Learn all about the purchase process of buying property on Roatan
Roatan is quickly gaining popularity as a desirable second-home destination. Located in the Western Caribbean close to the mainland of Honduras, the island features gorgeous white sandy beaches, turquoise blue waters, rolling hills covered with tropical jungle, a rich and friendly island culture, and the second-largest coral reef in the world. Despite increasing popularity as a tourism destination, the island retains its authentic charm, and entry into the market is surprisingly accessible. When it comes to accommodation and investment opportunities, visitors have a wide range of options, from high-end luxury to more rustic island style. Offering something for everyone, an abundance of natural resources, and well-serviced with direct flights from multiple cities in North America, it’s easy to see why the Roatan property market is such an attractive proposal.
Purchasing property on Roatan is a simple and uncomplicated process. Property ownership is guaranteed by the Honduran Government, and foreigners are allowed to purchase up to 0.75 of an acre of property under their individual name. To purchase more than 0.75 acres, a Honduran corporation needs to be created. With the help of a qualified attorney, forming a corporation in Honduras is a fairly easy process. A corporate entity is formed by two Honduran nationals, and once the corporate papers have been filed and registered, the original shareholders will endorse their shares and rights to you through a straightforward share purchase agreement. The approximate cost to form a Honduran corporation is about US$2,000, and we can recommend a qualified attorney.
In order to make an informed search and protect your investment, you need the assistance of a qualified Real Estate Broker and Honduran Attorney so they can guarantee the documents associated with clear title.
THE PURCHASE PROCESS
Once you have selected the property you wish to purchase, you must enter into an “Offer to Purchase Agreement” which specifies the property and outlines the conditions of the sale. Your broker will prepare this contract and facilitate all negotiations and communications with the seller.
Upon acceptance by the seller of the negotiated terms of the agreement, the purchaser will be requested to send the Earnest Money Deposit, which is typically 10% of the purchase price, to the established escrow account. The remaining funds will be wired at closing and need to be deposited to the escrow account approximately 3-5 days before closing takes place.
CLOSING
Closing costs range between 5.00% – 6.50% of the agreed sales price and vary depending on the municipality that the property belongs to. These closing costs cover Land Transfer Taxes, Municipality Taxes, Notary Services, Stamps, Notary Services Taxes & Document Registration. If a Honduran Corporation is formed, a mortgage is required or title insurance is purchased, there would be additional costs based on each case.
Closing can be handled in three different manners:
- Have the Purchaser travel to Roatan for closing and sign the papers in person.
- Provide a Power of Attorney (POA) to your designated Honduran lawyer to close on your behalf and accept title in your name.
- If a Honduran Corporation is being formed for the purchase, you can authorize your Honduran attorney to conduct a shareholders’ assembly for the buying corporation to provide Power of Attorney, which is something that can be done during the act of incorporation.
Property Taxes are around 0.45% of the sales price and are paid per year. For example, on a $100,000 property, your property taxes would be $450 per year. The municipalities usually offer discounts if you pay during the first trimester of the year.
Have any other questions about the property purchase process? We’d be happy to help!
