Honduras This Week Online Business & Economics

Contracts and charges made in U.S. dollars are legal

By MELANIE WETZEL

The legal currency of Honduras is the lempira, but anyone looking at real estate advertisements in the newspaper might find it hard to believe. Many houses for sale are priced in dollars. Even some high-end rental prices are in dollars.

Two years ago, when the lempira lost ground against the dollar every week, this practice was understandable. Property does not devalue with the currency, therefore to avoid the devaluation of the stated sale price, owners would price their property in dollars, a more stable currency. It also just sounds fancy, which is why the practice has continued even though the devaluation has stopped for the time being. It may have also continued due to the mistaken idea that the buyer is obligated to pay in real actual dollars.

The law states that the lempira is the legal currency. But in matters of civil law -- contracts between private people -- the contract makes the law. If the two contracting parties agree and sign the contract, it is valid for them. If the contracting parties are in agreement, the "payment" could be dollars, lempiras, or coconuts, whatever the property owner would like to receive and the payee agrees to give. A buyer or renter who does not want to pay in dollars must convince the seller or landlord to make the contract in lempiras.

The law also states, however, that the payment of debts must be made in the pacted currency, except when this is not possible, in which case the payment can be made in legal currency. That would be lempiras.

This basically means that a debtor does not have to go out and exchange his lempiras for dollars to pay a debt. He can pay in lempiras, at the current exchange rate.

The practice of pricing in dollars still has the effect of protecting the seller or landlord from a devaluation, but it is not a surefire way to acquire new 20 dollar bills.

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Congress approves reform of Article 107
Changes open way for foreigners to legally own beach property

By MELANIE WETZEL

TEGUCIGALPA -- Constitutional Article 107, which stipulates that only Hondurans by birth can own land within 40 kilometers of the coast or borders, is undergoing changes in the National Congress. The newly reformed article allows coastal and island properties to be purchased by foreigners or companies with foreign partners, as long as the property is used in a tourism development project approved by the Executive Branch. As before, urban properties are excluded, and are regulated by a separate legislation.

The reform does not affect non-coastal border areas, which can still only be owned by Hondurans.

Since Constitutional reforms must be ratified by two separate sessions of Congress, the law will be submitted to another vote early next year. If it passes in the next session, it will go into effect 20 days after being published in the "Gaceta," the official government periodical.

National Congress President Rafael Pineda told El Heraldo that prior to the final approval, actions would be taken to protect the lands owned by minority ethnic groups -- especially the Garífunas -- from being sold to foreign investors. "We will not ratify this reform without protecting the legitimate ancestral rights of these people."

Congress also voted this week to change the formation of the Executive Branch. Currently, the president is assisted by three "designados presidenciales." If the reform is approved in a second session, these figures will be replaced by one vice-president, with the change going into effect in the next presidential period.

In other legal news, the "Estado de Excepción" that has been in effect since Nov. 1 has expired. This signifies the end of the nightly curfew that had been in place since just after Hurricane Mitch devastated Honduras.

While some public officials are recommending the extension of the curfew, restaurant and night club owners, musical groups, and taxi drivers claim that they will soon be bankrupt if the measure continues. However, the curfew for minors that existed in Tegucigalpa before the natural disaster will remain in effect.

Home for Sale: CARIB Beachfront home, 2bd / 2bth w/ garage, now under construction. Fax Ray at 504-434-4200 More in Classifieds

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Congress approves reform of Article 107
Changes open way for foreigners to legally own beach property

By MELANIE WETZEL

The reform does not affect non-coastal border areas, which can still only be owned by Hondurans.

National Congress President Rafael Pineda told El Heraldo that prior to the final approval, actions would be taken to protect the lands owned by minority ethnic groups -- especially the Garifunas -- from being sold to foreign investors. "We will not ratify this reform without protecting the legitimate ancestral rights of these people."

In other legal news, the "Estado de Excepcion" that has been in effect since Nov. 1 has expired. This signifies the end of the nightly curfew that had been in place since just after Hurricane Mitch devastated Honduras.

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