Purchasing Property in Roatan
Individual investors can purchase approximately .74 acres of land as a foreigner. If you wish to purchase more than .74 acres, a Honduran Corporation needs to be formed. Forming a Honduran corporation is a simple process at a cost of approximately $2,000.00 with the help of a qualified lawyer. A qualified Real Estate Broker, Honduran Notary or Lawyer should assist you with reviewing the documents to ensure a clear title for the property. Title insurance is available.
The Purchase Process
Once you have chosen the property you wish to purchase you may enter into negation with the assistance of your real estate agent or broker. When ready, the broker will write up an 'Offer to Purchase' contract. In this contract defines terms, conditions and contingencies for the sale as well as a closing date. Once you and the Seller have signed the agreement and have mutual acceptance, you would make an 'Earnest Money Deposit' which is typically 10% of the purchase price. The earnest money is wired to the Broker or Notary's escrow account within 72 hours of acceptance of the offer, or within 72 hours of the purchaser's return home. The remaining balance of the purchase is due at closing which is typically within 60 days. The seller can accept the offer, submit a counter offer or reject the offer.
Once there is a agreement between the Purchaser and the Seller and earnest money is received, closing can be handled in several ways. The simplest is to have the Purchaser return to the island for closing and sign the papers in person.
A very common alternative is to have a limited Power of Attorney created (POA) by the Purchaser, appointing someone else (often your Honduran Notary or Lawyer) to close on your behalf and accept title in your name.
If a Honduran Corporation is being formed for the purchase, it is common to appoint someone to close on behalf of the Purchaser, (similar to a limited POA) in the articles of the constitution of the Honduran corporation.
The simplest way to close the purchase is to return to the island and sign the papers in person. An alternative is to have a limited power of attorney created (POA) by the purchaser, appointing someone else (your Honduran Notary or Lawyer) to close on your behalf and accept title in your name.
If a Honduran Corporation is being formed for the purchase it is common to appoint someone to close on behalf of the purchaser, (similar to a limited POA) in the articles of the constitution of the Honduran corporation.
The lawyer draws up a Honduran Protocol which transfers ownership of the property from the Seller to the Purchaser. The Seller signs the document and the funds (purchase price) are transferred to the Seller. The Purchaser, or his assignee, signs the same document agreeing to the terms of the sale and accepts title to the property in the name of the Purchaser. The lawyer takes this document to the public land titles registry and submits it. The registry then records the sale and issues the new title in the name of the Purchaser which takes about 9-12 months. The lawyer delivers your title to our office where we lock it in our safe until you come to pick it up or we can forward it to you via international courier.
Purchaser’s Closing Costs
A budget of 5 - 6% of the purchase price should cover closing costs. This includes taxes charged by the Honduran Government and miscellaneous legal fees associated with the transfer of the title. If a Honduran Corporation is formed, a mortgage is required or title insurance is purchased, there would be additional costs.
Many Sellers will consider financing and this is totally open to negotiation. Typically sellers will be willing to finance up to 50% of the selling price and there are several ways to accomplish this. One is with a legal, registered mortgage contract. Another is with stock certificates that are held in Escrow until the mortgage is paid. Many buyers prefer to raise the funds in their home country with a personal loan or a second mortgage on their primary residence.