Cadastral due diligence, what they never tell you before acquiring a property in Honduras

By: Paola Cantarero

Many are the doubts that arise to a person who is in search of their longed for first home or that of that company that is interested in acquiring a property for its development through a major investment, we all know that it is very important to verify in the history of domain (deeds) before the registration authority the Property Institute that the property does not have any pending litigation noted, Once these data are verified, we normally verify that the cadastral code is registered in the name of the seller and that the property is solvent in its charges and municipal taxes and we proceed with the deed, but is that all we can verify of a cadastral code? Have you been told that the absence of a thorough and exhaustive due diligence of the cadastral key can make you lose your investment completely? We will tell you in detail:

You have reviewed the deeds of a property and its historical background and you are satisfied and happy with the results because apparently you have found the perfect property for the investment you have in mind, as a next step you ask for the municipal cadastral key of the property: What do you do now with that key number? this point is very important within the transaction and it is not only to verify what would be obvious, that is to verify that the cadastral key is solvent in its charges and taxes and also to verify that it is updated in its dimensions in contrast with the public deed of ownership and very important also registered in favor of the owner, yes, that is one of the data that we must review before the municipal cadastre department and I recommend you to do it, but, what other data is vital to review? In our experience as a proxy firm of several banks nationwide and important real estate projects in the country has led us to notice that there is a type of search that almost no one practices when performing due diligence (due diligence) of a property, and this is a situation that is not at all hypothetical or alarmist, We have encountered situations like this and that is why we want to raise awareness of its importance, and that is to verify in the plans of the aerial images of the city that manages the municipal mayor’s office if the cadastral key that we have been provided in addition to being registered in favor of the seller corresponds geographically to the property offered for sale, But, what do I mean properly? In practice, we have come across properties that in documents are geographically located in a certain place, have their cadastral code up to date and registered in favor of the seller, apparently in documents everything is perfect, the property is ready for sale, however, oh surprise!

We have found that when verifying the geographic location of the cadastral code in the plans of the city hall, the same is located in another place, even in a different area of the city or residential area, and that the property offered for sale has another cadastral code assigned to another person who has no relation to the person with whom we intend to do business, this turns the property that apparently was legal in documents into a litigious property due to the geographic location of its cadastral code, which causes that property to be inspected by the mayor’s office to grant permits, for example for construction, the error that it suffers from is denoted and the permit is denied and an administrative claim process must be initiated before the authority to rectify the error in the assignment of the code, a process that is not at all simple and extremely long, In many cases we can find worse surprises such as denoting that the other person has another property title with the same boundaries registered before the Property Institute and that makes us initiate not only an administrative claim before the municipality for the wrong assignment of the cadastral code but also to initiate a litigation before the courts of the Republic to determine the validity of a registry title or of another one, For this reason, you should be very careful with this type of investigations, since either the first or the second scenario will be very harmful for you and your finances, either of them will be very harmful for you and your finances.

We hope these tips will be of great use to you and that you will put them into practice in your next investigation and due diligence of your next real estate purchase, we are sure it will save you a lot of problems in the future.