Roatan Dreams Real Estate
Facts & Considerations for the Prospective Buyer
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, itís 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:
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.
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.
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.