Real Estate Financing FAQ

Is the Honduran government stable and what system of government is it?
The Honduran government is stable and is one of the oldest democracies in Central America. It’s constitution was written in the late ‘70s with the help of the Carter Administration and went into effect in 1982.

Is it safe to live on the island of Roatan?
Roatan is generally as safe as anywhere in the world, and it has less violent crime than most places. Crime on the island in no way compares to that in mainland Honduras. Islanders are peaceful and friendly. It is a poor country and petty theft can certainly happen. As anywhere else, common sense needs dictate your behavior.

How long can I stay in Honduras?
As a tourist, you can be in the country, for up to 90 days (extensions can be obtained for additional 30 day periods). If you wish to move here or stay for an extended period, residency would be advisable.

Coming with your pets?
Please do check the Honduran requirements that you must fulfill.

PROPERTY OWNERSHIP

Can a foreigner own property in the Bay Islands?
Yes, foreigner has been able to own property in Honduras since 1991.

Are there limitations of how much property I can buy?
A non-citizen of Honduras can purchase, as an individual, up to .72 acres of land.
A Honduran Corporation, which can easily be set up with the non-citizen of Honduras as the “Administrator” of the Corporation, can own virtually any size (or quantity) of properties.

How do you form a Honduran Corporation?
This is a simple transaction which can be accomplished by a local attorney at a cost of approximately $1,800.00USD. By forming a corporation, you are entitled to all the rights of a Honduran citizen regarding ownership of your property.

REAL-ESTATE TRANSACTIONS

Do I need residency to have a property in Honduras?
No, you do not need a resident status to conduct real-estate transaction in Honduras. The only limitation is that as a non-resident, after the first 90 days in the country, you need to apply and pay for a monthly extension, or as an option, leave the country for a minimum of 3 consecutive days.

What is the process for purchasing property in the Bay Islands?
From a client’s perspective, it differs little from any purchase you may have made in the past:

You choose the property best suited for your needs and complete a simple “Purchase Agreement” outlining the details of the property desired to be purchased, price, timeline, conditions, etc.; thus making an “Offer to Purchase”.
After the offer has been accepted by the seller, and all conditions removed, the earnest money (deposit), 10% of the purchase price, is transferred within the following 7 days. Closing on the property is usually within 2 months of the purchase but can vary based on the circumstances of the parties to the transaction.

One of the biggest difference lays with the role of the real-estate agent in Roatan and his or her responsibilities, compared to what a typical agent would do in North America. Some of the tasks that an agent will do, in conjunction with their brokerage office once the offer has been accepted and the earnest money transferred are:

(1) Work with your attorney to obtain:
Title Copies
Title searches
Obtain recent surveys

(2) Work towards the closing.

(3) Attend the closing on your behalf, if you are not available.
(This is when seller and buyer sign the Notary Protocol and the transaction is complete).

Can I purchase and not attend the closing?
Yes. As a buyer, you will be asked to apply for a Power of Attorney, which will allow a person of your choosing to attend the closing. That person will “accept” the property on your behalf.

Can I sell a property and not attend the closing?
Yes, but as an absentee seller, you are required to obtain either an “Apostille” (a document authenticating your desire to sell and your signature) from your states Attorney General (in the U.S.) or a Honduran Power of Attorney if you are from Canada. Other countries also use one of these two options. Those documents would then need to be registered here legally before the closing and this may take an extra 2-3 weeks to accomplish, which needs to be added to the time line for the closing date.

What are the closing costs for a real estate transaction on the island?
The closing cost are normally the buyer’s responsibility:
If the transfer of property comes in the form of a “Change of Administrators” of a Corporation, the cost is normally between 2.5% of the purchase price. If there is no Corporation transfer involved, costs are approximately 4.2% of the purchase price.

What are typical real estate commissions on the island?
The real-estate commission is normally the seller’s responsibility and amounts to 10% of the purchase price.

RESIDENCY

What is the residency process?
There are several different types of residency in Honduras: ***NOTE- This information is given as a very general overview of the process and cost involved and if it is something that may be of interest to you we will recommend a dependable local attorney to advise you.*** It usually takes 3-6 months and costs between $1,200-$5,000USD depending on the type of residency.

(A) Residence rentier:
i. Your income records authenticated by a public notary and by the
ii. Chamber of notaries of their state/province of residence.

(B) Residence pensioner:
i. Bank reference where the pension or income comes from.
ii. Certificate of the company or institution where pension or income comes from.
iii. Both documents must be authenticated by a public notary and by the Chamber of notaries of their province of residence.

(C) Residence for work:
i. Contract work or a letter of commitment from your employer, authenticated by a notary and by the Chamber of notaries in the state/province of his residence. If the contract is drafted in Honduras, you don’t need to be authenticated in USA/Canada.

(D) Residence as an investor:
i. You can purchase the quality of resident investor, foreigners who invest their capital in any branch of licit economic activity in Honduras, not less amount of $ 50,000.00. As well as those who invest their capital in certificates, securities, stocks, or bonds of State and international financial institutions, in the form and terms determined by the law. For more information, contact the Consulate General or Embassy near you

BANKING

Is banking safe in Honduras and on the Island?
Yes, local banks are far more conservative and less susceptible to failure than foreign counterparts.

Is financing available?
Most purchasers choose to obtain financing in their home country via a mortgage on their residence, a line of credit or personal loan and then wire transfer the money to Roatan to pay for the transaction.

Some sellers will consider financing the purchase themselves with either a legal, registered mortgage contract or possibly with stock certificates (which become ‘bearer bonds’, held in escrow until the mortgage is paid).

Though local financing does exist, it is offered to citizens and legal residents only and normally at higher interest rates, higher down payments and shorter term than what North American are accustomed to.

ONCE YOU ARE HERE

What is the cost of living in the Bay Islands?
Electricity cost is higher than what most people are used to, which make it a commodity that needs to be used wisely.

Food costs really depend upon personal tastes. If you take into consideration that you can eat and shop where the locals do, meaning fresh sea food, (fish, lobster, shrimp) and locally grown fruits and vegetables, your expenses are normally far less than what you may pay at home.

Property taxes are low compared to what most are used to and range around 0.35% of the registered value and are paid annually
Property insurance is about 0.4% of the insured value. Most insurance package do not cover theft.

Do you have school age children are coming with you?
There are 2 schools where most of the expats go:
NuNa Academy in French Cay.
Bay Islands International School in Sandy Bay.

Can I get health insurance in Roatan?
Yes, there are health insurance providers on the island. “BUPA” is one that covers expats who live more than six months out of the U.S. Their coverage works in either country.