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Mortgages
Real Estate Financing in Mexico,
Latin America and the Caribbean
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Buying Real Estate in Guatemala
Legalities and OwnershipFor foreigners who are interested in buying
real estate in Guatemala, there is much good news. Foreigners can buy property
and enjoy all the same property rights as a Guatemalan citizen. There are no
restrictions on buying property in Guatemala except in the areas along the
coasts and lakeshores. All properties in these protected areas must be leased
from the government.
Buying and registering real estate in Guatemala is
a five-step process.
To begin with, the seller must obtain a certificate
from a Guatemalan property registry verifying that the property is free from
liens and financial encumbrances and that the seller is the legal owner. It is
this certificate that is later used by the public notary (notario) for
preparing the official property deed (escritua). In order to obtain
this certificate, the buyer must obtain from the seller the exact information
about the property’s registry identification numbers and the office where the
property is registered.
The next step is to get the cadastral value
(valor catastral) i.e. the taxable value of the property as determined
by the municipal government. If the municipal registry of the property does not
have the property value then the alternative is to request the information from
the DICABI (Dirección de Catastro y Avalúo de Bienes Inmuebles). The
DICABI is a national institution that presides over all of the regional
registries throughout the country.
Once the cadastral value has been
obtained, the next and most important step for the Notary/Lawyer is to prepare
and notarize the sale agreement and prepare the public deed. The documents
required by the Notary are:
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Property Title from the Real Estate Office. |
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Actualized Certificate of property from General Property Registry
(Registro General de la Propiedad or RGP) |
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Photocopy of the ID of seller and buyer (passport or local ID). |
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Certificate from the Tax Authorities certifying that the Value added tax
(VAT) has been paid. |
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Cadastral value of the property. |
The Public
Deed is then submitted to the Real Estate Office and recorded in the name of the
new owner.
The final step is to notify the municipality and /or DICABI
of the transaction. Though not having an effect on the validity of the transfer,
it is still important as it helps to ensure the proper updating of the cadastral
value of the property. Non-compliance with this step carries a fine.
Financial MattersThe entire process of locating, buying and a property
in Guatemala involves quite a few costs. The certificate from the property
registry needed to verify the status of the property can be obtained by paying
as of this writing $7 in expenses and $13 in legal fees.
To get the
cadastral value of the property from the municipality the legal fee payable is
as of this writing $10.
For all other transactions above $625 the notary
fee is $62.50 plus 3% of the transaction value. However, for all transactions
below $625 the notary is paid according to the rates given in the chart in the
notary bill.
The fee levied for the recording of the Public Deed in the
Real Estate Office is $6.25 plus 1.5 % of the transaction value (registration
value). The transaction can be notified in the Municipality and/or DICABI by
paying a fee, which amounts to $5.
Property taxes are surprisingly low in
Guatemala at the rate of 0.5% of the assessed value of the property.
Financing a real estate purchase in Guatemala is very difficult unless
you are residing there and possess a proof of income generated within the
country. The next best alternative is to look for a seller who is willing to
arrange private financing which is difficult and expect a hefty down payment.
Other Important IssuesWhen a property is purchased in Guatemala, 10% of
the purchase price is paid for the title tax. In addition, there is a standard
sales tax that is not visible but is included in all purchases and amounts to
12%.
If a real estate agent is hired then the seller usually pays him
the commission normally at a rate of 5%.
The seller is responsible for
collecting all the documents that are to be presented to the lawyer/notary. The
notary is, however, responsible for purchasing the stamps for the payment of VAT
(at the rate of 12% of the transaction value) and also for sticking the stamps
on the Public Deed.
Guatemala has had a serious problem until recently
with the inequality of land distribution. This inequality was a major motivating
factor in the 30 year civil war which ended recently. Previous governments have
made it a practice to give the land of the indigenous people to supporters of
their governments so be aware of a properties history.
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