to put an end to the so-called practice of “fronting”, whereby Non Bermudians (called “Restricted Persons” under the Act) gained control of Bermuda land by use of trusts or other arrangements that might have no basis in written documents.By law, Restricted Persons require a licence from the Immigration Department in order to acquire or hold land in Bermuda: that was the case before the Act and remains the case. Restricted Persons with no connection to Bermuda (e.g. not being married to a Bermudian), can only acquire certain high-end properties and condos, and then only with a licence from the Immigration Department, for which a hefty fee is payable.

In the recent past, the Immigration Department noticed a drop-off in licence fees being collected and attributed this to schemes being set up which allowed Restricted Persons to benefit from Bermuda land by having the property owned by Bermudian “fronts”. In some cases these arrangements were illegal but hard to prove, and in other cases they were legal but may have breached the spirit of the old Act.

As a result, Government acted. The opinion of some is that it over-reacted. Certainly with the recent legislative changes, it may be that the Government has inadvertently created a new set of problems for some Bermudians.

There are far too many changes in the Act to detail here. The main one though is the introduction of a new concept of “appropriation”, detailed in Section 78 of the Act. Appropriation is a prohibited activity. The Act states that “No restricted person shall appropriate land in Bermuda with the intention of occupying it, or of using or developing the land for profit at any time whether for his own benefit or for the benefit of another person.”

A person is deemed to appropriate land in the Act if he assumes at any time any of the rights of an owner of the land, whether at law or in equity. (sub-section 3).

Section 78 goes on to say that a Restricted Person is deemed to have the intention to appropriate land if he provides financial assistance for the acquisition of the land, and “financial assistance” under the act has a very wide meaning. It can mean lending money, guaranteeing a loan or “any other direct or indirect provision of value to or for the benefit of another person”.

Section 78 does not apply if a Restricted Person or trustee holds a licence or “deferral certificate” in respect of the land.

The Act precludes a person from holding property for the benefit of a Restricted person without a licence (or deferral certificate), and “benefit” is defined to mean “an indirect benefit, an eventual benefit and a potential benefit”.

In the case of a Bermudian married to a Non Bermudian (let’s call such marriage a “mixed marriage” for ease of reference), under the Act now, in order for the Bermudian to buy a house even just in his name with financial assistance from his foreign spouse, he needs a licence from the Immigration Department.

Very often sellers do not want to wait for a buyer to obtain a licence and so end up selling to other Bermudians who can buy without the need to obtain a licence. The Immigration Department is acutely aware of the fact that mixed marriages are being prejudiced in this way and have agreed to try to arrange to process licence applications within four weeks. Hopefully they will be able to do this so that no more Bermudians in mixed marriages lose out on opportunities.

Perhaps even more prejudicial to those Bermudians in mixed marriages is the fact that the Immigration Department has a policy that non-Bermudians can only have a licence for one property. The knock-on effect is that Bermudians in mixed marriages may be precluded from owning more than one property, because of the need to obtain a second licence for their financially contributing non-Bermudian spouse, which will not be granted because of the policy. Indeed, it may be that in order to comply with the new law, the Bermudian spouse of a mixed marriage couple owning say, two properties where the foreign spouse is helping to pay, may have to dispose of one in order to fall within the new law.

It is hard not to form the conclusion that Bermudians in mixed marriages are discriminated against by the Act. The irony is that there are undoubtedly some Members of Parliament who are married to Restricted Persons and who own more than one house whereby the foreign spouse benefits. Perhaps that will be the impetus to resolve any problems with the Act regarding the “foreign spouse” issue. In any event the Immigration Department has promised guidelines which will hopefully soon be published to help resolve some of the uncertainty that the Act has created. These are desperately needed so that everybody knows where they stand.