What Every Condo Purchaser Should Know Before Buying on Ambergris Caye/Belize
At the Ambergris Daily we are often asked about the benefits, perils and pitfalls of buying a condo on Ambergris Caye. One of the most common questions is “Do we get to own the condo outright if we buy it?”
Hopefully in most cases the answer is “Yes.”
Now some realtors and developers are going to say that the Ambergris Daily has not a clue, and that everything that is written in this article is bull****. However in ours, and others opinions this is the only way to safeguard your investment over the next century. Remember full ownership is key, and you should not have to be a lawyer to understand all the nuances of a contract.
The best way to own your condo outright is by Land Certificate in the form of Strata Title. With this type of ownership you are conferred full ownership and rights to the condominium (or villa within a development) you have paid for. You have a vote as a member of the Homeowner’s Association. You own a proportion of the common areas, gardens, swimming pool, pier and any other assets on site that do not form part of the condominium building(s). Each condo owner has an equal share and vote. No one owner or outside entity can “rule the roost” over the others.
Your “Strata Title” is the same as a regular title you’d receive for a parcel of land or a regular house. Under Belize law you are fully protected as a legal property owner. There is no “Big Brother” who can take the condo from you or deny you the right to access it without VERY good reason and approval from a court of law in Belize.
The other way of ownership of a condo or villa within a development is by Share Certificate. The idea is that a corporation is formed which owns the development property and hopefully everything on it. You get a share certificate which represents ownership of your condo. Under this system you often skip paying any transfer tax when you buy the condo although it should be noted that this is illegal under Belize law. Furthermore it’s likely that if you illegally skipped the Transfer Tax (of course with the developer’s blessing) then the developer is also getting away with paying the GST on his unit sales. We think this puts such a developer at an unfair advantage vs. honest developers who want you to have clear title, who have to pay GST on their unit sales and whose buyers have to pay Stamp Tax.
Saving (illegally) on taxes might be attractive to some buyers but BEWARE: There are quite a few pitfalls with share ownership:
(1) You don’t get title. Ask yourself, would you buy a property in your home country without a title? Let’s face it, your condo is worth a whole lot more if it’s titled.
(2) You certainly don’t get an equal share of the vote. It is possible that the developer will have the majority of the voting shares in his possession even after the last condo or villa has been sold.
(3) You could end up being victimized by a homeowner or the original developer owning a “Golden Share” or perhaps a casting vote or votes worth many times more votes than your share. We have seen this happen and in one Share “Ownership” development one condo owner has attempted to forcibly buy out the other owners at well under market value using sleazy lawyers and sneaky harassment tactics. Would you want to “Own” a condo under these circumstances, always looking over your shoulder to see who is trying to acquire your share certificate – and therefore your condo – from under your nose?
(4) The rules of the corporation will probably be written in such a way that the original developer or his proxy will always own the rental company, they’ll set the rates and owner/management revenue split will be decided without your consent and they’ll even force you to pay a premium for staying in your own unit. You could end up owning a unit you can’t live in affordably but yet end up losing your shirt with pathetic rental revenues because of artificially low pricing not to mention having to replace your furniture every few years as it is beaten to death by tourists having fun.
Dear Reader, as you have already surmised, STRATA TITLE is the way to go to own your condo. Accept no substitute. At Ambergris Daily we are very suspicious of the motives of the developers who are STILL building one or two developments with share “ownership” in place. We can think of no legal benefit to the condo owner except that he/she might be turned into a criminal by not being made to pay transfer tax. All of the benefits go to the developer and the rental management team and sometimes to the occasional rogue condo owner who wants to stir the pot.
Not good.
The Ambergris Daily will gladly listen and report why some developers and realtors still push the share system, and will gladly print reasons why it is better than the strata system.
