ABOUT HONDURAS - LEGAL INFORMATION

When analyzing a property purchase in Honduras, you should consider all the components. Those components include the cost of the land, the cost of construction and the cost of living. Honduras has so many natural resources and a solid labor force that on the mainland you can build a beautiful home for $50 per square foot. This would include tropical hardwood doors and kitchen cabinets, first class tile or hardwood floors, nine foot ceilings, and beautiful bathrooms. Covered porches can be built for about 50% of the price above.

The construction costs suggested above are entirely determined by your plans, the complexity of the construction, types of materials, etc. and may vary. Also, this cost is based on you constructing the home with a general contractor. An improvement that already is built would include the builder/developer/investor's profit and might be valued at $60 to $70 per sq. ft. in most cases. The builder/developer/investor is due an entrepreneurial profit for advancing the funds and undertaking the process of construction. Construction anywhere in the world has challenges and that, also, is true overseas. However, with a good builder, legal advice and contracts, inspectors, etc. the end result will be a beautiful home.

Costs of living on the mainland of Honduras expressed in US dollars.

  • Full time maid/cook---$160 per month
  • Full time gardener---$180 per month
  • Lobster dinner---$11 includes tip
  • Large Papayas (5)---$1
  • Fresh fish (grouper)---$1.50 per pound
  • Conch of shrimp ceviche---$3.50
  • Taxi around city---$ .90 (yes, that's ninety cents)
  • 50 just picked oranges---$3
  • Eye exam---$20
  • Hernia operation at modern hospital---$1,200

Furnishing a house in Honduras is both a fun, creative effort and the best part is the modest costs. There are hundreds of small wood shops where you can take your design or bring a picture and they will create you furniture from mahogany, teak, or other rare (plantation harvested) woods. Take a look at some of the items available in Honduras.

LAND MEASUREMENT CONVERSION TABLES

Within Honduras land sizes and measurements frequently are described in both terms familiar to us from the United States and in terms rooted in their Spanish colonial past. Below are common measurements and their equivalents.

  • 1 manzana equals 1.73 acres or 7,000 sq. meters
  • 1 hectare equals 2.47 acres
  • 1 hectare equals 10,000 sq. meters
  • 1 vara equals .837946 meter or 33 1/3 inches
  • 1 sq. vara equals .7 sq. meter or 7.5348 sq. ft.
  • 10,000 sq. varas equals 1 manzana
  • 1 meter equals 3.28 ft.
  • 1 foot equals .3048 meter
  • 1 sq. meters equals 10.764 sq. ft. or 1.4346 sq. varas
  • 1 kilometer equals .621 mile
  • 1 acre equals 43,560 sq. ft.

Remember that sometimes in Honduras you will see, for example, 567.89 written as 567,89 That can be confusing.

 

LEGAL ISSUES

Attorney Reference--For an attorney reference please "Contact Us" There are many excellent US trained and US educated Honduran attorneys that speak English and who can assist you with all legal matters. One of the most active in La Ceiba and the Bay Islands is Felipe Danzilo who speaks English and is Harvard educated. You may reach him at fdanzilo@honduraslaw.hn

Residency--If you plan to live in Honduras for more than three months at a time or plan to have a business or to work, you must establish residency. There are several types of residency including investor status (minimum of $50,000 investment), employment status, and retirement status, which requires proof of a certain level of cofirmed income. Your attorney can help you with this matter and there is a reasonable summary of the process on www.Honduranlaw.com. A residency can require up to six months and two thousand dollars to achieve.

Foreigners Holding TitleTo Property in Honduras --Foreigners may only own up to 3/4 of an acre in their own name on the outlying islands such as Roatan, Utila, Guanaja, and Cayos Cochinos and within 40 km of a border or the coast. However, most Honduran attorney's recommend the establishment of a Honduran corporation to hold title to larger parcels or even the less than 3/4 acre parcels. Stock certificates to the corporations are held by the foreign owner in a bearer form and you will be the President or Administrador Unico of the corporation. In essence you have 100% control and 100% ownership over your asset. This form of ownership is helpful in estate situations or for a transfer of property through exchange of the stock certificates. Your attorney can provide detailed counseling on this approach.

Title Insurance and Title Opinions--Title Insurance through First American Title and others is available in the Bay Islands and now is just starting to be available on the mainland of Honduras. An abstract and title opinion by your attorney has been more prevelant on the mainland; although title insurance may become more common as more foreigners purchase. In addition, the Property Registry's office will issue a certificate for a specific property with its recording information and the date and the name of the recorded owner and whether the property is free and clear or encumbered. This is known as the Constancia de Libre de Gravamen. Also, the municipality issues a certificate of title on their records, valuation, and amount and status of real estate taxes.

Closing Costs--Honduras recently changed the law to reduce the registration/transfer tax to 1.5 percent of the sales price or the municipal (catastral) assessed value, which ever is greater. In addition, there are some miscellaneous stamp and other charges. You can work with your counsel to establish his fee, but generally is it about 2% of the sales price (but can vary so always obtain an estimate from him as a contingency of your purchase contract). We suggest keeping in mind about 4% of your sales price as a minimum for closing costs plus any agreed upon costs such as survey, proration of real estate taxes, prepaid insurance, etc.

Purchase Contract--Your broker and your attorney will work with you to prepare an offer to purchase the property. This initial offer contract might be in English, but ultimately may be in Spanish to ensure ease of enforceability. Your broker and attorney can explain this to you in detail. However, with short closing time frames, most purchasers from the United States and Canada tend to just stay with the English version and would not litigate in the very remote case of a Seller changing its mind prior to closing and returning the earnest money deposit. Your purchase conrtract will set out time frames, purchase price, financing terms (if any), name the escrow agent to hold your earnest money deposit, and most importantly the contingencies such as new survey with Honduran engineer's stamp, inspections, title opinion,

Property Registrar's declaration of ownership (Constancia de Libre de Gravamen), the municipality's assessed value and its statement of ownership on its records, etc. Both the Seller and the Purchaser sign the ultimate transfer document, which will be on official stamped paper, signed beore a licensed Notary, in the Spanish language and recorded. Most attorneys can provide an English transalation of any document prior to execution---for a modest fee. The recorded copy of the document will require up to three weeks to be returned from the Property Registrar's office. In summary, the title registration system in Honduras is very similar to the system in the United States.

ALWAYS CONSULT YOUR ATTORNEY