FREQUENTLY ASKED QUESTIONS ABOUT REAL ESTATE IN BELIZE
CONSEJO
o COPPER BANK o SARTENEJA
A
hallmark of Corozal Town
Question:
Can a foreigner own property outright in Belize?
Answer: Absolutely! Belize is part of the
British Commonwealth and the legal system is based on British common law. A
foreigner has the same rights as a Belizean citizen to freehold property
ownership.
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Question: Are any
special permits required for a foreigner to purchase property?
Answer: No. Many Belize real estate websites make reference to an 'Alien Land
Holding License' and development requirements. This is confusing. The fact is
that the Alien Landholding Act was abolished in the early part of 2001. There
are no more licenses, permits, special permissions or conditions needed for a
foreigner to take title to freehold land in Belize.
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Question: How are Coroza
properties titled?
Answer: Presently, you can take title to freehold property in Corozal in one of
3 ways. The oldest form of title is taken via a Deed of Conveyance (or Deed of
Encumbrance), which originates from the British colonial days. Ownership by
Conveyance can be subsequently converted to a Transfer Certificate of Title
(TCT) via an application for first registration. A TCT is a physical title,
whereas ownership via Conveyance is a registered right to ownership of a
particular parcel of land. Either form of ownership is equally secure and merchantable,
however it is slightly more costly to transfer title on a TCT than on a Deed of
Conveyance.
In 1987, the Government passed the Registered Land Act and certain areas of
Belize were subsequently declared compulsory registration areas, which includes
certain sections of Corozal. Under this act, the conveyed properties were
reissued new physical Land Certificate Titles with parcel number designations
that replaced the old Meets and Bounds references on the original conveyed
properties. The Government is in the process of reregistering all freehold
lands under the Registered Land Act so as to eventually have a uniform
nationwide system of land ownership.
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Question: How do I
ensure the property that I want to buy has clear title?
Answer: By having your legal representative research the title and issue a
title opinion. The title is researched in the Lands Registry, and in the
Companies Registry if the land is held under a company. Liens, judgments and
encumbrances are valid only if properly lodged. A title opinion for land which
is not in the new registration section, such as conveyed land, takes a little
longer as an abstract of title must first be prepared that goes back no less
than 30 years. The statute of limitations on land claims is 30 years. An
opinion of 'good and clear title' will be issued once the attorney has satisfactorily
examined the abstract in fine detail.
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Question: What about
titles to 'condominiums'?
Answer: It should be noted that true condominiums only exist in the New Registration
zones where the Strata Act is applicable. That we know of, Corozal, San Pedro
Town, Seine Bight, Placencia and Belize City are the only locations that have
true condos with Strata Titles. Strata Title enables one to pass physical title
to a 'slice of air with a building in it' without owning the land that is below
it. ie: one can purchase and take title to a 3rd floor unit without owning the
shadow footprint of the land below. Many developers around the country
erroneously refer to their projects as 'condos' when they are not located in a
new registration zone. If the 'condos' are not in the new registration zone
then they should be referred to as 'units' or 'residences' and, in most cases,
they will be titled via corporate share certificate(s). This ownership
structure is popular and is known to North Americans as "Co-op's. The
advantages of Co-operative Corporate ownership are minimal closing costs and a
higher degree of isolation from personal liability. The downside is that share
certificates cannot be mortgaged by a lending institution. In most cases,
purchasers feel equally comfortable with both forms of ownership and there are
many popular Co-op's that exist within the Strata zones.
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Question: Can I take
title to my property under an entity other than myself?
Answer: Yes. This is one area where purchasers are generally lacking in their
due diligence. In many cases, it is prudent to form a Belizean company and take
title to the property under this structure. The cost to form a company runs
around $US1000 and around $US150 annually to maintain it in good standing. One
should always think re-sale when investing in property. If you purchase a
Belizean company that holds the property then you will be subject to only a 3%
tax on the value of the purchase price. If you purchase a property, which is
titled in the seller's name, then you will be subject to a 5% transfer tax on
the purchase price. On sales under corporate ownership the savings on the
closing costs for the purchaser is always a 'deal sweetener'.
One can also take
title under a foreign LLC however we have never run into a situation where a
foreign LLC was purchased along with the property. It might behoove some foreign
purchasers to take title under a domestic LLC but we have yet to figure out any
logical reason to do this, other than to afford the owner some degree of
domestic liability shielding. A foreign LLC, just like a Belizean company, must
have a Belizean registered office (an attorney or CPA) and be kept in good
standing locally via annual filings.
One can also take
title to property via an offshore vehicle, be it a foreign trust or
International Business Corporation (IBC). An IBC is the most popular and is
simply an anonymous company that is housed in one of many offshore
jurisdictions around the world. The ownership of the IBC is via bearer shares
so there is no record in any registry of the actual shareholders of the
company. The bearer shares can be issued in ones' names or in the name of the
attorneys of the registered office for additional shielding. In most offshore
jurisdictions the registered agent must hold the bearer shares under lock and
key.
Under Belizean law,
only a foreign IBC can hold title to shares of a company that owns real estate
in Belize. Here is an example of the mechanics of an offshore ownership
structure:
The purchasers would
hire a Belizean attorney to remotely form a Panamanian IBC through the Belizean
attorney's corresponding Panamanian law firm. Bearer shares would be issued in
the name of the purchasers and would be held in trust at the IBC's Panamanian
registered office.
The purchaser would
then form a Belizean company and issue the shares to the Panamanian IBC. The
directors of the Belizean company can be either the purchasers or the
Purchasers' Belizean attorney.
Title to the property
would then be taken under the name of the Belizean company. Under this
ownership structure, the purchaser would have complete anonymity of ownership
and absolute isolation from any personal liability. The cost to set up this
structure would be approximately $US1500 for the IBC, $US1000 for the Belizean
Company and around $US1500 per year to keep both companies in good standing.
Ownership under this structure can be very appealing to purchasers of larger
commercial facilities and to individuals requiring high degrees of privacy.
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Question: Can North
American Governments investigate my investment activities in Belize?
Answer: Yes and No. Belize is an offshore nation that does not have a tax
treaty with the USA or Canada. However Belize will co-operate with these
countries if there is sufficient evidence that a person or entity has been
involved in criminal activities and/or money laundering. Belize has modern
offshore banking legislation, including a tough anti money laundering act, which
is designed to repel illicit monies and persons from using our offshore
protectionism. A legitimate foreign investor can invest in Belizean property
through offshore instruments and enjoy all of the benefits of complete offshore
privacy.
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Question: Can I get
title insurance?
Answer: Yes but it is not necessary unless it is tied into some form of
international bank financing package on a sizeable purchase. Stewart Title out
of Texas issued its first policies in Belize about 10 years ago. Belize is the
only country that we know of, where an A+ American title company has felt
comfortable enough with the security of a Central American nation to guarantee
title. In our opinion, a TCT, Land Certificate or clear Deed of Conveyance,
which are all guaranteed by the Government of Belize, are as secure a title as
one can obtain in any commonwealth country or in the USA and Canada.
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Question: What are
typical closing costs?
Answer: This is very straightforward. In Belize, we do not have a capital gains
tax so the Government assesses a 5% 'stamp tax' on the declared purchase price
of the property at the time of transfer of title. The first US$10,000 of the declared purchase price is exempted from the payment of stamp duty. On an outright purchase,
legal fees for title research and title transfer typically run at 2% of the
purchase price. Legal fees for drafting and recording an Agreement For Sale and
Caution run between $US300-750. It is customary that the purchaser pays for all
closing costs under Belize transactions.
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Question: Do I have
to retain an attorney to purchase property?
Answer: Not necessarily. There are some very experienced and reputable
paralegals in Corozal who have been dealing with Corozal properties since day
one. In most cases, they will be ultimately more familiar with the title
history of our local properties than the Belize City based law firms. One will
find that the paralegals will be more efficient in communications and
finalizing one's purchase. Obviously the decision as to which way to go should
be analyzed on a case-by-case basis.
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Question: Are most
purchases consummated in US Dollars?
Answer: The majority of properties in Corozal are bought and sold in US
Dollars. This gives the purchaser a high degree of security against taking a
local 'currency hit'.
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Question: Is local
financing available?
Answer: Yes, however most non-residents will balk at the interest rates.
Effective local interest rates are currently in the range of 12-14% with fixed
terms of only 12 months. At the end of every year the loan is closed out and
then renewed at the current lending rate. Local borrowing is only permitted in
Belize dollars and thus is not applicable under most property purchasing
scenarios. However we can assist a purchaser in borrowing US dollars through
Belizean offshore banking institutions. Effective interest rates are
approximately 12% and the banks usually require that they be 50%
collateralized. Belizean offshore banks are not permitted to loan to persons
residing in Belize.
Another option
available is “owner financing”.
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Question: What are
the procedures for seller financing and how am I protected?
Answer: In most instances in Corozal, the seller financing your purchase would
be a North American developer or landowner. Most people are familiar with a
Land Contract and the Belizean equivalent is called an Agreement For Sale or
Memorandum of Sale. An Agreement or Memorandum, under Belize law, is a valid
and binding contract that vests the purchaser with an equitable interest in the
property concerned. Once such an agreement has been registered or recorded at
the Land Registry, it constitutes notice of that person's interest as
'Equitable Estate'. The 'Legal Estate' does not pass to the purchaser at this
point but the registered Agreement or Memorandum acts as a lien and security
for such title being eventually transferred. The titleholder can no longer
enter into any other contract on the property or mortgage the property. Legal
Estate will be passed at such time when the purchaser satisfies all conditions
of the agreement, which is when full payment has been made to the seller. When
an Agreement or Memorandum is associated with property falling under the New
Registration Act, an additional document called a 'Caution' is lodged in the
property's register to act as a similar lien in the Registered Lands
Department.
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Question: What is the
process for purchasing a property in Belize?
Answer:
The first step is to
submit an offer to the seller. Offers must be submitted along with a minimum of
2% earnest monies deposit with Corozal Bayside Realty. The offer form is
legally binding to both parties and includes an adequate due diligence period
for the purchaser.
Upon acceptance by
the seller, the purchaser will then retain a local attorney if needed. Once
satisfactory title research is completed, a recordable Agreement For Sale, or
original title transfer instrument will then be drawn up based on the
particulars of the original purchase offer.
The balance of the
monies payable for either the down payment or the full purchase price will be
due for deposit to our stateside company escrow account at the time specified
on the purchase offer or Agreement for Sale.
The transfer
documents will then be executed and delivered to the purchaser's attorney for
review. The attorney will then send us copies and notify us that the documents
are in order and will instruct us to release the seller's escrowed funds.
The executed
documents will subsequently be processed at the Lands Registry and an original
title or certified copy of an Agreement for Sale will then be presented to the
new owner in due course.
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Question: How long
does it take to close a sale?
Answer: Typically 30 to 60 days.
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Question: Should I
involve my US attorney in my Belizean property purchase?
Answer: US property law is significantly different from British property law.
Unless your attorney is a British property law specialist, with a sub-specialty
in Belizean property law, we recommend that you do not incur the additional
costs and headaches involved with retaining two attorneys. We can recommend an
experienced Belizean law firm to represent your interests if needed.
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Question: Do I have
to be in Belize to buy or sell property?
Answer: No. Many transactions are completed where either the purchaser or the
seller is not in Belize. The documents are Fedex'd to the absent party and
executed in front of a notary public. Purchase offers can be completed by
facsimile, which is legally binding in Belize.
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Question: Can I open
a bank account in Belize if I am not a resident?
Answer: Yes, it is simple to open up a Belize dollar account with any of our
local banks. All that is needed is a copy of your passport, a mailing address
and a bank reference letter. One can also open up a US dollar account through
one of our Belizean offshore banks. The requirements are similar to the above
but one cannot be a resident of Belize and hold an account. However one can
however form an IBC, which is considered non-resident, and maintain a US dollar
account through this company.
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Question: What are
the rates for property taxes in Corozal?
Answer: Taxes are very affordable. Most properties are taxed at 1.5% of the
assessed value. Assessments are usually at 10-30% of the market value.
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Question: Tell me
about Belizean surveys?
Answer: Most Belizean surveyors are educated in the UK or Canada. Surveying in
Belize is not taken lightly and there is a strict apprenticeship process that
one must go through before becoming licensed. We have found our surveyors to be
efficient and extremely precise. The survey plat of a parcel or sub-division is
only valid once registered, examined and approved by the Commissioner of Lands.
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Question: Are squatters
a concern in Belize?
Answer: No. Belize has tough anti squatting laws unlike Costa Rica and other
Central American countries. One can only claim title to a land or easement upon
proof to the Supreme Court of Belize that one has had continuous and
undisturbed possession for 30 years on National and Conveyed lands and for 12
years on Registered lands.
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Question: What about
property insurance?
Answer: Good all perils (including Hurricane) insurance is available here on
buildings and structures through local insurance companies who are re-insured
through US and European carriers. Rates run from 1.5% for concrete structures
to 2.5% for wooden structures. Deductibles are normally 5% of the sum insured
on storms and less for fire.
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Question: Do I need
to be concerned about hurricanes?
Answer: We have to be on the lookout for hurricanes while people in other
countries need to be on the lookout for tornados, earthquakes, forest fires,
floods and most recently, big terrorist bombs. These are the realities of life.
Fortunately, Belize is tucked down in the South West corner of the Caribbean,
which is far from the steering currents of the hurricanes and thus out of the
traditional hurricane paths. Historically, Belize has experienced a major
hurricane every 20-30 years. Ambergris Caye was hit by a hurricane in 1942 and
then 2000.
P.O. Box 275
Corner 1st
Avenue 7 2nd Street North
Corozal Town
Corozal District
Belize, Western
Caribbean
Tel: ( ) 501-422-0002
Cellular: ( ) 501-624-3300
Fax: ( ) 501 422-0003
Email: info@corozalrealty.com
Website:
www.corozalrealty .com
