Types of Property Ownership in Belize
One of the primary advantages to investing and owning in Belize is the ownership structure and the fact foreigners can own a property outright with a fee-simple title. Belize is one of the only countries in Central America that allows foreigners to truly own Belize real estate. A lot of condos use strata titles, timeshares, or leases. One reason we suggest investing in Belize and or buying detached homes in Belize is the fact you get full outright ownership with a fee-simple title, owning the land and structure.
Shares vs Strata Title vs Fee Simple
In Belize, most land opportunities and detached single-family homes allow for fee-simple titles and have a physical copy of the title from the Belize lands department. Most condos or developments in Belize are owned with co-op shares or strata titles. Strata Title enables one to pass physical title to a ‘slice of air with a building in it’ without owning the land that is below it. An example of Strata Title would be purchasing and taking title to a 3rd-floor unit without owning the shadow footprint of the land below.
Many developers around Belize erroneously refer to their projects as ‘condos’ when they are not located in a new registration zone. It should be noted that true condominiums in Belize only exist in the New Registration zones where the Strata Act is applicable. If the ‘condos’ are not in the new registration zone then they should be referred to as ‘units’ or ‘residences’ and, in most cases, they will be titled via corporate share certificate(s).
It is also important to note that Belize has a lot of parallels to the US & Canada when it comes to real estate and real estate appreciation. Condos rarely see the same level of appreciation and most of the condo projects in Belize (especially presales) are co-op share ownership.
Housing Cooperative (Shares)
This ownership structure is popular and is known to North Americans as “Co-op’s”. This is the weakest form of ownership in Belize and the buyer does not have any form of title. There are numerous downsides to this form of ownership, mostly being that share certificates cannot be mortgaged by a lending institution, and insurance on the unit is challenging. A housing cooperative or “co-op” shares are a type of residential real estate option that is actually a corporation that owns the real estate.
The ‘owners’ within the development do not own their units outright. Instead of owning the units, each resident is a shareholder in the corporation based in part on the relative size of the unit or equity stake the unit that they live in has. A co-op share ownership in real estate is a way to own a primary residence, through the shares of the corporation. With housing cooperative or co-op share ownership owners own the shares, they however don’t own their units outright or the land itself; instead, each resident is a shareholder in the co-op.
Some co-op share real estate options allow owners to sell their co-op shares (equity in the unit) in the open market, depending on the development. Often they have restrictive clauses that limit resales. This limits the liquidity of the property.
In Belize, when a condo appears to be cheap or “too good to be true” it is generally because they have co-op share ownership. Co-ops when it comes to real estate in Belize can be less expensive than homes or true strata title condos since they operate on an at-cost basis, collecting money from residents to pay expenses. Often padding additional profits to the developer.
Even though co-op share ownerships appear to be a great deal, they often come with more risk and a low level of ownership control. Before buying shares in a co-op ownership condo, be sure to check out the company’s financial situation and the fees involved.
A lot of presale condos use co-op share ownership. The resale is very difficult since the unit cannot be mortgaged and they are very difficult to insure in Belize.
It should be noted that true condominiums only exist in the New Registration zones where the Strata Act is applicable. This includes San Pedro Town, Seine Bight, and Belize City are the only locations that have true condos with Strata Titles. Strata Title enables one to pass physical title to a ‘slice of air with a building in it’ without owning the land that is below it. i.e.: one can purchase and take title to a 3rd-floor unit without owning the shadow footprint of the land below.
If a condo has strata title, it provides a higher level of ownership and is a true ‘condo’. In Belize, every property has an individual land title, when you purchase a home or land in Belize you receive a copy of the land title. When you buy a property with a fee-simple title you take possession of it when you purchase a house or a piece of land in Belize.
When you buy a property that is part of a strata title, you own your unit or condo. When you own a strata title property or condo, you have individual ownership over your apartment, unit, condo, or townhouse.
The Strata Titles Registration Act, Chapter 196, of the Laws of Belize governs the issuance of titles to condominiums in Belize. These condo titles are referred to as “Strata Title”. The Strata Titles Act essentially enabled developers to construct condominium developments in Belize and to issue freehold titles to each unit created in those Developments.
Condominium structures in the Caribbean are very rarely high-rise buildings. They are commonly relatively small two to four-story buildings. This is largely due to building restrictions set by the CBA (Central Building Authority). Unlike large metropolis cities, the structures in Belize are rarely above 3 to 5 stories and are primarily used by vacationing foreign residents. Developments that offer Strata Titles are most commonly found in San Pedro, Ambergris Caye, Hopkins, and Placencia.
When a developer of a condo project applies for Strata Title, the titles of the various units are issued to the Developer and are put in the developer’s name. As each individual unit is sold, the developer transfers the strata titles to the new owners (purchasers).
A property or development in Belize can only apply for strata title when the unit is built or near completion. This makes it challenging to obtain Strata Title since most of the capital for investment is tied up in the development. Because of the laws pertaining to Strata Title, and having to be at or near completion to apply (and application takes time for approval), most condos or units offer co-op share ownership for presale, which can have risk. The tedious Strata Title process is why so many condos go the co-op share ownership route. If you are looking at buying a condo in Belize, we suggest ensuring the property at least has a strata title.
Fee Simple Title
Fee Simple Title is Freehold ownership, which is by definition;
A permanent and absolute tenure in land with the freedom to dispose of it at will, especially (in full fee simple absolute in possession ) a freehold tenure, which is the main type of land ownership. Fee-simple title is an interest in land. Land owned in fee simple is owned completely, without any limitations or conditions. This type of unlimited real estate is called absolute. A fee simple is generally created when a deed gives the land with no conditions, usually using the words like “to John Doe” or “to John Doe and his heirs”. (source)
In British Common Law, a Fee Simple, Freehold Ownership, or Fee Simple absolute is real estate in land or physical property and is of freehold ownership. A “fee” that is used as the basis for the title is a vested, inheritable, present possessory interest in land and physical property. A “fee simple” is real property held without a limit of time. This means absolute and permanent ownership of property under the governing common law.
A Fee-Simple Title and Freehold Ownership is the highest possible form of property ownership. There are also properties that are known as a “fee simple absolute,” which is without limitations on the land’s use.
If you’ve bought land or a house in Belize, it’s likely you own the property outright with a fee-simple title. This is the strongest form of property ownership and means that you own the “real property”. The fee simple way of owning real estate is the most common type of homeownership in the USA & Canada. Belize is also one of the few countries in the region with fee-simple titles and full foreign ownership. The fact foreigners can own a property outright with a fee-simple title is one of the major draws and advantages of off-shore real estate investment in Belize.
When you buy land or a home in Belize you will receive a “fee simple” title to your property which gives you full and complete ownership, unlike some Central and South American countries where the title is held in trust by a bank or similar institution. Other countries will offer leasehold ownership to foreigners which means you only own the land/property for a set period of time.
Belize is part of the British Commonwealth and with that, Belize has a legal system that is based on British Common Law. This comes with fee-simple land and property ownership. Property purchasers can take title to freehold property in Belize.
The Land Laws of Belize and property ownership Laws of Belize are derived mainly from the Common Law and English Statutes of the 19th century. The Law of Property Act, Chapter 190 has a lot of similarities to the Real Property Act 1925 of England and are nearly mirror images of each other. Other relevant statutes and laws that Belize has used and implemented include the Registered Land Act, Chp 194 which is a statute that governs all land transactions in Belize.
Fee Simple vs. Leasehold Ownership
In Belize, most residential real estate and land are owned on a fee-simple basis (this is similar to the US & Canada). This is not the case in most of Central America & The Caribbean where land and home sales are in leasehold ownership. Belize is one of the only countries in the region that offers full foreign ownership and fee-simple title.
Under the leasehold model, one party owns a property while the tenant can use the land for a set number of years. This is common in Costa Rica, Mexico, Panama, etc. Most countries in the region have restrictions on foreign ownership. This is not the case in Belize, where you truly own real property. Generally, Leases involved in these arrangements are usually long-term, typically lasting 55 years to 99 years or more.
Some owners may grant something called a “life lease” where the tenancy remains until the lessee passes away. This means the property itself can not be passed on or inherited. In that case, the property reverts back to the grantor.
If you enter into a leasehold arrangement, you’ll have to pay a fee to use the land, unlike fee simple ownership which requires no rent payments or renewals. With fee simple, you do not have to renew the lease as you own the property outright. With a fee-simple title, you own any home on the land forever. But with leasehold, when the lease ends, both the land and home will revert to the previous owner – unless you negotiate a new lease or renew the lease before the old one expires.
When you own a property with a leasehold property you only “own” the property or real estate for a fixed period of time. When you agree on a leasehold property, there will be a legal agreement with the landlord (sometimes known as the ‘freeholder’) called a ‘lease’. This tells you how many years you’ll have rights to the property. Ownership of the property returns to the landlord when the lease comes to an end or expires.
There are a lot of restrictions on foreign ownership in countries like; Costa Rica, Honduras, Panama, Mexico, etc. These countries often have leasehold contracts or require a trust to own real estate. That is not the case in Belize. Belize has no restrictions on what foreigners can own. There are some condo developments in Belize that are leasehold or co-op share ownership and usually use this structure if they’re bought through shared ownership or a co-op.
Belize Real Estate Appreciation
When investing or buying real estate it is important to consider the Appreciation Potential. Single-family homes tend to appreciate more than condos, partly because people have a hard time envisioning paying a higher sales price for a property where they have to pay condo fees. Many homebuyers would rather put that money into home improvements of their own choosing. The people who generally profit from condos are the developers alone.
Look to the future and the entire condo community when considering the marketability of your unit when you wish to move on. Your unit will never be worth more than an identical unit, plus upgrades. If another owner sells at a cheap price, that might affect your resale value. Condos can often of restrictions on use if you are in a rental pool, or require using their own management. When owning a home or land, there are often no outside restrictions on use. Condo homeowner association rules may restrict how you use the property and may make it difficult—or even prohibit—renting your condo unit to others. Or rent it outside of the rental management. When you own a home, you have much more control over the use of the property.
Literally speaking, a condo can be a tough sell in a bad housing market. That’s because, for the most part, a condo is a substitute house. They’re the kind of property people buy only in the most robust markets. But detached houses on privately owned lots tend to be more liquid in all kinds of markets. There’s also the individuality factor. Each house is unique, particularly after it’s been customized by its owners. There’s a greater likelihood that it will appeal to specific buyers. Condos, on the other hand, are uniform. They’re so similar that one unit doesn’t necessarily stand out from the rest. If there are a lot of units for sale in a condo neighborhood, it could take a year or more to sell your unit. This is a major reason why condos are often converted to rentals.
Belize Property & Belize Real Estate
One thing every person who goes through the purchasing process in Belize knows how easy and straightforward the process can be. Buying real estate in Belize is very easy and our team at RE/MAX Belize is here to help you through the entire Belize Real Estate Purchasing Process.
Neither the Buyer nor the Seller needs to physically be in Belize for the purchasing or closing and the whole process can be carried out remotely. Belize is one of the easiest countries for foreigners looking to buy real estate and invest off-shore.
Belize recognizes the rights of non-nationals, and the ownership rights for foreigners are exactly the same as local Belizean citizens. Unlike other Central American countries and tropical tourism destinations, in Belize non-nationals can buy a property outright rather than have to settle for a long-term lease (leasehold ownership) with the national government or have layered trusts. With Belize’s British ties, the ownership rights are very similar to that in the UK, USA, & Canada.
Another advantage of buying property in Belize is that you do not need to physically be in Belize to make an offer on a property, or to complete a closing. Most real estate transactions in Belize are done remotely and the buyer does not have to physically be in Belize to purchase property in Belize. This makes buying real estate in Belize as a foreigner especially easy and appealing.
There are different types of titles and ownership structures in Belize but are still good and all legal. When you buy property in Belize, you have a few options when it comes to the ownership structure. A lot of real estate transactions in Belize are through corporations and have property ownership in an IBC with fee-simple title. Owning a property in an IBC is still fee-simple full ownership with an added layer of asset protection and tax optimization.
If you are looking to get the most out of your Belize investment and have the best value when it comes to Belize real estate, we at Remax Belize suggest buying land and building or securing a single-family home with a fee-simple title. The most desirable attribute Belize real estate offers is the fact that foreigners can own a property outright with a fee-simple title, and the fact Belize has full foreign ownership. When you purchase a condo (especially something with co-op share ownership) you erode the largest value of buying and investing in Belize. If you are looking for real estate options in Belize with a fee-simple title, contact us at Remax Belize.
As Mark Twain famously said, “invest in land; they are not making any more of it.”