Tips to Overcome Challenges When Buying Property in Belize
Posted by David Kafka on 09/01/2021 08:43 AM
On a monthly call with my mentors, we talk about real-life issues when it comes to investing. This last call made me think about some of the issues we may face when buying properties in Belize. We also talk about the importance of setting expectations with clients.
Here are some of the challenges we’ve experienced and tips on how to handle them.
Central Bank Approval Needed
Recently on two of my listings, an offer came from another real estate company. I requested the funds stay in the US per my clients request and they agreed.
Well, to my surprise, the money came to Belize.
What does that mean?
It’s not like sending money from a U.S. bank account where the recipient receives those funds in a couple of hours.
If the funds are in Belize and you have to wire out of Belize to North America or elsewhere, there are many required documents and approvals.
This process is out of everyone's hands except the bank and Central Bank. We need documents like the sales agreement, income tax clearance, Central Bank approval, and source of funds. If the money is going to a company, we need the company documents and proof that the shareholder is on the sales agreement. Once everyone is satisfied and the documents meet the requirements, the Central Bank will approve, and the bank will wire the funds.
It could take 2 to 8 weeks to complete the transfer of funds. We have even experienced a 3 to 4 month wait before.
People are working in the background to speed this process, but always ask your agent where the funds will be held. Then, double-check it with the legal team. There are times when the funds HAVE to come to Belize, but we try to keep the funds out if possible.
The 8% Stamp Tax
We will send a receipt that the stamp duty and the registration fee were paid. A copy of the receipt proves you are the official owner of the property.
Once the documents have been accepted, the sale and transfer documents need to go through several approvals. One of those includes evaluation of the price. If the Lands Office feels you paid too little, they can re-evaluate the purchase price and raise it so you will have to pay more of the 8% stamp tax. This happens quite often... as much as 50% of our sales. They normally use comparative sales, Google earth, and other means, including site visits.
There is a process to fight it, but it requires a good explanation and an appraisal of the property. A request can be submitted to work through the legal team. We’ve only won a few over the years.
We also were told we can no longer receive letters from the Lands Office because they do not issue letters of reassessment from the previous administration (UDP is the old administration, and now the political party in power is PUP). It is frustrating, but if you don't pay, then you don't get the title.
Receiving Your Title in Paradise
Another issue is the time it takes to get the title once the documents are lodged at The Lands Department. A receipt is sent with a sticker that says, “INSTRUMENT NO.” This number proves title ownership until the title document is received.
This receipt along with the sales agreement, allows you to set up utilities, request permits, etc.
Within the Lands Department, there are several other processes that the documents for title must pass. Once everything is verified and approved a new title is printed and signed by the Commissioner of Lands.
Sounds easy, right?
It’s currently a hot market in Belize, and there is a backlog within the UDP. Sometimes it takes up to 2 years to receive a title. There used to be a speedy application process fee you could pay, but that has been discontinued.
As PUP took over, they said they would get rid of the backlog, but they haven’t yet. It does take time, and this is also out of our hands. Our legal teams continue to ask about titles every week to ensure we remain on top of the progress.
Please let us know if you have had a closing with us and haven’t received your title. We are creating a follow-up folder and comparing it with the office of records to see if we can speed it along.
This is not meant to discourage you from buying but to let you know what to expect when you buy in Belize.
Lastly, we are getting ready to pay taxes. If you'd like help getting your property taxes paid, please let us know by emailing firstname.lastname@example.org and we’d be happy to assist you.