Tuesday, October 11, 2011

StrataTitle - What is it, how is it applied?

You are probably familiar with the concept of  “Title” ….. so what is “Strata Title”?
Essentially, Title to land is documentation of ownership of a defined piece of earth.   
Strata Title is a title to a defined piece of construction, as in a condominium.  The title document functions to guarantee your rights of ownership.  
To issue a title to land,  a survey has been done and a parcel number or “meets and bounds” description has been created. These items identify a property in such a way that it can be definitively identified. 
Much the same process applies to the issuance of a Strata Title, but since the title represents ownership of a piece of construction, the unit in question must be built prior to the survey taking place.  After the unit construction is complete, a surveyor comes to the property and measures/defines the “Boundaries” of the condominium unit.  From that information a Strata Title is created.   
When the Strata Title is issued, the land upon which the unit sits must be unencumbered by loans or other liens, and property taxes must be paid up to date. 
Prior to the issuance of Strata, property taxes are levied on the land.  After Strata, property taxes are issued on the unit itself.
The land upon which Strata titled units sit cannot be encumbered.  It cannot be borrowed against nor pledged as security for any kind of transaction. 
The Strata Title to your own unit can be encumbered – that is, it can be used as a security for a loan.  Since Strata is a separate and individual title, loans on a particular unit convey no liability whatsoever to other units in the condominium development. 
If you are buying a condominium that is under construction, your guarantee of rights is memorialized by an Agreement for Sale.  When the Strata survey is completed, your Agreement for Sale is replaced by a Strata Title document.

Monday, August 15, 2011

Insuring Your Property

Property Insurance - What is available, what does it cost?

Good insurance coverage is available in Belize.  There are several companies from which to choose, and naturally the policies vary a bit company by company. 
The commentary below is a overview.  Each company/policy will have its own particular conditions so do read policies carefully before purchasing coverage.

Structure/Buidling Insurance:
The base-policy is for fire.    Some policies exclude damage due to "brush fire" so read carefully.  If you live in a rural area where brush-fires may indeed be the prime fire-risk you face, find a policy that covers this potentiality. 
Additional riders add coverage for "All Perils".  “All Perils” riders cover a wide variety of potential events:Flood, windstorm, hurricane, earthquake, burst pipes, vehicular impact, airplane parts falling from the sky, malicious acts, earthquake, volcanic activity.
Deductibles will vary by occurrence.  The coverage is clearly stated in the policy.Deductibles also vary by company.   Read and understand this part of any policy you are considering.  It's at the heart of what you are buying.  

Rates vary depending on location and method of construction.
Seaside properties will have higher rates for hurricane coverage than properties located inland. 
Wooden buildings have higher rates than concrete. 
"Mixed construction" has another set of rates.  Mixed construction refers to a combination of concrete and wood.  The classification refers to the materials used for the construction of exterior walls.   Example - a first floor of concrete and a second floor of wood will be classified as "mixed construction".
Rates as of this writing run from 1% for seaside concrete construction up to 3% or more for wooden seaside construction.

Interior Contents:
Interior contents can be covered.  If you are buying building insurance as outlined above, the interior contents will be added to the base policy.
If you rent an apartment or home, you can purchase insurance on contents as a stand-alone policy.
Be sure to make an inventory of items covered and to submit it to your insurance company.  It is further recommended that you take photos of the goods themselves in situ to verify your inventory.  Burn the photos and written inventory to a CD and send it along to your agent.
Coverage should reflect the "value today" of the goods, not the cost to buy them new.

Piers can be covered, and carry rates parallel to "wood seaside" construction.  They cannot be insured on a stand-alone policy.  Pier coverage must be attached to a building/structure policy. 

Coverage during construction:
Contractors insurance is available.  All perils contractors policies cover the same range of items as those noted for completed buildings.  The rates and length of time of the coverage are different than those for completed structures.  Details should be discussed with the insurance agency you are considering.
Amount of coverage:
Your coverage should be for full replacement value.  Under-insuring has very stiff financial penalties if you file for a claim.   

Experience with filing claims - good companies give excellent and prompt service.  The coverage is really extensive, and unlike the unfortunate victims of Katrina you will not be sitting around splitting hairs over whether water damage was considered to be from rain or flood.  The coverage is written to INCLUDE the most threatening events, not to catch you up in a labyrinth of fine print.  DO read your policy carefully and DO comply with the provisions in it,  Do check the financial strength of the company you are considering before buying.   DO document your property.  DO prepare it properly for an impending storm - if you are putting up shutters, take photos.  If you are pulling your boat take a picture of it up on the land.  

Enjoy your property in Belize, knowing that you have excellent options for insuring your property, and that in the unlikely event of filing a claim that you will be treated well and fairly !

Monday, August 1, 2011

"Buy It" Part Three - What Happens in Escrow?

Webster's defines "escrow" as follows:  "A deed, a bond or a piece of property held in trust by a third party to be turned over to the grantee only upon the fulfillment of a condition."

You as the Buyer (grantee) have made an agreement with the Seller (grantor) to purchase a piece of property.   The title to the property will be turned over to you when certain conditions are met.   These conditions include payment of the purchase price, and other things clearly spelled out in the contract to buy.

The "third party" in the escrow is called the "Escrow Agent".  It is not you, and not the seller.  It is a mutually agreed upon "other".  It can be an attorney, a para-legal service, a title company or a company that has as its sole business the activities of escrow.  Sometimes it is a real estate company or even an insurance company.   The job is an important one and the escrow agent should be chosen with care.

 Here is a basic outline of the steps that take you from the "opening of escrow" to the "closing of escrow": 

Opening Escrow - Copies of the signed sale agreement and Earnest Money check are given to the Escrow Agent.  The Ernest Money check is deposited (cashed) into the trust account of the Escrow Agent.  

Title Search - Seller provides copies of title documents to Escrow Agent.  Escrow Agent uses these documents to have a search of the Title done.  If title is "good" the transaction proceeds.  

Other contingencies are met within pre-determined timelines.  These may include things such as a review of survey, CC & R's, house inspection, verification of inventory. 

Seller and Buyer provide their names and addresses to the Escrow Agent so that transfer documents can be created.

Transfer documents are created, and sent to the Seller for signature.  If the Buyer needs to sign (some types of transfer require this, others don't) then the documents are sent along to the Buyer for signature.  The transfer documents are then returned, fully executed, to the Escrow Agent.

Brokers for Buyer and Seller create a closing statement for each party and submit them to the Escrow Agent for use at closing.
Buyer's will show balance of purchase price (or down payment) due to close plus any other agreed upon fees, pro-rations, etc.   The final number will be what the Buyer needs to send along to the Escrow Agent to close.
Seller's closing statement will show the price, less Broker fees, plus any pro-rations (owed by Buyer to Seller) for property taxes, etc. as noted above.  The final number net the Seller will receive.  

Buyer sends balance of purchase price and any other agreed upon fees (for instance pro-rations for property taxes or homeowner's fees) to the Escrow Agent's Trust Account.

Closing Escrow - on the agreed upon date for completion of the sale, the Escrow Agent registers the transfer on behalf of the Buyer; sends the Seller his/her net proceeds and also sends the Brokers their fees.   Buyer will receive back the stamped original transfer document from government within a few weeks time.  Meanwhile, copies of the document lodged at the registry (along with a receipt for same) are a guarantee of your status as the new owner. 

Voila!  A "Closed Escrow."  Congratulations - you now own property in Belize!  

Tuesday, July 26, 2011

"Buy It" Part Two - Presenting the Offer

Presumably you have arrived at a point that could be briefly outlined below:

1.  You know what you want to buy, what you will pay and when you will pay it.
2.  You have enough money to make the purchase and pay the associated closing and professional fees.
3.  You have outlined the conditions (contingencies) that must be met in order to proceed to finalize the transaction.
4. You have a broker who has local knowledge, and has advised you on other conditions and terms that should be in your offer.
5.  Your broker has taken the details of the transaction and has written them in an orderly, understandable and legal format.
6.  You have read, understood and signed the offer and have written a check for your Earnest Money Deposit.

What Happens Next?

The first thing you do is ask for and receive copies of everything you have signed and that includes a photo-copy of your check.   After that, retire to your favorite beach chair and wait to hear from your broker. 

Your broker will contact the Seller or the Seller's agent and will inform them of the offer.   Usually a phone call kicks off the dialogue, followed by delivery of the written offer itself.   If the Seller is nearby, a paper copy can be presented for consideration.  If (as is most common these days) the Seller would prefer to receive electronic copies of the offer, then the broker will either fax or scan and send a copy of the document you signed.  This offer will have given the Seller a time-frame in which to respond.  

The Seller will review the offer and respond:  

Occasionally it's really easy, and s/he says yes, signs and sends the document back.   If this happens you have an accepted offer, and that offer has now become a binding legal agreement.  

Other times there are small details that need to be corrected (somebody's name is spelled wrong, the parcel number has a typo, etc), or larger issues that need to be negotiated (price, date of closing, certain furnishings not being sold with the property, etc). 

Small changes can usually be corrected by hand right on the document, with the corrections initialed by the Seller - in this case the Seller will also sign the acceptance.  The Buyer will need to initial the changes too, but at that point for all practical purposes you know you have a deal and can celebrate.  

Larger changes mean you are back in negotiation with the Seller.   It is now the Seller who initiates a written proposal/response.   This response is known as a "Counter-Offer".   Typically there are two methods of documenting a counter-offer:

1.  Seller signs the original offer, with the caveat - "Subject to Terms and Conditions as noted on the attached Counter-Offer.  All other terms and conditions of the original offer are accepted."  Then the changes are outlined on a second form, signed by the Seller and sent off to the Buyer for consideration.
If the Buyer agrees to the changes, s/he signs the Counter Offer and the deal is done.

2.  The entire contract is re-written with the changes included.  The Seller will sign it, giving the Buyer a time-frame in which to respond.   (Whilst it is probably neater to do it this way, it's not always possible due to time constraints, computer programs, etc. )  If the Buyer signs this the transaction is a "done deal."

Counter-Offers are submitted to the Buyer in much the same way as the original offer was submitted to the Seller.  If the Buyer is not in agreement with the counter-offer s/he can make yet another offer.   Subsequent responses are handled more or less as noted above.  This process can continue back and forth for as long as you wish, but the fewer times it bounces around usually the better the outcome will be.   Try your best not to over-negotiate.    You may believe you deserve the refrigerator as part of the deal, but don't loose a fabulous house over a detail - forget the frig (and your ego) and concentrate on the real goal.   Make a deal you can live with and get on with the process of closing.  You'll be glad you did!

AFTER the agreement is signed ........ the period between signing a mutual agreement to a sale and closing the transaction is called the "Escrow" period. 
Next week -  Buy It, Part Three - What Happens in Escrow. 

Friday, July 15, 2011

"Buy It" - Part One - What's an Offer?

You found something you like, and can afford - YEA!  

Next step - Make an offer.  

What constitutes an offer and how do you make one?

An offer to purchase occurs when you state your terms and conditions for the purchase of something (in this case that something is real property).

You can make a verbal offer or a written offer.  Telepathic offers don't count.  Verbal offers usually don't count either, because they are not binding and rarely contain the level of detail that is needed to be clear about what everybody needs to do.  My first employer told me - "Verbal offers are worth the paper they're written on .....".   

Write it down.  When you do so you will begin to articulate not just what property you want to buy and how much you will pay, but also when you'll pay it, how you'll pay it, what other conditions apply.   All of these items are important.  Work with your broker to be sure the list includes everything it should. 

Buyer Name - Is it you personally, you and a partner or significant other, your company, a family trust ?  If you're not sure, then note that as well so that appropriate provisions can be made later to vest title as you may choose. 

Seller Name - The listing agent will have this information and your broker should be able to obtain it from him/her.

Property description - The legal and common description of the property - be sure everybody knows what property is the subject of the contract.

Price - What will you pay, in what currency.  In Belize it is common for property prices to be quoted in either Belize or US Dollars.  The quote usually tells you which kind of currency the seller wishes to receive.  An asking price of $100,000 US means the seller wants US currency, not Belize currency.  

Earnest Money - When you write an offer it is customary to present an "Earnest Money Deposit" with that offer.  Traditionally it is done by way of a personal check.  It should be 100% refundable if the offer to purchase is not signed by the seller.  Why bother?  Because the "Earnest Money" is to show you are doing this IN EARNEST.  You're serious.  If you want to be taken very seriously, make the check a substantial one.  Your broker will advise you on the amount that is appropriate for the property and offer you are making.  If the offer is accepted, the earnest money will be put into the purchase escrow account and will become part of the purchase price at closing.

Terms - When will you pay the balance of the purchase price and how?   In 30 days, 90 days, or an a particular date that coincides with the maturation of a CD, or will you put a % down and pay the Seller over time (1  year, 5 years, 1 years?).  If you are making payments over time, when will each one be due and how much will each one be.  Where and how will you make those payments?  By check, by wire?  To what account?   What are the consequences if you are late?  All these items should be made clear.  

Possession of property - When do you get to "control" it - when do you get to move in or move on the property?  Usually it is at the "closing" of the contract.  Ask your broker for details on what constitutes a closing.  

Closing - When does the down payment (or entire purchase price, depending on the contract) get paid to the Seller?   Contingencies must be satisfied prior to this date, papers must be signed, etc.   Typical closing dates are 30-60 days from the time the offer is made. 

Contingencies - the list below is a sampling of things you may wish to put in an offer.  A contingency means - IF this happens, we proceed to buy.  Each property is different, so you should work with your broker to establish the appropriate contingencies.

Typical provisions are:    Title search showing that the property has clear title and that the person selling it owns it.     Receiving, reviewing and approving a copy of the registered survey of the property.  Having property taxes paid up to date.  

For raw land there usually isn't much more to include as a contingency, but for a condo or a house there will be other items to include.  

For a condo, you will want to receive, read and approve the CC&R's and have the condo fees verified.  

For a house you may want to have provisions for a property inspection with a builder or contractor.  

If you are buying a furnished property you will want to include a general inventory (don't get too type-A on this by including every fork and spoon - focus on the big stuff) and note the condition the items should be in at closing (working order or "as-is" ?).  

Perhaps you wish to review the insurance currently in place on the property?   If you are not closing for a while, you'll want to stipulate that the seller has to keep the property insured until closing.

If you are buying a business there are a host of other contingencies that are too complex to go into here.  One day I'll take up that subject..... but  for now let's proceed with the assumption that you are buying a lot, house or condo.

Other costs - Who pays for what? 
Title search, Stamp Duty and fees of the Closing Agent are usually paid for by the buyer.  It's in the buyers best interest to have it this way - the individuals doing this work should work for you and represent you. 
Broker commission - Sellers usually pay all of this.
Annual Real Estate Tax - pro-rated for each party to pay a fair-share from closing until the end of the tax year in which the closing occurs.
Insurance - policies are not assignable, so there is no pro-ration for this.  Old policy will terminate at closing and a new one should be arranged to be in place when the property changes hands.  In the event of an installment sale/mortgage agreement, the buyer usually pays for the policy, and the insurance company will name both parties as loss-payees.  Discuss details with your broker an insurance agent.
Homeowner's fees - pro-rated, with seller paying up until closing and buyer paying thereafter.

Hopefully this list did not scare you - it's not meant to!  Your broker will take his/her boilerplate contract template and customize it to include the items that are appropriate to your offer.  

Read it before you sign it.  If something is not clear to you, ask for clarification.  In Belize it is the intent of the contract that prevails and contracts are typically very straightforward.   Simple agreements are usually easier on all parties - do cover the important parts but don't engage in so much hair-splitting that you give everybody a headache.   

When does an OFFER become a CONTRACT?   When all terms and conditions on the paper are agreed to - in writing - by both parties.   Be sure your "offer" has a time-limit on it, so that if it's not signed by the seller in a certain number of days it "expires" and cannot become a binding contract without your re-endorsement. 

Contracts are like road-maps - they say where you want to go, who's going, and what roads you wish to take to get there.  Sometimes (often) there is an unexpected adventure or detour along the way, but if you keep your attention on the destination (closing) you should arrive there just fine. 


Monday, July 11, 2011

Investing in Belize - Getting Started

It all sounds great - buy a piece of property in Paradise, enjoy it and make some money - but what do you DO to get started?

1.  Make a budget.   Sounds obvious, but most people start out asking how much things cost and then think about whether they can afford them.  Do yourself a favor and think about money before you stand on the beach or on a mountaintop and fall in love with a place.  Assume that you have already learned all the legal stuff and are comfortable with the idea of buying.  How much cash do you have today for investment?  Do you have a reliable cash-flow from work or other investments that would allow you to make ongoing payments on a property?   Answer each question before you go shopping.   You can always revise your budget down (or up if you win the lottery) later.  

2.  Define your goals.  Don't make yourself crazy with this, but do have some idea of what you'd like to do.  Do you want to invest in something you can use today for income and vacations?  If so, a condo or home are suitable.    Do you want to spend a little today hoping it will grow over time?  If so, perhaps a parcel of vacant land is the thing to look for.  Are you looking for a place to live longer term?  If so, make a list of things you "must have" in a daily life situation. 

3.  Book a trip to Belize.  Don't overdo the "research trip" idea.  Pick one or two places that appeal to you most and spend several days there.   If you feel at home someplace then realize you ARE home, and concentrate your property search there.  

4.  Locate a realtor who lives and works in the area you are interested in.  Develop a rapport with them.  Tell them about #1 & #2 above.  Without that information they can't help you.    The idea of finding something on your own in a place where you don't live is not practical, and in the end could cost you dearly.  Professionals do exist here, and the ones with good reputations have earned the trust and loyalty of their clients.  

5.  When you find something you like and can afford - buy it.  Use your head as much as your heart when making a choice.  In the end the property that has "emotional appeal" is going to be the most fun to own, and the easiest to re-sell if/when you choose to do so.  Don't buy ugly, and don't buy junky.  If your search parameters are realistic, your realtor should be able to find you a property meeting your needs without too much trouble.  If it's not there at the time, they will tell you.

Watch for the next installment dealing with step #5 above - "Buy It" -  How do you safely and sanely proceed?  We'll deal with several kinds of properties and what kind of questions you should ask, what contingencies you should demand, and what kind of legal services you may require. 

Belize Basics

This blog was created to help you learn about owning property in Belize.  Of course it helps to know a little bit about Belize and what is has to offer a property investor .........

So, why Belize?  Good Question!

It's a global economy.  It's long been advised that you don't keep all your money in one bank or one stock and these days it's advised that you don't invest in just one country.   Ok, good idea in theory, but how do you decide what "other" place to invest and how do you do it safely and intelligently? 

First, pick something you have a little experience with already.  For most of us, real estate is an area of investment where we have some experience and understanding.  Also - it's "real" which is not just a play on words.  Real estate is something you can touch, see, and use.  You can improve it, convey it, gain income from it and enjoy it.   As the old adage goes - "they're not making any more of it."  Until the dot-com rage, virtually all the great fortunes in the world were based on owning or controlling real estate.  And guess what, even a computer software mogul needs a house, and a place to park his/her money.  Under all is the earth ...... and Belize is a very special spot on planet earth. 

Assuming you already agree with the idea of real estate as an investment choice (after all you're reading this blog), and assuming that you might want to consider Belize (after all you're reading this blog) ..... here are a few thoughts on why Belize really is a good idea:

English Common Law
Strong Private Property Rights
Clear Title (Absolute, Fee-Simple, Freehold)
Non-litigious business climate
Contracts are easy to read and understand
Intent of contracts prevails (no getting caught in tricky fine print)
Abundant natural resources
Well educated population
Friendly, welcoming people
Multi-cultural society without racial strife
Offshore Banking
Leading edge company/trust/asset protection plans
Foreigners can own property without extra fees or permits
Great weather
Tourism opportunities
Good health care
Modern communications
Low Taxes
Democratic government
Environmentally responsible
Peaceful - Belize has never been at war
Secure, safe, healthy environment.
Belize dollar has a fixed exchange rate with the US Dollar
Belize real estate is a ground-floor investment opportunity
And ........ IT'S BEAUTIFUL HERE!!   AND FUN!!

Who am I and why should you listen to me?  
My name is Diane Campbell.   My husband and I live on the beach about 5 miles north of San Pedro, on Ambergris Caye in Belize.   I was a licensed Realtor in California from 1980-1992.  My husband was a builder of fine homes in Malibu, California.  We moved here in 1992 have lived here full-time ever since.   Together we have built a life and a business in Belize.  We buy and sell real estate, we build and sell developments.   We've made a nice life here and we intend to stay.   We loved Ambergris Caye as we found it many years ago and are mindful of honoring its integrity as we participate in its growth and inevitable development.   Investing in real estate is all we know and all we do.  It's worked for us and we firmly believe it can work for you, provided that you use common sense and do just a little homework.   I hope that by sharing some of what we've learned over the years that I can assist in shortening your learning curve and give you the information you need to make an intelligent choice when purchasing real estate in this amazing country.

Initially I'll be posting a series of basic real estate "lessons" pertinent to Belize.   When current events have an impact on Real Estate investments, I will post them here as well.   Check in weekly for the newest topic !