Trade and Commercial Law Assessment - Honduras - Economic ...

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS C. IMPLEMENTING INSTITUTIONS The LdP created the Instituto de Propiedad as an independent body to govern the registration of real property. This entity will oversee real property registries, which are now dependencies of the Supreme Court. The registry of Tegucigalpa, which has authority over property and commercial matters, is in poor condition. Within the registry, transactions are recorded manually by staff in books in which information is indexed according to the persons involved in the transaction (i.e., folio personal). The registry’s books are kept in an insecure form, and some of the books are damaged and contain loose documents. The registry is not automated and only two computers, used for word processing, are present in the facility. Inadequate staffing exacerbates the lack of automation. According to interviewees, a permanent staff of 59 employees is responsible for processing, by hand, the 400 documents received daily. Registration of property can take as long as 3 months, and submission of a cadastre map is not required. Because of uncertainty regarding procedures during the current transition period, the registry has continued to operate under the old property system. Some lawyers interviewed complained that the LdP has created chaos during the transition period. One lawyer stated that, although the new law states that registry fees should be 1.5 percent of land value, the old 3-percent fee is still charged because of poorly trained staff and lack of supervision. Evidence of poor training is found in the comments of registry employees, who said that even though property transactions should be recorded in a pre-written form based on the new law, they would reject a transaction presented in such a form. Lawyers also mentioned that the new law’s creation of the Instituto de Propiedad creates additional bureaucracy for which the government lacks funds. The presidential commission for property reform disputes the notion that the Instituto de Propiedad increases bureaucracy and maintains that the new body will have sufficient funds to modernize registries and pay registry employees based on the increased number of property transaction registrations that will result from the reform. The LdP is intended to be fully in force by January 2005. According to the plan outlined for the transition period during the last quarter of 2004, registries will be evaluated, staff will be changed and trained, and the society at large will be advised about the benefits and changes associated with the LdP. At the State Reform Commission, it was reported that it would take from 2 to 3 years to strengthen the property system. Registering Property (2004) The ease with which businesses can secure rights to property is measured below using the following indicators: the number of procedures necessary to transfer a property title from the seller to the buyer and the time and the costs as a percentage of the property value Indicator Honduras V-4 Regional Average OECD Average Number of procedures 7 6 4 Time (days) 36 56 34 Cost (% of property per capita) 8.8 5.6 4.9
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS Source: World Bank In contrast to the registry of Tegucigalpa, the registry of the city of Comayagua is automated thanks to an automation process that began 12 years ago. The executive officer of the Instituto de Propiedad said that two other registries would be automated by the end of the year. There is no national cadastre although there is a cadastre law. Municipalities have cadastre maps that are used to determine municipal taxes on land use. Interviewees estimate that 62 percent of the territory of Honduras is recorded in some kind of cadastre map, but information between cadastres is not integrated and often outdated. Under the auspices of the World Bank, Honduras recently initiated a project to automate, consolidate, and make public all property information. The $140 million, 12-year project, named Programa de Administración de Tierras de Honduras (PATH), is meant to strengthen the Instituto de Propiedad, which will be in charge of registries, cadastres, and land dispute resolutions. An experimental project within PATH recently created a unified system of registration, called Sistema Unificado de Registro (SURE), which will be accessible online. Using the new system, a data query, which previously took 6 to 9 months, was completed in 1 minute. Under PATH, it is expected that property information, currently dispersed amongst 26 entities, will be consolidated and accessible through SURE within 4 years. It is expected that automation and information consolidation of the registries of Tegucigalpa and San Pedro Sula, the two largest cities, will be finished in 2 years and that automation and consolidation of the registry of the Bay Islands will be finished in the next 6 months. A fully functional version of SURE could decrease fraud by providing a mechanism to measure the dimensions of the land electronically and allow property transactions to occur via the Internet by use of specialized scanners. The Instituto de Propiedad would certify persons allowed to use the scanners, expected to be banks and real estate brokers, to send information to the Property Registry electronically. Interviewees estimate that this electronic system would reduce registration time from three months to one day. Concerns exist regarding the current Supreme Court and its commitment to reform. New justices were appointed two years ago through a transparent process that involved the civil society, yet even though their mandate was to change the judicial system, these justices have not yet engaged in such reforms. The Supreme Court has rejected many reforms, and indirectly opposed reform in cases in which they lack final authority. In one case, the Colegio disbarred all 15 justices over its resistance to proposed reforms to the legal profession. The U.S. Heritage Foundation gave Honduras a score of four on protection of property rights (five being the lowest possible score). 32 The foundation pointed out, “Protection of property is somewhat weak. According to the Economist Intelligence Unit, “[T]he judicial system in Honduras has long been criticized for its biases, inefficiency and lack of independence. It can 32 See Heritage Foundation Index of Economic Freedom, available at http://www.heritage.org/research/features/index/country.cfm?id=Honduras V-5
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