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Roatan buyer's guide

Purchasing property on Roatan is a simple process with a licensed Realtor and Notary (Attorney). The basic process is similar to North American standards with signing a sales agreement offer and negotiating the terms of the deal. The use of an experienced Roatan Reef Realty Realtor are professionals to ensure you are getting the best deal for YOU!

It is always a good idea to have a list of questions and concerns for your Realtor and Attorney to answer but see our guide to purchasing Roatan Real Estate for an overview.

Purchasing Property in Roatan

Frequently Asked questions and things you should know

Purchasing Property

The actual purchase process is an easy, uncomplicated process. Foreigners, as individuals, can own up to 3000 square meters, which is approximately .74 of an acre of land per investor. In other words, you can buy a single property under .74 acres in your name but if you want to purchase a larger lot of land or home, a Honduran Corporation must be formed. A Honduran corporation is easily formed with the help of a qualified lawyer at a cost of about $1,500.00. When purchasing in Honduras, it is necessary to have a good attorney who understands the documents associated with the property, corporations to ensure a clear title to purchase. To protect this investment, a qualified Real Estate Broker, Honduran Notary and Lawyer should assist with explaining the documentation.

The Purchase Process

Here is a typical scenario. Once the property has been chosen, the Roatan Realtor will write up an offer to purchase. The offer will contain a paragraph calling for an “earnest money deposit”, which is 10% of the purchase price. The earnest money is typically wired to the Broker’s or Notary’s escrow account within 5 business days of acceptance of the offer. The balance of the purchase price is due at closing which is usually within 30-60 days.

The seller can accept the offer, submit a counter offer or reject the offer.

Once there is an 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 Realtor) 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.

At Closing

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 several weeks. The lawyer delivers the new title to the Purchaser or it can be forwarded it to the Purchaser via international courier.

Purchaser’s Closing Costs

A budget of 5-6% of the purchase price should cover the Purchaser’s share of the closing costs. This will cover the land transfer taxes charged by the Honduran Government plus the miscellaneous stamp, bar and registry taxes including the legal fees (3%) associated with the transfer of the title. If a Honduran Corporation is formed because it is required by land size or formed for owner financing, there would be additional costs. If the purchase has a corporation included and the Attorney clears the corporation of any liabilities, the closing costs can be lowered to about 4%.

Seller's Closing Costs

The Seller is obligated to pay Capital Gains Tax (currently 4%) on the increase of value of the property to the Honduran Government and the real estate sales commission.  Seller is also responsible for paying Realtor’s commissions (Buyer & Seller Agents) which is used against their Capital Gains. 

Financing

Financing may be provided by the Seller, guaranteed by the Purchaser through a mortgage registered against Purchaser’s title at closing or a Honduran corporation . The terms of the mortgage or owner financing package are part of the offer to purchase and therefore open to negotiation by Seller and Purchaser. The interest rates are usually higher than in the US (average is 6-7%) and require about 50% downpayment. The duration of the mortgage is usually in the area of 1-5 years, but may be longer. It can be structured in a way that gives the Purchaser lower monthly or quarterly payments with a balloon payment at the end of the term, or a short amortization that pays off the mortgage completely over the length of the term. Seller financing is generally intended to help the Purchaser secure the property today, allowing the Purchaser to fund the purchase on their own timetable and terms.
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