Honduras has a unique charm that attracts all types of tourists, but only the brave ones fall in love with the possibility of owning a piece of paradise. If that is your case, here you will find ten important steps you need to be aware of when purchasing property in Honduras.
1. After you find a property you like, your real estate agent will create a simple sales agreement, and after review you sign and initial it.
2. You have seven to ten working days to get a 10% earnest money deposit wired to your real estate agent’s escrow account once the contract is approved by both you and the seller. NOTE: When you sign the contract and promise to wire the money, then the owner signs it, the property comes off the market. After you wire the earnest money, please be aware that if all contingencies and terms of the contract are met by the owner and you back out, you lose your earnest money deposit. So make sure you want the property.
3. If you are purchasing title insurance, when you wire the earnest money to the escrow account, you also wire the title insurance application fee to First American Title or Stewart Title at the same time. That is a non-refundable deposit. If you later build a home or buildings on the property, you can increase the coverage. Your real estate agent can help you fill out the form to begin, then within a day or so First American or Stewart will tell you how much the fee will be exactly.
4. Within the first 10 days after you sign the sales agreement, you or your legal representative will receive both a survey and title. The attorney begins his work at that time in checking the documents.
5. If you choose to put the property in a corporation, or Corporation and Holding Corporation, you will need to provide the attorney with the name you want, and who the administrator or administrators will be. If there is more than one administrator, then you need to decide if both administrators need to act (sign) together to make major changes, such as adding or removing administrators or selling the property, or if either can act independently of the other. If only one person is going to be at the closing, make it so either can act independently. If the buyer won’t be able to attend the closing or there is any chance the property could close late for title insurance reasons or any other reason (which is not uncommon) then many buyers will appoint a limited power of attorney to someone such as the real estate agent to accept benefits for the corporation or themselves (like land) and put assets in the corporation but not occur any liabilities (like selling land or entering into any agreements). You have to tell the attorney if you want to do that. The attorneys will provide you with closing costs, which are all paid at closing.
6. During the time you are waiting for the closing, your real estate agent assists the attorneys in getting the cadastral certification (satellite registered plot), the survey, the paid tax receipts, title documents, etc. for the closing and title insurance to proceed.
7. At least a week before closing, you need to wire the final funds, including the attorney fees. Real estate agents and attorneys are both present for the closing. The closing is performed after the attorney completes the title opinion search, confirming that the land has 100% good title with no unanswered questions. If there are any issues on the seller’s side with the paperwork, they must be resolved to the attorney’s and your satisfaction or there is no closing and all funds are returned or the closing is delayed. Irresolvable issues are rare.
8. You, or your Realtor with power of attorney, sign the documents, the seller signs them and you get the OK from the attorney that you now own the property. Then the seller gets his proceeds and the attorney is paid as well. You also get copies of all documents before you leave.
9. Within approximately four months you will receive the registered title and the registered corporate documents and shares from your attorney. A few months after that, you will receive the title insurance certificate from First American. At that point you are all done. Keep your copies of everything in a safe place and especially guard your shares (originals) since the person who holds them in their hands is the owner of the companies and all assets.
10. Don’t forget to pay your taxes once a year or even pay them a few years in advance. Depending on the location of your property, these are paid in the municipal offices of Oak Ridge or Coxen Hole. The first time you pay your taxes take a copy of the previous year’s tax receipt, the cadastral certificate, and a copy of your Escritura Publica to change the cadastral certificate into your name. The cost is approximately 1,000 Lempiras ($53). Ask the attorney once a year about any corporate updates you might have to do. Usually there are none.
For more information on Roatan Real Estate contact Steve Hasz of Roatan Life Real Estate at http://www.roatan.net