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Tugliani & Tugliani
Since 1974
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Presentation...
- Honduras- Legislation Overview
- Real State in General
- Real State involving Individuals
- Real State involving Corporation
- Closing Documents Checklist
- Closings – Step by Step
Legislation Overview – Prohibitions
Constitutional Article #107:
State, Municipal or Private Properties situated
along neighboring countries or coastlines of both seas in
an extension of 40 km towards the interior of the country,
including islands, cays, reefs, rocks and sand banks, may
only be acquired, possessed or held at any title by Hondurans
by birth, corporations formed entirely by Hondurans, and,
government institutions, under penalty of nullity of the act
or contract.
The acquisition of urban properties located
in the limits indicated in the above paragraph shall be subject
of a special legislation.
(Congress Decree 90-90)
Property registrars are forbidden to record documents that
contravene these dispositions.
Legislation Overview – Permissibles
Congress Decree # 90-1990
- 3,000 m/2 for Residential Purposes in a Foreigner’s
Name (approx 0.72 acres)
- Improvements (Residency) to be made in 3 years from
purchase.
- Larger areas for tourism projects with authorization
from the Honduran Institute of Tourism
Firm’s Interpretation and Notes:
- 2 individuals may Not buy more land jointly;
- Improvements Building condition is not regulated (yet);
- For larger areas, even if for tourism projects, we recommend
the use of a corporate structure.
Corporate Structures
From Constitutional Article # 107 we’ve
learned that any of the following 3 elements are required
to acquire land in excess of what allowed by congress Decree
# 90-90 (3,000 m/2):
- To be a Honduran by Birth;
- A Corporation formed entirely by Honduras;
- Government Institution.
# ‘s 1&3 are Not options, therefore,
we’ll analyze #2….
Honduran Civil Code
Article # 50:
The Corporations, Foundations and Associations recognized
by the Law and which are domiciled in Honduras shall have
Honduran Citizenship if they have the concept of a juridical
person as per the dispositions stated in this code.
Article #56 :
Juridical Persons are :
- ...
- Associations of particular interest ; civil, mercantile
or industrial to which the law their own personality,
irrelevant to the one of its associates.
 Therefore,
any corporation formed in Honduras, regardless of the Nationality
of its shareholders, HAS HONDURAN CITIZENSHIP.
ABC Holding Company, S.A
Is a corporation chartered and domiciled in
Honduras, therefore, has Honduran Citizenship. Can it own
land according to Constitutional Article # 107?
Anwer =No !!!
Because it is not formed entirely by Hondurans.
 To
comply with the element “formed entirely by Hondurans”
we must take another step…
“Juan Perez” shall be a Honduran
National who will aid in the chartering process of the corporation
since a minimum of 2 shareholders are required for the purpose.
His/Her stock certificate shall be transferred
by simple, blank endorsement as allowed by commerce Code Articles
# 126, 480, 482, 483, 484, 487, 489, 490, 491, & 492.
Real Estate in General.
1st. Feel comfortable with:
a) The property you intend to purchase;
b) Your real estate agent;
c) Your attorney.
2nd… Pay special attention to the terms and conditions
you agree to when signing the agreement to purchase property.
In your Real Estate experiences you
will find transactions:
- From Individuals to Individuals;
- From Individuals to Corporations;
- From Corporations to Individuals;
- From Corporations to Corporations;
- Purchase of a Corporation with its Assets.
Closing Documents Checklist
- Agreement to Purchase Property stating all terms, conditions
and contingencies.
- Property Title of the land, vested in the name of the
Seller; and, if applicable, property Title of parcel providing
access.
- Dully recorded Power (S) of Attorney in the event seller
(s) or easement grantor shall not be present.
- Survey of the land with Polygonal description and area,
signed and stamped by a Honduran Civil Engineer or Architect.
- Cadastral Certificate of the Property subject of the
Contract (desirable but not mandatory)
- Passports, Residency Cards or other forms or ID of all
parties involved in the contract.
- Suggested name for Corporation (when applicable). Also
desired stock distribution and administration.
- Final payment of the Land and Closing Costs should already
be in escrow by the time of closing.
Title Searches
It is very important that the Closing Attorney
you choose checks the current Property Title, as well as the
antecedents going back at least 20 years.
*Ordinary Statute of limitation = 10 years (Involves
Fair Title and Good Faith)
*Extraordinary Statute of limitation =20 years (No Title and
No Good Faith)
- Fauls and actions against the Government are NOT interrupted
by Statute of limitation; ever.
Accessories to Closing
Title Insurance
- First American Title Insurance Company
- Stewart Title
- Mortgages
- Easements of any sort
- Pedestrian or Vehicle Access
- Water
- Public Utilities
Closing Costs
- Transfers Tax = 1.5% of Purchase value
- Cadastral Certificate = 1% or 2% (Depending on the Municipality
the property is Located. Applicable only to the Bay Islands.)
- Registry Fees = US$1.00 per every Thousand.
- Bar Association Stamps, Miscellaneous Expenses, Notary’s
Fees, Corporations, etc..
- Closing Costs, in average, are equivalent to approx.
5% of the transaction’s value.
- All Real Estate Transactions involve an Attorney (Notary).
Transactions documented in Private documents do NOT have
any legal effect before third parties.
- All closing documents MUST be recorded at the Registry
House.
- Average time, currently, approx. 3-4 months.
- Closing Costs are customarily payable by the Purchaser.
Pre & Post Closing Procedure
- Spotting the Right Property for you
- Negotiation.
- Signing of Agreement to Purchase Property
- Deposit of 10% Earnest Money
- Establishing Terms, Conditions and Contingencies
- Setting a Closing Date Signing of Agreement to Purchase
Property
- Closing- Transfer of Ownership (Signing of Public Instrument)
and Disbursement of Payments, Commissions and Closing
Costs.
- Payment by Attorney of Transfers Tax, Registry Fees,
Bar Association Stamps, etc. (72 hours)
- Release of Authorized First Copy by the Notary
- Issuance of Cadastral Certificate by the Local Municipality
- Submission of the Deed to the Registry.
- Registration of Deed
Purchasing Corporations
Purchasing a Corporation along with its asset
(s) involves a slightly different procedure than Real Estate
Closings.
- No Transfer Tax Payment Since there’s no transfer
of ownership involved. Property remains in the name of
the Corporation.
- Instead, a change of Administrator’s) or Board
of Directors takes place through a Public Instrument as
well.
- All Property Documents and Corporate Documents, including
BLANK ENDORSED Stock Certificates as allowed by the Honduran
Commerce Code.
- Same Closing Documents Checklist For Real Estate is
Applicable plus ALL Corporate Documents.
Sense of Security –Convention Between
the USA & Honduras
Congress Decree No. 207-98, published in the
Official Gazette November 28, 2000 (vol. 29,339)- Bilateral
Treaty (USA-Honduras) relative to Reciprocal Sponsorship and
Protection of Investments.
Main Topic.
- No Expropriations; unless for Public Interest which
is followed by the corresponding indemnification.
Tugliani & Tugliani
This presentation is a General Overview of Real
Estate transactions in General.
All Transactions have their own level of customization
to them, therefore, if you feel you need to ask a specific
question, please contact us…
Italo, Gio & Alex Tugliani
e-mail: tugliani-corplaw@yahoo.com
Roatan: Tel/Fax (504) 445-3130 & 445-3028
Tegucigalpa: Tel/Fax (504) 231-072
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