Four Common Mistakes of Land Buyers
15 October 2000
By Melanie Wetzel

1. Buying property that has a "little problem with the registry" There are no little problems with the registry. Almost all registry problems are big. If the seller is having trouble with the registry, it could mean that he will have trouble determining his ownership, and this trouble passes directly on to the buyer. Trouble with the registry could also result from a mortgage on the property or a joint ownership situation.

All pieces of property have a history and that is what is recorded in the registry. If a piece of land has a sordid, twisted, or unidentifiable history, it is better to look for another property to buy.

2. Putting complete faith and trust in the seller. This is not a problem, as long as the seller is completely honest and has your best interests at heart. But any person who has been involved in the sale or purchase of a major investment like a home or property knows: the seller has the seller's best interest at heart. The buyer is responsible for protecting his own interests. If you allow the seller to handle all of the contractual and legal details you are setting yourself up to be taken advantage of. If all of these contracts and legal details are handled in a language that you don't read or understand . . . but you wouldn't do that, would you? If you are signing contracts that involve sales worth thousands of dollars, it is only logical to have your own trusted legal representative or real estate specialist counsel you in the transaction.

3. Ignoring the laws. There are laws in Honduras that strictly regulate the purchase of property in coastal areas. Starting at the top, Constitutional Law, Article 107 says that foreigners are not allowed to own property in coastal areas. Urban areas are excluded from this limitation, and most of the Bay Islands have been declared urban areas. In the regulation of these urban areas, Decree 90-90, it states that foreigners may own up to 3000 mts². Many foreigners have purchased larger pieces of property than this. They do so by using false corporations, by putting the property in other people's names or other manipulations.

The further you stray from what is legally allowed, the harder it is to defend your property ownership. If you are investing in large land purchases hoping to resell at a profit, then you must realize that as with any foreign investment, this brings risk. If you are a person who is spending a significant amount of your savings to buy a property for retirement, then consider following all of the laws of Honduras and buying less than 3000 mts². It is safer.

4. Not fulfilling your continuing legal obligations. Once you purchase property, at the very least, you will need to pay yearly property taxes. If you are buying property under the Decree 90-90, you must build on the property within three years. If the property is owned by a corporation, the corporation must be maintained legally active and registered. Getting the property purchased is important, but so is continued compliance with property laws.

Melanie Wetzel is a practicing lawyer in Tegucigalpa, specializing in commercial and tourism law. She has also written the Legal Forum in Honduras This Week since 1997. Her website is at: www.honduranlaw.com