Process of Registering and Buying Property in Guatemala

admin — Sat, 15 Nov 2008 08:16:57 +0000

Step 1: Obtain a certificate at the Property Registry to verify the status of the property

Completion Time Frame: 7-8 days (depending on length of the real estate file or if it is digitalized) (simultaneous with Step 2)
Completion Costs: $7 (expenses, depending on length of the real estate file) + $ 20 (legal fees)
Points to Note:
The seller obtains a certificate at the Property Registry in which the buyer can verify that the property is free from mortgages and encumbrances, and to verify that the property is owned by the seller. In order to obtain the certificate the buyer needs to know the registry numbers where the property is registered. Usually this information is provided by the seller. It is usually the lawyer who verifies the books at the registry and obtains this information. This updated certificate of the property will be used later by the lawyer/notary to prepare the public deed.

Step 2: Obtain the cadastral value of the property from the Municipality and from DICABI (Dirección de Catastro y Avalúo de Bienes Inmuebles)

Completion Time Frame: 1 day (simultaneous with Step 1)
Completion Costs: $ 20 (legal fees)
Points to Note:
The seller must obtain the cadastral value of the property from the Municipality of the place where the property is located. Sometimes, the city where the property is established does not have a Municipality registry of the property value, so this information has to be obtained in DICABI (Dirección de Catastro y Avalúo de Bienes Inmuebles).
DICABI is a national institution containing information based on a “personal registry type” on all the regional registries in the country. In any case, it is very important also to obtain property’s value information at DICABI as the price in the contract for VAT purposes must be set at least equal to the value registered at DICABI.

Step 3: Lawyer/notary prepares the sale agreement and notarizes it, along with the public deed

Completion Time Frame: 2 days
Completion Costs: $62.50 + ($800 – $1000) (notary fees) + $65 (tax stamps, copies, and others) + registration fees (Q.160.00 plus Q 1.5 for each Q 1,000 of transaction value)
Points to Note:
If the seller is a registered VAT Taxpayer, the tax must be paid with an invoice, in which the tax is charged.

The lawyer/notary (In Guatemala, the lawyer is also the notary public) prepares the sale agreement and notarizes it by preparing the public deed.
There is a scale in the Notary Bill that regulates the fees, but nowadays since the market has driven prices for notary services down, one will likely pay between $800 and $1000 for such a transaction. The notary will be in charge of buying the state stamps for VAT payment if necessary (12% of transaction value), and adhere the stamps to the Public Deed; it is safer to the buyer to process VAT payment directly in cash.

The documentation shall include:
-Property Title issued by the Real Estate Office (advisable)
-Actualized Certificate of the property issued by the Property Registry (Obtained in step 1)
-Photocopy of the ID of seller and buyer (pasport or local ID). In case the seller/buyer is a Company, photocopy of the appointment in which the Company gives sufficient faculties to proceed with the transfer of property. In some cases, a Board of Director resolution may be required
-Invoice issued by the seller or Form in which the Tax Authorities certified that the consumption tax (VAT that is 12% of the value of the transaction) is paid; Nevertheless, the sale agreement must be formalized with the public deed
-Cadastral value (Obtained in step 2)

Step 4: Public deed is delivered to the Property Registry for its recording

Completion Time Frame: 8 – 12 days
Completion Costs: Q.160.00 + 0.15% of transaction value (registration fee–already paid to notary)
Points to Note:
The public deed is delivered to the Property Registry for its recording under the name of the buyer. It is also advisable to obtain a certificate at the Property Registry to verify that the change of ownership is properly recorded.
The internal Steps conducted by the Property Registry are as follows:
1. Departamento de Reparto –all incoming cases are assigned to the officials (operadores), whose salaries are based on a percentage of the fees. Since 2005, an electronic system is fully implemented to assign cases based on current workload (1 business day).
2. The official registers the property electronically; and issues the case file (expediente)
3. Departamento de Revision (legal assessors) reviews and approves the transaction
4. Accounting department verifies the payment of fees
5. Departamento de Firma Electronica: Registrar or auxiliary registrars (14 full-time and 5 part-time) sign the registration certificate. As of Decree 42-2006, electronic signatures from auxiliary registrars are legally valid. Each one is assigned a unique number by which they can electronically sign, facilitating the registration process.
6. Departamento de Archivo –updates the information in the system
7. Certificate is signed.

Step 5: Notify the Municipality and/or DICABI of the transaction

Completion Time Frame: 10 days
Completion Costs: no cost
Points to Note:
Notification to the Municipality and/or DICABI of the transaction. Sometimes this information is not updated, so in order to register the transaction it is mandatory to update prior information.
This step is important to update the cadastral value of the property for the purpose of tax collection. There is a small fine if this Step is not fulfilled, but it has no effect on the validity of the title obtained in the previous step.