Buying in a foreign market can be a bit confusing compared to the US or Canada for example.

In Guatemala, the property titles are held in the Central Registry, located in Guatemala City in Zone 1.

Your lawyer will do a title search, and compare the registered documents against the seller’s identification documents. If everything matches, then in 99.9% of the cases, everything is fine.

The registered documents contain any liens or encumbrances on the property, such as a mortgage, or a personal loan secured by the property and so on.

What about the .01%?

Unscrupulous lawyers, working with people inside the central registry can falsify documents to show that the property belongs to the person representing themselves as the owner. This happens at times, when the real owner is deceased, and no heirs are apparent.

Some lawyers, but certainly in the minority, will resort to getting the title into another person’s name, offer the property for sale, and then split the proceeds. If that should happen, and eventually it comes to light, then the purchaser will lose the property, and any buildings or improvements that were done to the property. By this time, the lawyer and his associates have disappeared into thin air, and there is no recourse to the buyer.

How can you protect yourself from the possibility of this type of fraud?

In Guatemala, and all other Central American countries, you can purchase title insurance through Stewart Title service. It is basically an insurance policy that covers and protects you in case this should ever happen. The title company will defend any action that may occur, and will reimburse any monies that have been paid should a claim prove to be accurate.

As this is something that is highly unlikely to happen, it is still an inexpensive way to guarantee that you will not suffer any loss in case you are somehow in the .01 category.

Century 21 Casa Nova is in a position to offer Stewart Title insurance, and if you feel that it would be a wise decision, we can certainly provide the service.

“Times they are a changing” as the old song goes, and by the looks of it, it’s not for the better, and probably won’t be for some time to come. The bad news just seems to keep coming.

High unemployment, little job security, layoffs, benefits running out, retirement funds are depleted, investments holdings cut in half, homes sales and foreclosures at an all time high, and no relief in sight.

How depressing can it get? What are the options for a continued quality lifestyle moving forward?

Maybe it’s time to consider your options.

Antigua is located in Guatemala, a small Central American country with everything any one could want.

The weather is perfect. The average temperature is in the mid 70’s all year round, so therefore there is no air conditioning, and no central heating to contend with.

Heating/Air conditioning:

The US average for heating in 2010 is $1051.00.

Air condition on average to maintain a home at 72 degrees is $6.24 a day. For 6 months a year, that works out to $1123.20 annually. Neither of these items includes maintenance if required, so throw in another $300.00 a year to keep the equipment operating. Total average yearly cost: $2474.20

Automobile:

In the area of Antigua, Guatemala, which is the favored retirement area in Guatemala, you can walk anywhere in the city. No car required. If you have a car, you can park free of charge. There are no traffic jams to contend with as well. If you live on the edge of town, and want to use your car to drive into Antigua for shopping or whatever else, the drive is, at the most 5 to 6 minutes and possibly 2 miles. In that case, your gasoline bill is next to nothing, your maintenance and operating cost on average in the US is .56 cents per mile, including depreciation. Parking on a daily basis in most US cities averages $15.96 per day. That’s a whopping $4150.00 a year if you park 5 days a week for 52 weeks. Here, it’s free!

I have found that my average annual mileage is 5200, and that includes some trips for things other than business. If I were to keep my car for 100,000 miles, I can drive it for 19 years.

Insurance for your car is comparable to the US, or, in most cases, less expensive. For full coverage, my cost is currently under $700.00.

All that said and done, you don’t need a car, so take a look at how much that will save you.

Local transportation to downtown if you don’t want to walk or drive is .12 cents.

To the Capital (28 miles from Antigua) is .75 cents.

Food:

Guatemala is a country that produces some of the best produce in the world. They are picked fresh in the morning and in the local market the same day, it’s a vegetarian’s paradise. For $25.00 a week for a family of 3, you can fill your fridge, and enjoy fresh produce every day.

Chicken is one of the staple items in Guatemala, and for boneless chicken breast, its $3.25 a lb.

Accommodation:

You have 2 choices. You can rent, or buy a home. If you choose to rent, you can find a fully furnished 3 bedroom home, with a large yard for around $600.00 to $700.00 a month.

To purchase a home, the average for a 2500 Sq. Ft. home in a nice, secure location is under $200,000.00.

Average annual property taxes are $200.00 to $250.00.

Communication:

In Guatemala, you have all the services that you may have in the US. Telephone, cellular phones, cable with ample English channels, High Speed internet connection and so on.

Average monthly cost is $48.00 for all these services.

Electricity:

In Guatemala, the electricity is 110 for house hold, and 220 for dryers and stoves. Your average cost of electricity, if used with common sense, is $31.00 a month.

Healthcare and Dental Care:

This is a point that astounds most foreigners. A visit to the Doctor for a full check up averages $15.00. Medical plans for full coverage is available locally, and the cost varies on age, but for a 50 year old, the cost averages $1400.00 annually, and payable monthly.

Language:

In Guatemala, the official language is Spanish. In Antigua, English is spoken in most places that cater to tourists, and Antigua is a tourist town. If you don’t speak Spanish, but would like to learn the language, you can hire a personal teacher for as little as $3.00 an hour, or attend one of the several language schools for a 4 hour daily class, 5 days a week, for $65.00

Residency:

Guatemala will allow a person to obtain permanent residency with a monthly income of $1200.00 a month, and for a couple, $1500.00 a month total. The income needs to be verified, and the other main requirement is a background check with the local police in your current country of residence.

If you don’t qualify for the income, you can also live in Guatemala by having a tourist status with your passport. Your passport allows you to stay for 90 days, and then you can renew for another 90 days, and so on. Basically, you can stay here for the rest of your life by simply renewing you tourist permit.

Stress:

There isn’t any! Your healthier, happier, and stress free. It’s a bit of a manaña attitude, so just lay back and enjoy.

Now, take a pencil and paper, write down your current monthly costs, and make the comparison.

I think you will be amazed at how inexpensive it is to live life, and enjoy doing it.

We look forward to seeing you in Guatemala, the land of the eternal spring.

There are four main monthly bills in Antigua, Guatemala that are addressed below as follows:  water, waste removal, electric and telephone.  

The monthly water bill typically is Q30.00 ($3.75), but can run a bit higher in the dry season if you do a lot of watering in the garden. The city does not deliver a bill; you need to go to the Municipal office by Central Park and pay. If you over 2 months late, you pay a small fine, over 3 months late and your meter may be shut off, and it will cost Q100.00 to reconnect.

Waste removal averages Q35.00 ($4.38) a month for 2 pickups weekly. You pay the driver of the truck monthly.

Electric bills are delivered to the house, and if you have a local Q bank account, you can pay online. If not, you need to take the bill and pay it at one of the banks in town. If you 3 months in arrears, they will remove your meter, and you will need to pay a reinstalling charge of around Q125.00, and it can take 1 to 3 working days to reconnect.

Telephone bills can also be paid online if you have a local Q account, or paid at the telephone company’s office by Central Park, or at most banks.

If you’re buying a property that has a telephone line, you should check the credit limit on the line. In some cases, the limit may be only Q100.00, and suddenly without notice, you are cut off from making outgoing calls, although you paid the bill previously. When you hit the credit limit, you need to make a payment to be able to phone out. If you ask for a credit limit increase, it is normally granted within 48 hours. That can be done at the local telephone office.

If you want to check the balance owing, dial 147-100. An auto response will answer. As you are guided by the auto response voice, you press 1, wait, press 2, wait, and then 1, and wait for a few seconds and enter the home telephone number and the voice will give you the balance owing.

You've selected your home and your offer was accepted, what happens next? When buying a home or property in Antigua, Guatemala here are some of the key processes you will want to know at this crucial time. The good thing is if you are dealing with a professional realtor all these and other steps will be handled for you.

Who pays for what at the time of closing a purchase?

When a property is purchased, the responsibility to pay all associated costs is the buyer.

This includes the preparation of all legal documents, the title search, the review of the sellers and the buyer’s documents, the registration of the property, and payment of the required sales tax (IVA).

Whose lawyer am I entitled to use? 

As a buyer, you are entitled to choose your own lawyer to do any required legal work.

In many cases, the seller will try to insist that their lawyer prepare all documents, but this can be a costly venture for the buyer. If you agree, whatever fees the sellers lawyer decides to charge you will have to pay.

The lawyers have a published rate which is based on a percentage of the value of the transaction, but it is seldom applied, unless you are using the sellers lawyer, and then you are at their mercy.

The solution to avoid this potential over billing can be done in two ways.

Prior to any agreement, get a firm quote in writing from the seller’s lawyer, then select your own lawyer, and do the same.

If you don’t have any specific lawyer, shop around and keep comparing. It doesn’t cost anything to get a quote.

We personally recommend two lawyers in Antigua. For Spanish speakers, we suggest Azucena Chavez de Rosales, or for English speakers, we recommend Manuela Rosales. They are located in Antigua, and in the same office.

If you find a better rate with your selected lawyer, and the seller is still insistent, then you can simply tell the seller that your lawyer will prepare the documents, and send a draft copy to the sellers lawyer for review and approval.

In this case, the seller will need to pay their lawyer for the review.

Sales tax on purchases

Sales tax, or as it’s known in Guatemala, IVA, is 12% and paid on the registered value of the purchase. I will explain this in more detail later on in this article. That can be a scary figure if you just purchased a $300,000.00 property, and you have to add an additional $36,000.00 plus legal fees.

What is a promesa de Compra Venta, and a Compra Venta?

Promesa de Compra

In most purchases, there are two steps, but not all the time.

A promesa de compra venta, is a promise to buy and sell. This is generally used when the buyer has made a decision to purchase, but is not prepared to close the sale immediately. The reasons can be that funds need to be transferred, money is tied up in a term deposit, financing is approved, but the application is in the final stages of approval etc.

The buyer is in a position to make a deposit to show good faith, which is generally a minimum of 10% of the agreed price.

This document outlines all conditions, such as the full selling price, the anticipated date to finalize the transaction, and the information of both the seller and the buyer (passport, cedula, date of birth and so on).

The document is a private document, and each party receives a notarized copy, and the lawyer retains a copy. The contents are not made public, or registered.

If the document contains the term “arras”, it means that if the buyer does not complete the agreement as stated, the buyer is entitled to keep whatever deposit was made as liquidated damages. If that clause appears, be sure you can fulfill what you have promised to do, or don’t sign.

Even though the seller has promised to sell, they can change their mind prior to the actual closing. The seller has no penalty attached, except to return the deposit, unless the buyer insists that a clause is added that states something like “ If the seller should sell to another party during the agreed term specified in the promesa de compra venta, the penalty will be an additional amount equal to 100% of the amount of the deposit”. That really means that if the seller receives an offer after the promesa is made, then it had better be at least 10% or higher than what was agreed to in the promesa. On the sellers side, they can insist on the same penalty should the buyer change their mind, and decide not to proceed.

When everything is finally ready to proceed, the paragraph below covers what happens next.

Compra Venta

In many cases, the buyer can enter directly into a Compra Venta, and bypass the Promesa.

This is normally done if the buyer has the required cash on hand to close immediately, and the buyers lawyer has inspected all the sellers documents, and if comfortable that everything is in order.

The lawyer will create a document that describes the property in detail (size, the registration number in the central registry, the owner, etc.)

Disclaimer

The following information regarding sales tax/IVA is how the system works in Guatemala.

We make no recommendations or statements, other than what actually is the current process, and this is handled between the lawyer, the seller and the buyer.

Now, as I mentioned in the Sales Tax/IVA paragraph, here is how the tax is generally handled.

The registered value is much less than the true value of the sale. Your lawyer will walk you through it, and explain all the details.

An example is the following;

When the lawyer researches the property, the Central Registry will show the previous registered value.

In 99.99% of the cases, it will be, for example purposes.  Q200,000.00. In that case, the sales tax is calculated on that amount, or an amount slightly greater than the last time it was registered, as you really can’t register for the same previous amount. Lets say that the lawyer recommends you should register for Q225,000.00.

You sales tax is then around $3400.00 or Q27,000.00. That’s a long way down from my example of $36,000.00 for a $300,000 purchase.

Some exceptions can be if you are purchasing the property from a corporation. You will need your lawyer to review the corporation to verify what value was placed on the property when it became an asset of the sellers corporation. A corporation must issue a facture (invoice) to the seller, and the corporation must pay the tax they receive for the sale. You may find out that the tax is much higher than a purchase from an individual party, so be sure to have it clarified in advance.

Another point to consider is if you purchase from a developer, and it is a new property, the sales tax /IVA can be around 40% of the actual value. The developer will inform you what you can expect to pay in this case. If it is a resale in a development that is within 5 to 6 years old, you may have to pay a little more than the 40% of the actual registered value.

Once all is done, signed and paid, your lawyer will then send the completed documents to the Central Registry, and you can expect to receive the title to the property in about 2 weeks.

Now, you own a home, and congratulations!

How are property taxes arrived at? 

Everyone from countries other than Guatemala is astounded by the small amount of property taxes compared to what they are accustomed to paying.

Here is the calculation to arrive at your annual property tax.

It is in 2 phases.

For example, if the property is registered below Q70,000.00 here is the formula 7 X 69,500.00 divided by 1000. In this example, the annual tax would be Q486.50. Using the current exchange rate of today (Q8 to $1), this is $60.81 annually.

For another example, if the property is registered for Q70,000.00 and above, the calculation is

9 X 200,000.00 divided by 1000. In this case if the registered value was Q200, 000.00, your annual tax would be Q1800.00, or $225.00 annually.

In Guatemala, taxes can be paid quarterly, or in one payment. If you don’t want to stand in a line for an hour to make a quarterly payment, we always suggest doing it once a year.