Shopping for Island Property
Living in the Islands can be immeasurably rewarding, if you have wisely
chosen a home and lifestyle that suit you. Here, on Roatan, you can find
desirable properties similar to those in the sub-tropical United States--but
often at a fraction of the cost. But house-hunting in the Islands requires
greater care and consideration than shopping Stateside or in Canada.
Study the island's resources and infrastructure. How is the water quality
and supply? Can you expect reliable power? How long would you have to
wait to get a phone? How are the roads? What about the quality of medical
care, schools, the diversity of shopping, and prices?
When you find your tropical dream property, ask your Realtor about purchase
and financing options. More local financing options are available than
ever before, but most buyers still find that if they need financing, it’s
easier and less expensive to obtain an equity loan against a property
they already own.
Be prepared to pay total transaction closing costs of 6-7% including
local transfer tax, Cadastral Certificate, attorney and miscellaneous
fees The upside is the annual real estate taxes are usually minimal. Is
title insurance available on this property? Are there deed restrictions
or covenants? Can you get homeowners insurance? Will your home be secure
if you are an absentee owner?
If you plan to rent your island property, will you be able to count
on a reliable management agent to secure tenants and look after your home?
Many clients have expressed an interest in finding work on Roatan.
What kind of jobs, if any, are available for non-nationals? What about
buying or starting a business? Investing in a new venture?
If you are tempted to seek work on a Caribbean island, you're not alone.
Many returning vacationers and property seekers hope to do the same.
Your chances for finding work are better if you are creating jobs for
islanders, either by investing in an existing business, or starting a
business the island needs. For instance, many types of construction skills
are currently needed on Roatan.
General Tips on Buying Property
If you are thinking of buying property here in Honduras or anywhere else
in the world, for that matter, we offer the following handy tips to help
you make your purchase:
- Make your decision based on logic, not emotion.
- Choose a reputable real estate agency and find a
broker that you feel comfortable with.
- Ask your real estate agent to recommend a few attorneys
if you don't know any, and interview at least two before hiring one.
- Speak to as many local people as you can. If there
is anyone who is going to be upfront and honest, it is those who already
live in the area you wish to purchase, so this is a wonderful excuse
to visit bars and restaurants, the local grocer, hardware store and
as many other places as you can.
- If you see something that fits your description of
the perfect property, buy it. Chances are that it will be someone else's
perfect property too.
Plan your trip so that you have enough time to do all of the above.
I recommend that you stay for at least one week.
Legalities
Prior to 1990, foreigners could not own land on the Honduran islands
individually. Thanks to a change in the constitution, foreigners can now
purchase land in their own names--under certain conditions.
Foreigners, as individuals, are not allowed to purchase more than 3,000
square meters of land which is about 3/4 of an acre and must build within
three years. This, however, does not make it impossible for you to purchase
a parcel of land that is more than 3,000 square meters or to postpone
building. To overcome these limitations, you must form a Honduran corporation.
Forming a Honduran corporation is a simple transaction, which can be
taken care of by a local attorney at a cost of about $1,200 to $1,800.
If you don't speak Spanish, an English speaking lawyer is essential, as
all documents have to be written in Spanish. I can recommend a reputable
bi-lingual attorney for you if needed.
By forming this corporation, which you will fully control, and by designating
yourself general manager and administrator, you are entitled to all the
rights of a Honduran citizen regarding ownership of your property.
There are no time restrictions on building or developing for a Honduran
corporation and you can own more than 3,000 square meters.
If you do purchase a piece of land smaller than 3,000 square meters,
you will still need the assistance of a lawyer, who will take care of
all the necessary paper work. You must build a house on this land within
36 months; otherwise, you will pay a penalty equal to 10% of the purchase
price each successive year.
Ownership
Hire a lawyer you trust, not only to conduct the title search, but
also to register ownership of the property via a document called an Escritura
Publica or Dominio Pleno. Your lawyer will make sure that the title you
are transferring is official. A publicly registered document has a square
stamp on it with the court's registry number. If a survey is not furnished,
you may need to hire a surveyor to determine your property's boundaries
before your land documents can be registered. Escritura Publica means
it is and was a public document when transferred. Dominio Pleno means
that there was not a prior public document and a judge had to make a decision
to grant title to a property owner based on his testimony and documents.
Notice would then be posted for 30 days. The judge will verify ownership
by talking to all the surrounding property owners. When he issues Dominio
Pleno, it is then a public document and holds as much validity as an Escritura
Publica.
Terms of the sale
Financing is available, but not common in Honduras. Bank financing
is gradually becoming available at more reasonable rates than in the past,
10-11%, and is most useful on purchases of pre-construction condo projects.
An alternative is to finance your purchase by owner finance or through
a developer. Many buyers have refinanced their homes or other collateral
in the U.S. in order to purchase property in Honduras since the interest
rates are much lower in the U.S. The terms of each sale will differ and
are generally dependent on the financial circumstances of the seller at
that time. You may be asked to pay for the property in full, in cash,
at the time of sale. Honduran lempiras or U.S. dollars are accepted. However,
the standard for owner finance is usually 30% down, financing the balance
for one to five years at 10% to 12%. Every situation is different. Transfer
taxes and associated closing costs will amount to about 6 1/2 % of the
reported price of your property. Real estate agents charge 10% commission,
usually paid by the Seller. Property taxes are extremely low.
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