Permanent residence, challenging economy

A diamond is said to be forever. Permanent residence may not however be as “permanent” as advertised.

Cayman has long enjoyed and benefited from the presence of large numbers of foreign nationals in the community. The increase in population alone has generated levels of commerce that would not have otherwise been viable in the purely domestic economy, and the work permit regime served to help guarantee that whenever practicable local persons received tangible benefits. At the same time, immigration controls ensured that work permit holders were net contributors to the economy. In theory, at least, expatriate persons who were unable to support themselves could not remain. The permanent residency regime can complicate the equation.

Without a large tax base available to provide an extensive social safety net, the Law seeks to ensure that only “net contributors” are awarded permanent residence. Persons contribute to society in countless valuable ways, but it is on economic contribution that the permanent residence regime provides particular focus. Whilst there is a balance and the very wealthy do not obtain undue advantage on the basis of their finances alone, those facing financial challenges may find the hurdles almost impossible to overcome.

Guidance is given to the Caymanian Status and Permanent Residency Board and prospective applicants as follows:

“The applicant must satisfy the Caymanian Status and Permanent Residency Board that he has sufficient resources through income or investments to support himself and any dependants accompanying him. Ability to provide sufficient funds for his and their healthcare, education, accommodation and maintenance is of paramount importance for prospective long term residents.”

It follows that if applicants are unable to satisfy the Board of their ability to maintain themselves and their dependants, they ought not to be granted permanent residence – and it would appear that the Board is entitled, or even expected, to deduct points in appropriate circumstances to ensure that the “paramount” factor is not overcome by a surplus of points in other areas.

Applicants are therefore encouraged to ensure that their funds and assets (including pension statements) are brought to the attention of the Board on application and that they update the Board of all material improvements to their financial standing which may take place prior to their application being actually determined. Care should however be taken to ensure that the Board is not given a misleading picture of an applicant’s finances. The Law states that if false information is provided, or a material fact is concealed in an application, the Board may revoke any permanent residence awarded. Even without concealing a material fact, persons who became destitute subsequent to the grant of permanent residence are also expressly at risk of having it revoked.

A related issue is the expectation that most applicants will have made investment in local real-estate or a local business. Up to twenty points are available for such an investment. The idea is that every permanent resident be encouraged to tie their own fortunes to those of the Islands. Failing to maintain such an investment in the Islands can be costly. Amendments made only at the end of 2008 have confirmed what had already been assumed – with the inclusion of a new section of the Law, conferring on the Board an absolute power to revoke the permanent residence of any holder who “fails to maintain the level of financial investment stated in his application”.

In these trying economic times, a real estate investment policy of buy and hold may be that which is best suited to applicants for and holders of permanent residence. If you are in such a position and wish to trade, you may do so, provided the investment is replaced with another in the Cayman Islands of equal or greater value.

Let the seller beware!

Disclaimer: This article consists of general information only and is not intended to be legal advice. Whilst every effort is made to ensure the accuracy of this information, legal advice should be obtained from a qualified lawyer on any legal matter.