Real Estate in General.
First, you need to feel comfortable with:
1. Your real estate agent; Ask about their background,
experience and how long they have lived here. Ask about their
investments here and visit their home. They should be able to
show you their legal documents so you’ll know what you should
receive after you’ve completed your purchase.
2. The property you intend to purchase; Ask about your
new neighbors and meet them if possible. Discuss the local
weather conditions and what to expect during different periods
of the year. There are significant differences between the
south (windward) side of the island and north (leeward) side.
3. The attorney that will be handling your transaction; Ask
to meet them and discuss their background and real estate
experience. Most brokers have several attorneys that they will
recommend.
Second, be sure to pay special attention to the terms and
conditions you agree to when signing the agreement to
purchase your property. This is especially true when you are
purchasing a home or condominium that is part of a large
development and offers property management services.
Pre and Post Closing Process
1. Decide which property is right for you.
2. Negotiation.
3. Signing of Agreement to Purchase Property
- Deposit of 10% Earnest Money
- Establishing Terms, Conditions and Contingencies
- Setting a Closing Date Signing of Agreement to Purchase
Property
4. Closing- Transfer of Ownership (Signing of Public
Instrument) and Disbursement of Payments, Commissions and
Closing Costs.
5. Payment by Attorney of Transfers Tax, Registry Fees, Bar
Association Stamps, etc. (72 hours)
6. Release of Authorized First Copy by the Notary
7. Issuance of Cadastral Certificate by the Local
Municipality
8. Submission of the Deed to the Registry.
9. Registration of Deed
Closing Documents Checklist
• Agreement to Purchase Property stating all terms,
conditions and contingencies.
• Property Title of the land, vested in the name of the
Seller; and, if applicable, property Title of parcel providing
access.
• Dully recorded Power (S) of Attorney in the event seller
(s) or easement grantor shall not be present.
• Survey of the land with Polygonal description and area,
signed and stamped by a Honduran Civil Engineer or Architect.
• Cadastral Certificate of the Property subject of the
Contract (desirable but not mandatory)
• Passports, Residency Cards or other forms or ID of all
parties involved in the contract.
• Suggested name for Corporation (when applicable). Also
desired stock distribution and administration.
• Final payment of the Land and Closing Costs should
already be in escrow by the time of closing.
Title Searches
It is very important that the Closing Attorney you choose
checks the current Property Title, as well as the antecedents
going back at least 20 years.
*Ordinary Statute of limitation = 10 years (Involves Fair Title
and Good Faith)
*Extraordinary Statute of limitation =20 years (No Title and No
Good Faith)
• Faults and actions against the Government are NOT
interrupted by Statute of limitation; ever.
Accessories to Closing
Title Insurance
- First American Title Insurance Company
- Stewart Title
• Mortgages
• Easements of any sort
- Pedestrian or Vehicle Access
- Water
- Public Utilities
Closing Costs
• Transfers Tax = 1.5% of Purchase value
• Cadastral Certificate = 1% or 2% (Depending on the
Municipality the property is Located. Applicable only to the Bay
Islands.)
• Registry Fees = US$1.00 per every Thousand.
• Bar Association Stamps, Miscellaneous Expenses, Notary’
s Fees, Corporations, etc..
• Closing Costs, in average, are equivalent to approx. 5% of
the transaction’s value.
• All Real Estate Transactions involve an Attorney (Notary).
Transactions documented in Private documents do NOT have
any legal effect before third parties.
• All closing documents MUST be recorded at the Registry
on Roatan. Average time, currently, approx. 3-4 months.
• Closing Costs are customarily payable by the Purchaser.
In your Real Estate experiences you will find transactions:
1. From Individuals to Individuals;
2. From Individuals to Corporations;
3. From Corporations to Individuals;
4. From Corporations to Corporations;
5. Purchase of a Corporation with its Assets.
The following describes purchases of a corporation along with
it's assets or forming a corporation for the purpose of
purchasing property.
Purchasing Corporations
Purchasing a Corporation along with its asset (s) involves a
slightly different procedure than Real Estate Closings.
• No Transfer Tax Payment Since there’s no transfer of
ownership involved. Property remains in the name of the
Corporation.
• Instead, a change of Administrator’s) or Board of
Directors takes place through a Public Instrument as well.
• All Property Documents and Corporate Documents,
including BLANK ENDORSED Stock Certificates as allowed by
the Honduran Commerce Code.
• Same Closing Documents Checklist For Real Estate is
Applicable plus ALL Corporate Documents.
Forming a Corporation
The following describes why you may need to form a
corporation to purchase your property and what it means to
you.
Legislation Overview – Prohibitions
Constitutional Article #107:
State, Municipal or Private Properties situated along
neighboring countries or coastlines of both seas in an
extension of 40 km towards the interior of the country,
including islands, cays, reefs, rocks and sand banks, may only
be acquired, possessed or held at any title by Hondurans by
birth, corporations formed entirely by Hondurans, and,
government institutions, under penalty of nullity of the act or
contract.
The acquisition of urban properties located in the limits
indicated in the above paragraph shall be subject of a special
legislation.
(Congress Decree 90-90)
Property registrars are forbidden to record documents that
contravene these dispositions.
Legislation Overview – Permissibles
Congress Decree # 90-1990
• 3,000 m/2 for Residential Purposes in a Foreigner’s
Name (approx 0.72 acres)
• Improvements (Residency) to be made in 3 years from
purchase.
• Larger areas for tourism projects with authorization from
the Honduran Institute of Tourism
Interpretation and Notes:
1. 2 individuals may Not buy more land jointly however
they may divide a larger piece into two adjoining pieces as long
as neither exceeds 3,000 m/2;
2. The Improvements Building condition is not regulated
(yet);
3. For larger areas, even if for tourism projects, we
recommend the use of a corporate structure.
Corporate Structures
What if you want to buy more than 3,000m/2? From
Constitutional Article # 107 we know that any one of the
following 3 elements are required to acquire land in excess of
what allowed by congress Decree # 90-90 (3,000 m/2):
1. To be a Honduran by Birth;
2. A Corporation formed entirely by Honduras;
3. Government Institution.
1&3 are Not options for non-Hondurans, therefore, we’ll have
to exercise #2.
A corporation will need be to be formed with the aid of two
Honduran Nationals during the chartering process. Their stock
certificate shall be transferred by simple, blank endorsement
as allowed by commerce Code Articles to you after the
purchase is complete. You will end up owning and controlling
the corporation that the property was transferred to.
This procedure may sound complex but it is standard practice
here in the Bay Islands. There are additional benefits to
forming a corporation that will hold your property. Ask your
attorney to discuss these benefits.
Roatan Real Estate Buying Guide
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