The Property Buying Process
1. The Buyer identifies a property they are interested in purchasing either directly from the property owner or through a Licensed Real Estate Agent,
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.
If you decide to transact a property purchase, we need the following information from you, the Buyer;
a. The full name(s) of the Buyer
b. Marital status (married or single) of the Buyer
c. Mailing address (for correspondence)
f. Copy of identity documents (ie: scan of passport picture page)
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.
Note 5: It is important to point out that in Honduras, Notaries are different than in the United States for the following reasons;
a. Local Notaries are Ministers of Public Faith authorized by the Honduras Government to witness all acts or contracts wherein parties request their intervention,
b. In order to be a Notary in Honduras you MUST be an Attorney at Law, because contrary to what occurs in the United States, Local Notaries are not only responsible for the date and signature of the document, but also for its content,
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,
If you decide to transact your purchase through us, we can conduct the remaining property purchasing steps (5) - (8) on your behalf, by;
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.
c. We will then present your offer to the Seller, and assuming it is accepted, have the Seller also initial and sign the Property Purchase Agreement. We will then email a copy back to you.
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.
f. Once this schedule of fees is accepted by you, you will need to wire the balance of funds for the purchase and the closing costs and attorney's fees [as indicated in (5) below], and $30 for wire transfer costs.
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.
h. You do not need to be present at the closing if so desired.
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.
j. If you have any questions throughout this process, please do not hesitate to contact us. We stand ready and willing to answer any and all questions and/or concerns you may have.
5. When the parties are ready to close, the Notary prepares the revised Deed document. Both parties appear before him, sign the document and pay him for the expenses. Said expenses are the following:
a. Federal Sales Tax - which is 1.5% of the documented sales price. This tax is paid directly at a local bank to the order of the Honduran Government,
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,
c. Land Registry and Miscellaneous - which are generally between $300 and $400 for registering the documents into the Land Registry,
d. Attorney's Fees - which are usually 2.0% of the documented sales price (depending on Attorney - see (7) below).
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,
8. Upon receipt of the inscribed Deed, Honduran Law considers the registered owner as the legitimate owner of the property.