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Foreign nationals buying a property in Honduras may personally own (as ‘fee simple’ or freehold) up to 3,000 square meters of land in the Honduras Bay Islands area that is within 40 kilometers of the coast or frontiers. If you purchase vacant land, you are supposed to build on it within 3 years of making the purchase, or you may be liable to a fine for failure to develop the land amounting to 20% of the purchase price for each successive year (although we know of no cases where this requirement has been enforced). Property areas larger than 3,000 sq meters can be owned through a Honduras Corporation, with a foreign national (ie: you) being the sole or joint owner of the Corporation. Corporations are not subject to time restrictions for building.

It is relatively simple to establish a Honduras corporation. As a foreign national you enjoy the same rights of property ownership as any Honduras citizen. We can offer ‘off-the-shelf’ Honduras Corporations or can assist you with forming your own. Either option will cost $US 1,200, the primary difference is that an ‘off-the-shelf’ Corporation is available immediately but you can not change the Corporation name, whereas forming your own will take some time (1 week or more) and you can choose the Corporation name. A Corporation is also required if you want to apply for ZOLITUR (Tourist Zone) tax free benefits.

1. ‘Escritura Publica’ – (literally Public Writings) is a Public Document, containing a ‘testimonio’ which describes in words, often at great length and in detail, the property and why the current owner can claim to be the legitimate owner of the Honduras Property Title.

2. ‘Dominio Pleno’ – (literally – Complete Dominion) is a Public Document issued when there was no prior Escritura Publica for the Property. Typically a judge or public official of similar standing is asked to make a decision to grant title to a property owner based on their testimony and documents. Notice is then posted for 30 days. The Official will verify ownership by consulting the surrounding property owners. When issued, a Dominio Pleno is then a public document and holds as much validity as an Escritura Publica.

Both Escritura Publica and Dominio Pleno documents must be registered and inscribed at the official regional Registry of Property, which for Utila is located in Roatan – the administrative headquarters for The Bay Islands. Documents inscribed in the Registry have legal precedence over all other documents and ownership claims on a property. Recently inscribed documents are also available to view on-line via the Honduras National Land Administration System. We can instruct you how to view your documents in this system via the Internet.

In order for the transfer of ownership of a Honduras property to occur, the documentation associated with property must be in order and all outstanding taxes must be paid. Before offering a Property for Sale, we have already had our Legal Department investigate the Deed Documents with the appropriate Registry and confirmed that the documents are complete, valid and without encumbrances. We hold a copy of these documents in our files for your viewing.

2. If the property is located by, or to be transacted through, a Real Estate Agent, it is usual for the Buyer to sign a Purchase Agreement with the Real Estate Agent. A Purchase Agreement is generally considered a "private document", that is a document not authorized before a Local Notary.

3. Once the Buyer has decided which Property is to be purchased and the entity (private or corporation) through which it will be purchased, they must obtain a copy of the Deeds to the property so that the Notary may conduct a title search. If you are conducting the purchasing transaction through us, we will already have a copy of these documents in our files, and will have already conducted a title search.

c. Although we normally recommend that contracting parties obtain their own legal counsel, due to the Honduras definition of a Notary, it would be incorrect to state that they represent one party or the other, they are simply Ministers of Public Faith called upon to document a transaction in accordance with the will of the contracting parties.

4. Once the Notary has conducted a property title search, if the title is clear, they instruct the parties to consummate the sale. At this point in time, the parties may request a title opinion and we suggest to the Buyer that they walk the boundaries of the property and talk to the neighbors if the land is not fenced in order to assess whether or not there are any boundary disputes or ownership claims that have not been judicially petitioned. If a dwelling is built on the property and it contributes significantly to the purchase price, we recommend, and can arrange, a Home Inspection by a licensed Builder,

a. Drawing up a Purchase Agreement between you, the Buyer, and the Seller. Our Property Purchase Agreement (in English & Spanish) details the process of finalizing a purchase and documents the agreement between the Buyer and Seller with regard to prices, deposits, payment schedules, document transfers, dates and fees, etc.

b. Before we present your purchase offer to the Seller, we will email you a copy of the Purchase Agreement for your approval. Assuming you approve the Purchase Agreement, then print it, (read it carefully), initial at the bottom of each page, sign and date the signature page, then scan and email the Property Purchase Agreement back to us.

d. Once both parties have signed the Property Purchase Agreement, the Buyers deposit must be lodged in the agreed Escrow Account. The closing process normally takes around 30 days once both parties have signed the Property Purchase Agreement.

e. Two weeks prior to closing we will send you a detailed, itemized breakdown of the closing costs and attorney’s fees. Since this is a relatively simple, straight forward transaction, one could expect these fees to be between 6% and 7% of the sale price. We will also send an English translation of the closing protocol prior to the closing date.

g. As usual, no funds will be dispersed until the closing has been executed, and, all funds must be in place in the escrow account 10 days before the proposed closing date. All these dates and amounts will be laid out in the Property Purchase Agreement.

i. Once the closing has occurred, the Honduras Notary takes the deed documents to the Land Registrar’s office in Roatan for processing and payment of Federal Sales Tax. Once that is done, they are taken to the Utila Municipal Land Registry where they are registered and the Transfer Tax is paid. Finally they are returned to our office together with all tax receipts where we keep them secure until your next visit.

b. Utila Municipality Transfer Tax – which is 2.0% of the documented sales price. This tax is paid directly to the Municipality of Utila once the revised Deed Documents have been issued by the Land Registry and presented to the Municipality,

6. Once the new Deed document has been issued, signed and stamped, it is presented to the Registry of Property for its inscription, which is the process of entering a copy of it into the Registry, which should only take a few days, but can sometimes take many months,

7. Once inscription is complete, the Notary retrieves the Deed document from the Registry and delivers it to the client. He is expected to be paid at that time. Under Honduras Law, the fee that the Notary is supposed to collect is of 3% of the documented sales price, but few if any Notaries charge that. A more precise billing percentage ranges between 1% and 2%. In The Bay Islands, it is standard practice for the Notary to be paid when the disbursement for the expenses is made,