Honduras: Coming to Live
Honduras coming to live.
INFORMATION ON RULES AND REGULATIONS FOR: RESIDENCIES, OWNING PROPERTY, SHIPPING, COST OF LIVING.
Basic Information to know!
guide to real state closing process IN HONDURAS.
In Honduras, like anywhere else in the world, the system for a smooth real estate closing depends on everything being prepared and reviewed before hand by the realtor involved and the attorneys handling the closing. Below is what we believe each party should do to ensure there are no problems.
The real estate Broker can act for the buyer or seller. How ever, a contract must be agreed upon representation either from buyer or seller. Normally the listing broker will represent the seller, but as stated he can be a buyers broker if required. Trujillo Realty will act in either capacity if requested. The broker will receive all relevant legal information from the seller when listing a property and should do registry checks (easily done on the web) verifying the property and ensuring things are basically in order on the property as presented to him by the seller.
The basic property registration information can be viewed on any property in Honduras at The National Registry web site (www.sinap.hn). All you need is the folio numbers to check. It is unbelievable how many amateur agents don’t even know how to do this and waste lots of time showing properties they have not verified. This is a firing offence at Trujillo Realty for agents. It is important to ensure the property Plan co-incides with the Folio real numbers, some plans are Fichas that have segregated from their original "Ficha Madre" so this needs to be checked. An easy task. Once we have this we simply check in the registry that all is correct.
The most common forms of ownership of a property are:
1) Owned by an individual — as it suggests the property is in the name of an individual person.
2) Joint Title — Where more than one person has an interest in a property the interest is undivided- — known here as Derechos "Rights".
3) Owned by a corporation or a Sociedad Anonima ( S.A.)
Once we have established and checked ownership we begin to list and show a property. The broker, once he has found a buyer, negotiates the price, terms, and conditions with all parties.
When buying land for development or other use make sure zoning is correct for the parcel involved, many buyers have fallen foul of zoning laws by believing unscrupulous sales agents.
Once an acceptable price is agreed, we ask buyer to sign a formal offer to purchase based on the terms and conditions agreed and at that point a 10% deposit is paid to us as escrow agents to hold while the transaction enters the next phase.
Once an offer is accepted we take this to the buyers attorney who will prepare a formal purchase contract which can be a reciprocal promise to buy and sell or an option to buy your attorney will advise which suits better but both achieve the same goal.
It is important to list all conditions of sale including any inventory on these documents.
The actual closing date will be included in the above and the agent should co-ordinate all aspects to ensure a smooth closing takes place.
All utilities, water, electric, phones, etc, should be told of prior to transfer and arrangements made for new hook ups and change of ownership name. Sometimes in Honduras people simply take over old utilities in the name of ex-owner so as to avoid waiting for a new hook up — that is fine as long as you have proof the utilities are paid up to date.
Proof of property tax payment is usually brought to closing in form of a receipt form the local tax authority.
If a home sale includes furniture a full inventory should be taken prior and after closing.
There are now a number of reputable title insurance companies operating here Kent Insurance. Use them if you think fit.
Transfer of Title
The actual property transfer must be done in front a notary public who will pay any transfer duty that is due and records the deed. Each party will sign and the deal is done. Some closings are by way of simply transferring all the stock in a corporation to the new owner thereby making him the owner of the Real Estate — this is common in Honduras and is not problematic as long as its done properly with your attorney recording the share transfer in the correct and proper manner.
All details for the closing should be in the contract and commissions and legal fees are all paid at closing.
Closing Costs
Attorneys normally charge fees on a scale approved by the local law association which is as follows:
First 10 Million colones or equivalent 2%
Excess 10 to 15 million colones or equivalent 1.5
Excess 15 to 30 Million colones or equivalent 1.3%
Excess 30 Million colones or equivalent 1.0%
This is just for the writing and filing of the property transfer deed. Other fees if any are extra. On top of this there are the government transfer taxes which are:
Transfer tax 1.5% total value of property
Registry fee: For the 1st thousand = L.200.00 + (for the remaining thousands x L1.50)
Example: Property sold for L.100,000.00
1) Total of thousands= 100 (100 thousands x 1,000.00) = L.100,000.00
2) 1st thousand = L.200.00 in initial tax
3) Remaining 99 thousands= 99 x L.1.50 = L. 148.50
Legal fee: Documentation,stamps 1.5%
If you decide to buy a property by simply buying the shares to avoid these taxes be aware that under Honduran law if you buy a existing corporation you assume all debts of that corporation disclosed or undisclosed.
A Rapid and Smooth Closing
A good Real estate closing in Honduras should be only the exchange of financial instruments and signing of deeds, nothing else — no surprise should present itself at any closing with all the homework being done well beforehand. Let Trujillo Realty handle your property purchase in Honduras and there will be no surprises!
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Charlie Biondolillo
Movil: +(504) 9912-4569
email: info@trujillorealtyhn.com
Honduras is a vibrant country, brimming with clear turquoise waters, pristine beaches, lush jungles, breathtaking mountains, challenging rivers, and fascinating ancient ruins.
In addition to Honduras travel destinations and popular attractions, the country offers opportunities for business and trade. San Pedro Sula's "tax free zone" allows international companies to manufacture goods at attractive rates. Located at the very center of the Americas, Honduras operates ports in San Lorenzo, Puerto Castilla and Puerto Cortes, which provides a thoroughfare between the Atlantic and Pacific Oceans, and expedites the transit of merchandise.
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Corporate Structures for Investing in Real Estate in honduras
Many buyers or business owners in Honduras will have the property they buy or the business they own registered in a corporation instead of their own name. It is a smart decision. There are many advantages to using a Honduran Corporation for investing including looking after your heirs, tax advantages, and being able to grant simple powers of attorney in your absence. We will happily supply more details on request and at personal meetings.
Many business clients must decide whether to use a Honduras Company set up here or to use an existing Corporation outside Honduras. It is almost always better to set up an entity in Honduras under local laws that can engage in business easily. Even though a foreign company can legally do business, sign contracts and more, there are occasions where a foriegn registered corporation could cause unnecessary delays. If you have to use your non Costa Rican company then at least register it here at the commercial register. This can take several weeks to complete.
There are two main types of company registrations in Honduras:
1) The Sociedad Anonima (S. A.)
This is the most used and it has multiple uses and is flexible. It can have any amount of initial capital split any way you want. The S.A. must have a Treasurer, Secretary, and President, who must be separate people. It must have three directors and a comptroller, usually the attorney who cannot have power of attorney. Shares can be freely transferred without other shareholders knowledge. Transfer of shares is with entry in the shareholders book, endorsement of share certificate, or a transfer contract. You can alter the by laws at any time and freely give POA with a simple shareholder meeting or proxy. The legal representatives are responsible for the company actions.
An S.A. has 3 corporate books and 3 account books and are registered with the tax authority. If no activity exists in the company, i.e. the company is just for holding an asset or assets formal tax reporting is needed, although you should register yearly saying no activity is taking place.
The company and tax year runs October 1st to September 30th each year. You have until December each year to file.
2) The Sociedad de Responsibilidad Limitada (SRL)
This structure is similar to the S.A except that shares cannot be transferred to third parties after set up without consent of other shareholders who can have first right to buy those shares. An SRL can only have one manager administrator which is very appealing if you don’t want your name to appear anywhere as it will on an SA board of directors. Consult our attorney for more details.
We recommend that all property investments in HOnduras use a Honduran corporation for ownership purposes. We are happy to help you in this and all matters related to Real Estate in Honduras.
Property Law Honduras
Ownership of Land
Foreigners and Hondurans citizens alike enjoy the same protection under the law and the constitution. You will find no restrictions to owning, buying or selling of real estate save for a few government programs where land is given to the poor and may not be sold for a certain amount of time.
Your property can be traded freely on the open market to any and all comers regardless of citizenship. You need not be a citizen to own land here and do not even have to be present in Honduras to register your ownership.
The Registration Process
We have a very safe form of property title registration. The National property registry has many devices in place to stop any attempted property fraud. The Registry duly records the owner of each property and the Property plan that goes with it. If anything changes with that property it must be immediately recorded as requested by a notary public and is easy to verify.
As anywhere in the world we recommend advice from a professional, and to do all normal and proper title searches before parting with money. When you have closed the deal make sure you have copies of everything relevant to the sale. We can recommend attorneys if required.
Planning and Zoning
Most lawyers and realtors will agree that the laws on planning and zoning make sense here. In some areas they are not as strict as the States. When buying land for development be aware that an engineer must sign off on the plans for segregation that should be approved by the local authority, the Health Ministry and the relevant house permitting authority.
Real Estate Brokers
There is no real licensing of Brokers in Honduras although plans are in place to approve such a law. Look for brokers with actual places of business i.e. an office.
Property Taxes
Property taxes in Honduras are 0.25% of the declared value at the registry per year
Closing Costs
This will cost around 5 to 6 % of the actual sales price.
Transfer and land taxes are based on the declared value and lawyers fees on actual sales price. These can sometimes be negotiated to be split with seller.
Exchange Law
Contracts can be written and consummated in Colones or Dollars – 90% or our sales are in US Dollars. There is no restriction moving your money into or out of Honduras in any currency you want.
Capital Gains Tax
There is no capital gains tax in Honduras and attorneys have no power to retain any money from sales that may be due for any other taxes.
Beachfront Land Regulation
In Honduras the first 50 meters from the highest tide mark of any beach is Public property that cannot be bought, sold or exchanged.
We pride ourselves on the creative financing we have helped put together particularly for our developer clients. However financing in Honduras is not as easy as in the States, Canada, or Europe and any prospective buyer needing financing must be ready for this.
Although a number of the major banks including Banco Atlantida, BAC, DAVIVIENDA, BANPAIS, all offer no resident financing the terms are high, closing costs related to the loan high, and points are payable to all banks on any loan.
financing real state IN HONDURAS
- REAL ESTATE BROKERAGE: for both buying and selling any type of property in Honduras (Residential, commercial, investment, ranches, industrial)
- FULL FORMAL APPRAISAL SERVICES: for clients who wish to ascertain the correct market value of their property.
- BUILDING SERVICES: we offer a complete (turn key) [Honduras real estate services] design and build package for those wishing to build anything from houses to hotels.
- LEGAL SERVICES: direct access to lawyers for legal help.
- OFFSHORE INVESTMENT ADVICE: for those looking for solid real estate backed investments.
- FEASABILITY STUDIES: for any business or project.
Trujillo Realty will work with you throughout Central America as your buyer agent and to effectively market your properties in Honduras. For developers we have strong connections with a number of proven architects, lawyers, builders, and planning companies that will ensure your project is carried out correctly from start to profitable finish. For the individual buyers we have staff who are knowledgeable in all sections and areas of the market from small apartments to large luxury estates.
We also provide assitance with furniture selection and interior design.
We have successfully constructed a number of Spec homes built for our clients and are actively involved in expanding this part of our business.
Our associate attorneys can help with setting up a corporation (S.A.) and with any other legal related issues.
Appraisals can be carried out on your behalf from small lots right up to large development properties and luxury estates, and everything in between.
Come to us with an idea or concept for your project and we can give impartial advice as to its feasibility in the area you propose.
HONDURAS INFO
for architectural services:
Arq. David Araque
for travel agency services: www.hondurasconcierges.com
Building in honduras, A Guide.
Trujillo Realty agents will be happy to point you in the right direction with your Honduras building projects, both large or small. Building costs have dropped by around 25% in 2009 so now is good time to build.
We have built numerous homes for clients and helped many building projects get started all over Honduras. As usual, good planning is the key and we have all the professional contacts you need to build your home or project correctly.
When building the architects college or CFIA (Colegio de Architectos) is important as they control all building in Honduras.
According to CFIA, a licensed architect engineer must supervise building in the following two phases:
Phase 1. Construction Plans and permitting.
Phase 2. Execution and control.
In Phase 1 Construction plans and permitting the CFIA establishes the fees charged by the Honduran Architect for preliminary studies at 5% of overall construction costs. Pre project design is 10-15%. This will give you an idea of what is being designed in some preliminary drawings and ideas. Make sure you give as much info as you can to the architect at this stage so he knows what you want.
For detailed plans and technical specs the charge is 4% and this is a vital stage of any project as the key elements of design and building are worked on in detail, these are plans the builder will build from so they need to be correct. These plans should include interior finishes, sanitary design, mechanical, structural, electrical, footings and beams, roof support. Long and trans perspectives. Elevation distribution set up and a large site plan. Budgeting will cost another 1 % for itemized budget or 0.5% for global.
In Phase 2 Execution and control 3% of budget to inspect once a week and ensure specs are met. 5% for supervision on a day to day basis. Or 12% for total supervision and control of all aspects of the building. Which one you choose will depend on what contract you have with a builder.
We have in house builders and architects we work with on a regular basis that can help in all aspects of the design, development and construction in Honduras. As always contracts should be prepared with any builder and or architect prior to paying to ensure all understand clearly their responsibilities.
If buying a lot to build on make sure it has water, electricity, telephone and access prior to buying. All lots in existing subdivision should have these basic services.
Once again Trujillo Realty can help with purchasing quality properties for development or home construction in Honduras.
Building a house in Honduras can be a very rewarding experience, I have built many, including the one I live in now, and as always it is better done with professional guidance as provided by the experts at Trujillo Realty in Honduras.
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Honduras:At a Glimpse