Our Last Purchase – Were done!
| Our LAST PURCHASE – WE’RE DONE! I’ve been dying to write this particular newsletter for over two years, and now that the time has arrived, I’m somewhat reluctant due to the nature of its content. I feel that I can’t do the story the justice it deserves due to its complexity and its controversy. I’m going to have to give the watered-down ‘Reader’s Digest version’ which is still going to be a little long. But please read if you are EVER considering buying a property in a foreign country. It could save you A LOT of money and a big headache some day. Basically we bought 2 new (to us) hotels and 5 more villas in Roatan in October. One is in the beautiful and upscale beach of West Bay, and the other is in the community of West End. We bought West Bay Colonial just the good old-fashioned way, with a seller who wanted to sell and a buyer who wanted to buy, but how we bought West End Resort and the villas is much more interesting and contains valuable real estate lessons, so allow me to tell you about more our 2ndpurchase. The 2nd purchase was a 10-room hotel plus 5 villas at a foreclosure auction at the Roatan Court House on September 29, 2018, which actually happened on the exact same day we took possession of the 1stpurchase. The timing couldn’t have been worse, but we rolled up our sleeves and just got ‘er done.It’s helpful to know the story from the beginning of how we ended up at a foreclosure auction in Roatan. About 12 years ago, a nice, retired American man named Matt, came to Roatan to build his dream home in the Caribbean. He hired a well-known (to Roatan) developer, who also happened to be American. The home was built to completion on time. It was a beautiful home: 4 stories high where Matt would live on the top floor and rent out the 3 walk-out apartments under him, since it was built on the side of a hill. The fight started when Matt returned to the island in 2006 to take possession of his newly-built multi-family home, and found that the developer had built 2 more walk-out apartments under his parking pad, which was right beside the house. The developer claimed that he had sold Matt the land: NOT the land UNDER the land! Matt refused to accept the house and wanted his money back, which didn’t happen, so there started the 12-year lawsuit between Matt and the developer.In my 20+ years of doing business, I have never seen an example of more amazing perseverance and positive-thinking than displayed by Matt. I am in awe of his stick-to-it-ness and his commitment to his vow that he would NEVER give up. He is in his mid 70’s now so this has not been easy on his health nor his lifestyle. He rented a small apartment in Roatan for the first 11 years of the lawsuit, but moved back to the States exactly one year ago when he realized that he was getting close to a final positive outcome. He decided that it would be wise to get out of the country while GETTING OUT ALIVE was still an option. In this past year, he basically has been couch-surfing at his relative’s and friend’s houses. How horrible for a 70-some-year old man! Which is why I got involved! I truly felt sorry for this man. Of course Paulo, Rafa and I also saw a great business opportunity, but we have seen lots of great business opportunities in Roatan in the past 4 years that didn’t interest us to the degree that this one did. This deal held my attention for the past 2 full years, and I can honestly say that it was because it had that human element that somebody had been wronged and I wanted to see him get justice. I wanted to see some comeuppance on the developer who has caused so much stress to so many people in the community over the past several years.I decided that I would join efforts with Matt’s 2ndlawyer (the 1stlawyer was still involved but for various reasons he not available to me to work with.) Anyway, Matt hired a junior lawyer to help him get the job done. For me, it was really cool to work with this particular junior lawyer as he used to work for us at Splash Inn as a receptionist while he was in law school so I knew him to be smart and easy to work with. Then Paulo and I hired our experienced and expert real estate lawyer right at the end to assist the 2ndlawyer with the details of the foreclosure. Hiring a 2ndand a 3rdlawyer WAS the reason the case finally got resolved.Part of the problem on an island in a 3rdworld country is that many lawyers (and judges) and maybe even a good percentage of the real estate agents don’t completely understand real estate. It’s different from what we are used to in the United States and Canada where typically lawyers and realtors are well trained and highly scrutinized by overseeing governing bodies. Anyway, back to the story… the most amazing thing is that Matt absolutely would not stoop to cheating. If anyone even suggested to him that this was the way to get the job done, he would say “Nope! That’s a slippery slope, and once you get on it, there is no way of getting off. We are going to win this with the law on our side.” And so he did! It was absolutely amazing to watch it all play out. It was beautiful: the most fun I’ve had buying a property in a long time, although I can’t even begin to tell you how frustrating, agonizing and exhausting the whole process was. But the victory was overwhelmingly gratifying and made it all worth the while. I’m so happy for Matt, and for the junior lawyer (as he is kind of famous on the island now for winning this case) and for Paulo, Rafa and myself who just love having more work to do!!!! (hahaha)It rarely happens in a 3rdworld country that a foreigner wins a case like this in spite of the fact that there are MANY cases of people that got swindled in a bad real estate deals. It’s more common than you would ever think. So it worries me when I hear from people who are buying in Roatan (or Mexico or all other Central and South American countries). “Oh, don’t worry, we have a lawyer working on it”. This means nothing to me until I hear WHO the lawyer is. Usually it IS THE LAWYERS who are to blame for individuals losing their properties, as in the case of this particular lawsuit. You see, here is the twist in the story. Matt sued the developer (and won) BUT the properties that we acquired were ‘owned’ by different people. In other words, different people had bought and paid for these properties some years ago and had possession of them, but they DIDN’T OWN them on paper. Legally they still belonged to the developer. Titles were never transferred to these new buyers because individual titles DON’T EXIST on these buildings. That’s right! Your read it right! Individual titles to the hotel and to 4 of the 5 villas we acquired DO NOT EVEN EXIST! These buildings all belong to the same original title called ‘Lot 37’. The original lot was never subdivided into separate lots before the developer built on them. So tell me, what kind of a lawyer sells 5 individual properties to 3 different parties and forgets to check if titles even exist on any of them? I would call that a pretty crooked lawyer! No lawyer could be that incompetent to forget to check the titles of 5 individual sales. It had to have been done on purpose. Terrible!!!There ARE reputable, honest and competent lawyers in Roatan and in every 3rdworld country, but you have to know WHO THEY ARE. If you don’t know whom you are dealing with, it’s a crapshoot! Paulo and I now realize how lucky we were to have chosen an honest and fair lawyer the first time we bought in Roatan because I admit, we just went with the lawyer that the seller recommended and used. Ugh! I cringe at how naïve and ‘green’ we were when we bought Splash Inn. Wow! We really were SO lucky! We feel bad for the ‘owners’ who lost the keys to their properties in this auction but the truth is that they did rent them out for the past 12 years and I’m sure they didn’t claim any of this income since the properties legally don’t exist. They also didn’t pay any property taxes since the improvements were never registered either. I am sure they recouped most of their initial investment, if not more. The other consolation in the story is that the owner that lost the hotel and one villa is now suing the developer and will take whatever is left in the developer’s name, which is some valuable property and land. Unfortunately this in turn affects some other innocent individual buyers who bought property without titles. But the good news for all home-owners in Sunset Villas is that it clears up the long-standing stigma about the ‘legal issues’ which have long been affecting property values in the area.My hope is that anyone who is even considering buying in a foreign country read through this newsletter and thinks about what they have to do to protect their investment. These are my absolute recommendations: Use a qualified real estate agent and ask them for references from previous foreigner clients and check in with those references. Ask around for names of competent and trustworthy lawyers who speak English. Hire a 2ndlawyer to do a little leg-work to double-check things. This 2ndlawyer could be a junior lawyer to help double-check and translate legal documents before you sign. You should also get this 2ndlawyer to double-check titles for you at the registrar’s office to confirm that the title actually does exist and that there are no liens or encumbrances of any kind against the title. Junior lawyers are excellent at research and they like to take screen shots of documents. Ask your lawyer when you should expect your title and follow up with the lawyer often. Stay on top of the lawyer to deliver you the title in a timely manner. This may sound like overkill but it absolutely just amazes me how many people buy in a foreign country and trust the seller or the developer. Paulo and I bought a condo in Mexico in 2011 at an upscale private resort and we did all the things I recommend to do above. We even hired a lawyer from Calgary who spoke Spanish to check into the health of the condo development before we bought so that we didn’t end up in a development that got half built. (I have sees a lot of this in Mexico and Brazil – developments that look unfinished and abandoned due to lack of funding). The title to our Mexico condo took about a year after the sale to come through, but we checked on it about every 3 to 4 months until we finally got it. Once we got our title, we were astounded at the number of Canadians and Americans who were enjoying their winter vacations on the beach every year and hadn’t even started process of the transferring the title because of the land transfer fees (which translated to about $25,000 USD at that time). The developer told them there was no hurry to transfer the title. “WHAT? THAT’S CRAZY PEOPLE!!!!”– is what we thought! “The developer is probably out borrowing money against their property and putting a full mortgage on it as we speak” is also what we thought. Why would anyone trust a developer just because they are from the same country as you? FYI: There are some shady Canadians and Americans and these people tend to gravitate to 3rdworld or developing countries where they can easily get away with shenanigans like this. My advice: pay the fees and transfer the title as soon as you can!!!! It’s crucial.Paulo and I (and Rafa) are thrilled with our new purchases in Roatan. West End Resort is a quiet little 10-room, mid-priced hotel: almost more like B&B prices with a huge pool and free hot and delicious breakfast at Splash Inn just a 5-minute walk up the road from Splash Inn, which is still more of a diver’s delight with great food right in the heart of West End. The villas in Sunset Villas are another great option for families or larger groups that want their own kitchen and living room, but can also take advantage of the condo’s newly renovated pool and the free hot breakfast at Splash Inn. West Bay Colonial is a beautiful 21-room Spanish-style colonial building in the upscale neighborhood of West Bay with its own pool and free hot breakfast. It’s a 2 minute walk to the most beautiful beach in Roatan where we have a deal with some other resorts to use their chairs and pool right on the beach. We’ve now got the perfect vacation accommodation to suit almost everyone’s needs. by Kathy Berner |
