Property Law

This Law has as its purpose to strengthen and grant legal security to property holders, develop and execute a national policy that permits national and foreign investment and access to property by all sectors of society. TABLE OF CONTENTS Section A Legislative Branch Property Law Title I General Provisions Title II Of the Institute of Property Transportation and Housing Transfer of Funds Title III Of the Registry and Cadastre Title IV Real Estate Cadastre Title V Of Regularization Title VI Procedure for Jurisdictional Resolution of Disputes Title VII Of the Notarial Protocol Title VIII Infractions and Sanctions Progress Section B Legal Notices Its provisions are of public order.

The provisions of this Law encompass movable property, immovable property, commercial property, intellectual property, real rights and other rights with the purpose of making expeditious, effective, transparent and equitable all legal transactions relating thereto.

The objectives of this Law are:

• 1)

  To integrate and coordinate regulations, entities, policies and procedures relating to property oriented toward the development of the human person and society;

• 2)

  To apply advanced legal, administrative and technological instruments that guarantee security, transparency, reduction of costs and times for registrable transactions and administrative procedures; commercial, intellectual property and others that are created or placed under its jurisdiction;

• 3)

  To ensure the recognition and protection of private, municipal and national property rights, promote their regularization and facilitate the performance of all types of legal acts and transactions; 8) To guarantee the security and perpetual preservation of the inscriptions that are made;

• 4)

  To promote the legal and expeditious resolution of conflicts relating to property; 9) To design and execute a program of regularization, titling and registration of immovable property that is not registered or that has existing problems;

• 5)

  To facilitate access by persons to secure property; and, 10) To establish norms for the operation of associated centers to operate certain registries or cadastres or to facilitate the fulfillment of its purposes;

• 6)

  To regularize real property for the population. 11) To utilize other databases, metadata, geomatics resources, maps and property registries of the State that contain information deemed useful for the fulfillment of its purposes; TITLE II OF THE INSTITUTE OF PROPERTY CHAPTER I CREATION, BODIES AND PATRIMONY

The Institute of Property (IP) is created as a deconcentrated entity of the Presidency of the Republic. It shall have legal personality and its own patrimony, shall function with technical, administrative and financial independence. The Institute of Property (IP) shall exercise its functions throughout the national territory. It shall have its domicile in the capital of the Republic and may establish branch offices and associated centers in places it deems convenient.

The Institute of Property (IP) has the following powers and duties:

• 1)

  To comply with and enforce this Law and its regulations;

• 2)

  To coordinate the creation and operation of an integrated property information system;

• 3)

  To operate a computer network with the purpose of allowing public access to data relating to property in the country;

• 4)

  To incorporate technical norms and international practices on property matters subject to its jurisdiction, provided that they do not contravene domestic law;

• 5)

  To administer and supervise uniform procedures that permit and ensure that in a rapid, economical and secure manner the constitution, recognition, transmission, transfer, modification, encumbrance and cancellation of property rights subject to registration are effected;

• 6)

  To administer, supervise and instruct on the use of technical norms and standardized formats authorized by officials and notaries that ensure compliance with procedures that permit and guarantee that in a rapid, economical and secure manner the constitution, recognition, transmission, transfer, modification, encumbrance and cancellation of property rights subject to registration are effected;

• 7)

  To issue administrative regulations for the establishment and operation of registries of immovable property, movable property, 12) To create, administer and make available to the public by any electronic or physical means the information on rights and registries that are within its jurisdiction with the limitations established by law; 13) To contribute to the safeguarding of the nation's historical memory by providing collaboration for the preservation of the country's main archives; 14) To issue the resolutions necessary for the fulfillment of its powers and duties; 15) To execute the resolutions issued by the judicial bodies; and, 16) Those others established by Law and its regulations.

The Institute of Property (IP) shall be composed of:

• 1)

  The Board of Directors, as the governing body;

• 2)

  Executive Secretariat; General Management MARCO ANTONIO RODRIGUEZ CASTILLO SECRETARY OF STATE IN THE OFFICE OF GOVERNANCE AND JUSTICE The Gazette REPUBLIC OF HONDURAS - TEGUCIGALPA, M. D. C., JUNE 29, 2004 3) General Directorates;

The powers of the Board of Directors are the following: 4) National Program for Land Regularization;

• 1)

  To appoint and remove the Executive Secretary, the General Directors, the General Inspectors and the members of the Resources Superintendency; 5) The National Commission for Property Policy and Regulations (CONAPON);

• 2)

  To approve plans for the implementation of the regularization process; 6) The General Inspectorate; and,

• 3)

  To delegate to the Executive Secretary and to the General Directors powers for the fulfillment of their functions; 7) The Resources Superintendency.

The patrimony of the Institute of Property (IP) shall be composed of: 4) To issue resolutions to regulate matters within its jurisdiction;

• 1)

  The movable and immovable property and budgetary allocations that the State transfers to it; 5) To create, modify or eliminate its branch offices;

• 2)

  The resources and returns from investments; 6) To approve or disapprove the recommendations of the National Commission for Property Policy and Regulations (CONAPON);

• 3)

  The inheritances, legacies and donations it receives in accordance with law; 7) To approve or disapprove the Annual Reports presented by the General Directors;

• 4)

  Any other income it receives; and, 8) To approve the institutional budget project;

• 5)

  Legally contracted obligations. All ordinary tax income it obtains must be deposited with the General Treasury of the Republic. 9) To approve the Annual Report; 10) To approve the internal organization of the Institute of Property (IP); CHAPTER II OF THE BOARD OF DIRECTORS, EXECUTIVE SECRETARY AND GENERAL DIRECTORATES 11) To hear and resolve complaints and reports against the Executive Secretary, General Directors and other employees and officials filed by the General Inspectorate;

The Board of Directors is the superior decision-making and governing body of the Institute of Property (IP). It shall be composed of seven (7) members. 12) To fix and modify the values of the services provided by the institution when these are not expressly established in applicable laws; and, Four of the members shall be appointed directly by the President of the Republic and shall choose one from each of the lists of three names proposed by: 13) Those others granted to it by this Law and its regulations. 1) The Honduran Business Council (COHEP);

The Executive Secretary shall have the following functions: 2) The General Confederation of Community Boards; and,

• 1)

  To guide, direct, coordinate, supervise, control and facilitate the administrative management of the Institute of Property (IP); 3) The Honduran Institute of Notarial Law.

• 2)

  To propose to the Board of Directors the appointment and removal of the General Directors; The President of the Republic shall designate the member who shall preside over it. This member shall exercise the legal representation of the Institute of Property (IP).

• 3)

  To comply with and enforce the resolutions of the Board of Directors; The Board of Directors shall have an Executive Secretary with voice but without vote.

• 4)

  To present monthly reports to the Board of Directors relating to the management of the Institute of Property (IP);

The Board of Directors shall have the obligation to meet ordinarily every fifteen (15) days or when the majority of its members determines the need to meet in extraordinary session. Its decisions shall be taken by simple majority of its members. 5) To propose to the Board of Directors for its approval the budgets and annual operating plans of the Institute of Property (IP), channeling the initiatives of the General Directorates through them; No member of the Board of Directors attending a meeting may abstain from voting on matters submitted to its deliberation. A. 2 The Gazette REPUBLIC OF HONDURAS - TEGUCIGALPA, M. D. C., JUNE 29, 2004 6) To prepare the Annual Report of the Institute of Property (IP); 5) Those who have been convicted of crimes committed against the public administration or against property; 7) To sign acts, contracts and agreements in the areas of its jurisdiction; and, 6) The shareholder members of the administration or oversight body of financial, real estate or construction companies; and, 8) Those others established by Law or the Board of Directors. 7) Those in arrears with the Public Treasury. The functions of the Executive Secretary shall be exercised on a full-time and exclusive basis. CHAPTER III NATIONAL PROGRAM FOR LAND REGULARIZATION

To be Executive Secretary, General Director, Inspector and member of the Resources Superintendency the following are required:

The National Program for Land Regularization is the temporary unit responsible for implementing the process of regularization of immovable property at the national level. 1) To be an qualified professional with a university degree; 2) To have practiced their profession for a period not less than five (5) years; CHAPTER IV OF THE NATIONAL COMMISSION FOR PROPERTY POLICY AND REGULATIONS 3) To be of recognized honorability; and, 4) To be a Honduran citizen in the exercise of their civil rights.

The National Commission for Property Policy and Regulations (CONAPON) is constituted as a body of consultation, proposal, discussion and dialogue on matters proper to the Institute of Property (IP).

For the fulfillment of its functions the Institute of Property (IP) shall have, at minimum, the General Directorates of Cadastre, Registry and temporarily of Land Regularization. It shall have the following functions:

The functions of the General Directors are the following: 1) To propose to the Board of Directors policies and regulations on property;

• 1)

  To comply with and enforce compliance with this Law, its regulations, and the resolutions of the Board of Directors and the Executive Secretary;

• 2)

  To contribute to social control over the management of the Institute of Property (IP); 2) To direct and organize their respective departments;

• 3)

  To propose agreements that promote the clarification and simplification of internal rules and procedures to achieve better adaptation to the needs of society, contributing to the safety and transparency of registrable transactions; 3) To appoint and remove personnel under their charge;

• 4)

  To submit to the Board of Directors the plans, development programs, and organizational structure of their department for approval through the Executive Secretary; 4) To propose to the Board of Directors rules for the control, regulation, organization, and internal functioning of the Institute of Property (IP);

• 5)

  To know and resolve complaints, objections, and reports against their subordinates; and, 5) To propose to the Board of Directors procedures for the execution of public competitive examinations to select property registrars, general inspectors, and members of the Resources Superintendency;

• 6)

  To submit a semi-annual report to the National Commission for Property Policy and Standards (CONAPON).

The following shall not be able to be members of the Board of Directors, Executive Secretary, Directors, General Inspectors, or members of the Resources Superintendency: 6) To report to the competent organs of the State when, after thirty (30) days have elapsed, the internal organ fails to conclude its own motion investigations or complaints of irregularities against officials or employees of the Institute of Property (IP); and, 1) Spouses and relatives among themselves within the fourth degree of consanguinity or second degree of affinity; 7) To approve their internal regulations. 2) Spouses and relatives within the fourth degree of consanguinity or second degree of affinity of the members of the Board of Directors;

The National Commission for Property Policy and Standards (CONAPON) shall function collegially. Its decisions shall be made by simple majority of those present. It shall be composed of a representative from each of the following institutions and organizations: 3) Partners, shareholders, or members of the governing bodies of legal entities that have contracts with the Institute of Property (IP);

• 1)

  Secretariat of State in the Offices of Governance and Justice, which shall preside over it; 4) Those declared bankrupt or in creditor proceedings, members of the governing bodies of financial institutions at the time of being declared in forced liquidation;

• 2)

  National Agrarian Institute (INA);

• 3)

  Honduran Forestry Development Corporation (COHDEFOR);

The Resources Superintendency is the organ charged with hearing appeals filed against the acts of the Executive Secretary, the General Directors, and the registrars. 4) National Forum for Convergence (FONAC); 5) Workers' Confederations;

The appeal shall be filed and formalized in the same written instrument before the organ that issued the resolution, within three (3) days following notification thereof, the case file being sent to the Superintendency on the day following such formalization. 6) Indigenous and Afro-Honduran Peoples; 7) Federation of University Professional Colleges of Honduras (FECOPRUH); The Superintendency shall resolve within a maximum period of ten (10) days from receipt of the case file. 8) National Federation of Farmers and Ranchers of Honduras (FENAGH);

The resolution handed down in the Appeal exhausts the administrative remedy. 9) Association of Municipalities of Honduras (AMIHON); 10) Honduran Association of Banking Institutions (AHIBA); 11) Honduran Chamber of the Construction Industry (CHICC); and, 12) Confederation of Peasant Organizations of Honduras.

In matters of property registration and cadastre, the Institute of Property (IP) shall develop, through the General Departments created for such purpose, the following functions: The representatives of the indicated organizations shall be appointed for a period of two (2) years by the President of the Republic upon the proposal of these organizations, who shall perform their functions ad honorem. 1) To create, develop, and administer a national information system on territorial matters in the area of property; 2) To coordinate and develop the cartographic system of the country;

The General Inspectorate is the organ charged with ensuring compliance with the functions that by law are attributed to the Institute of Property (IP). It may act on its own motion or at the request of a party. 3) To certify property registrations and cadastral actions; 4) To coordinate its actions with national or municipal entities related to territorial planning;

The functions of the General Inspectorate are the following: 5) To establish agreements with national, municipal, and private entities regarding the provision of cadastral services and the maintenance of the national cadastre;

• 1)

  To monitor and supervise compliance with the functions attributed to officials and employees of the Institute of Property (IP); 6) To register, georeference, and maintain updated the cadastral registration information system, the boundaries of urban and rural municipal zones, rural agricultural and forestry zones, historic and human heritage, protected zones, reserve areas, areas with ecological easements, coastal zones, maritime zones, cays, mangroves, risk zones, and other delimitations that entail legal effects on use or ownership;

• 2)

  To ensure ethics, probity, and transparency in the exercise of the functions that by law are attributed to employees and officials of the Institute of Property (IP);

• 3)

  To investigate complaints filed against officials and employees and report to the Board of Directors; 7) To authorize, define, carry out, verify, homologate, or validate the projects, systems, techniques, methods, studies, and cadastral works that are carried out or intended to be carried out in zones of the territory of the Republic;

• 4)

  To report quarterly or when necessary to the Board of Directors and to the National Commission for Property Policies and Standards (CONAPON) on the acts executed in the exercise of its functions; 8) To prepare and authorize the forms or formats that shall be used to document the acts, contracts, and other actions that must be registered in the registries;

• 5)

  When it deems appropriate, to request the Board of Directors to suspend officials or employees who are being investigated;

• 6)

  To collaborate with the State control entities; and,

• 7)

  Such other functions as the Law may establish. 9) To make the official declaration of the zone or territorial area that shall be subject to cadastral survey and registration activities, its official and definitive closure of the zone or territorial cadastral area with all of its effects; and, public administration such as the registration of aircraft in charge of the Civil Aeronautics Department and Maritime Registry comprising vessels, ships, and encumbrances on the same. 10) To maintain, keep current, update, and operate the registries and cadastre making use of the techniques and systems that according to the available methodological and technological advances are suitable for its obtaining, processing, identification, and registration, nomenclature, safeguarding, and conservation of information that ensure optimal provision of its services.

The Unified Property Registry shall operate in the registral jurisdictions that are enabled or organized with the territorial and administrative competence that shall be defined in the agreement of its creation. The jurisdictions may be regional, departmental, municipal, or sectional. Its competence and proportionality may be general or limited, according to what is determined in the corresponding agreement.

The registral jurisdictions of the Unified Property Registry shall be in charge of and under the responsibility of a Registrar. Deputy Registrars may also be appointed within a determined registral jurisdiction. By agreement of the Board of Directors, the number of Deputy Registrars shall be defined.

The Registry has as its object and purpose to guarantee to users and third parties that registrations and registry services are carried out under the principles of organization, registral efficiency, legality, priority, petition, mandatory nature, publicity, succession of title, specialty, generality, universality, and public good. The Registry is public and mandatory for all acts or contracts ordered by Law and voluntary for acts or contracts in which, according to the interest of the parties, its registration is requested to secure and publicize their rights before third parties.

To be a property registrar, the following are required:

• 1)

  To be a lawyer;

• 2)

  To be Honduran by birth;

• 3)

  To have at least five (5) years of professional practice; and,

• 4)

  To be of recognized honorability.

The Registry is public and mandatory for all acts or contracts that the Law orders and voluntary for acts or contracts in which, according to the interest of the parties, its registration is requested to ensure and publicize their rights before third parties.

Every constitution, cancellation, encumbrance, transmission, or transfer of ownership of immovable property and other real rights constituted on the same must be registered. Until this occurs, the act or contract only produces obligations and rights between the parties, except in the case of a mortgage which must always be registered in order to have its effects.

Real Folio is the set of individual entries relating to each property that according to law must be recorded in the registry, which shall include from its initial inscription the mutations, documents, and encumbrances that are produced with respect to it, whether as a result of agreements between parties, by operation of law, or by resolution of competent authority.

All registries that depend on the Institute of Property (IP) function as a Unified Registry of Property that shall include the following: Registrations shall be made following the rigorous order of presentation in the Journal or Automated Registration System. Deferral of registration due to formal defects shall not alter the order of presentation. 1) Registry of Real Property: shall comprise real rights constituted on real property, as well as encumbrances and preventive annotations that are constituted on them;

The geographical determination of real property and its respective cadastral record shall serve as the starting point for the reorganization of the Real Property Registry System under the Real Folio technique in order to achieve concordance between the content of the Registry and the extra-registral legal reality. 2) Registry of Personal Property: shall comprise vehicles and other property, as well as encumbrances and preventive annotations that are constituted on personal property; When there are discrepancies between the information filed in the Property Registry and the cadastre concerning the area of a real property in which the boundaries have not changed, the cadastral information shall prevail. 3) Mercantile Registry: shall comprise mercantile enterprises under the nature of individual merchants or business entities and encumbrances and preventive annotations that are constituted on the enterprise or its elements;

The Real Folio of real property shall include the following information: 4) Registry of Intellectual Property: shall comprise industrial property and copyright and related rights; 1) Unique real folio number; 2) Unique cadastral number or geographical identifier of the object; 5) Special Registries: shall comprise civil legal entities, judgments, concessions and franchises granted by the State, chorographic information, geodesic information, cultural heritage, world heritage, protected areas, natural reserves, historic sites, cultural patrimony, world heritage, protected areas, natural reserves, historic sites, cultural patrimony, world heritage, protected areas, natural reserves and others that the Institute of Property (IP) creates or incorporates; and, 6) Associated Registries: shall comprise registries of some type of property that are managed by other entities or organs of the A. 5 La Gaceta REPUBLICA DE HONDURAS - TEGUCIGALPA, M. D. C., 29 DE JUNIO DEL 2004 3) Legal nature of the real property;

Preventive annotation may be requested by: 4) The vocation or potential use of the real property;

• 1)

  One who files a suit in court for the ownership of property or the title to any real right over such property; 5) Identification data of the holder of the right;

• 2)

  One who by Judicial Decree obtains attachment, seizure, prohibition of executing acts and contracts on property; and, 6) Extension, conditions, charges, encumbrances or limitations of the right to be recorded; and,

• 3)

  One who presents a title whose registration cannot be made definitively due to lack of legal formalities. 7) The ordered set of registrations and cancellations. In the case of property of another nature, legal entities, or acts, in addition to the previous data that may be applicable, their individual characteristics shall be described. The Preventive Annotations referred to in numerals 1) and 2) shall have effect until the judgment becomes final, the right is prescribed, or the instance is extinguished. In the case of numeral 3) they shall have effect for ninety (90) days from the date of their annotation. CHAPTER III OF REGISTRATIONS AND CANCELLATIONS IN THE REGISTRY

Promises of sale, retention of title, and purchase option contracts shall be subject to preventive annotation, which shall have effect for the agreed term.

Registration is the entry made in the Registry of titles subscribed in this requirement, in order that the acts and contracts contained in said titles are made public.

Registrations and preventive annotations may be canceled in whole or in part. Registration is of two (2) classes: definitive registration, which is that which produces permanent effects, and provisional registration, called preventive annotation. Total cancellation of registrations and preventive annotations shall be appropriate when there is nullity decreed by final judgment or arbitral award and when the right or judicial order registered or has been extinguished completely or the established term has expired.

Every registration made in the Real Property Registry shall express the following circumstances: Partial cancellation shall be appropriate when the property that is the subject of the registration or preventive annotation is reduced or the registered or annotated right is reduced. 1) The class of title to be recorded, the authorizer and its date;

The cancellation of every registration shall contain: 2) The nature, extension, conditions and charges of the right to be recorded;

• 1)

  The class of document that motivates the cancellation, the date of the document and that of its presentation in the corresponding Registry; 3) The full name, nationality, domicile, number of identification document of the parties;

• 2)

  Name and number of the identification document; and, 4) Cadastral Number or geographical identifier; and,

• 3)

  The signature of the Registrar, place and date. 5) The area and boundaries. CHAPTER IV OF REGISTRAL QUALIFICATION

In order for a title relating to real or personal property to be registrable, it is essential that it be contained in a document executed in accordance with law.

Registral qualification is the power that registrars have to determine the legality and formal validity of acts or contracts, titles, public instruments or authentic documents by virtue of which registration is requested. Every mandate or representation that permits the performance of acts of strict ownership over such property must be recorded. Once the registration of an act or contract is made, it shall be considered as qualified. Certifications of Resolutions, Agreements, Decrees, or Judgments of competent authority shall serve as registrable title when they recognize, constitute, extinguish, transfer, encumber, or modify real rights. Provisional or definitive deferral shall be expressed through a duly motivated resolution with legal foundation that shall be notified to the interested party.

The document in which a property regime is constituted for its registration in horizontal property records must be accompanied by a general plan in accordance with technical standards that shall include the distribution of the building, floors, apartments, areas of common property and other details for its identification.

Qualification shall comprise the extrinsic forms of the documents, their content, the capacity and legal condition of the grantors or issuers who authorize them, verifying the observance and compliance with legal provisions regarding the origin. The constitution of real rights over property subject to the horizontal property regime shall be subject to a separate registration that shall have as an indispensable reference the document constituting such regime previously registered. A. 6 La Gaceta REPUBLICA DE HONDURAS - TEGUCIGALPA, M. D. C., 29 DE JUNIO DEL 2004, modification, limitation or cancellation of acts, contracts or rights that purport to be subject to the protection of registral public faith.

Registrars shall respond administratively, civilly and criminally for acts of negligence or fault that by action or omission result in the prejudice of their functions. The Institute of Property (IP) shall be jointly and severally liable as to civil responsibility.

Registrars may correct of their own motion the material or factual errors in documents subject to registration provided that this does not imply the alteration or modification of the intention of the parties.

The omission or inaccuracy of any or some of the circumstances required for preventive registrations and cancellations does not impair their validity. In order for invalidity to be declared, it is necessary that as a result of the stated omission or inaccuracy there results an absolute insecurity regarding the persons of the contracting parties, their civil capacity, the right acquired, or the immovable property that constitutes its object.

Registrars shall not obtain the legality of judicial or administrative orders that mandate an inscription. However, if they believe that it should not be carried out, they shall inform the respective authority. If despite this it insists on the registration, an inscription of office shall be made for what has been ordered, and the original shall be filed.

The legal provisions relating to the Immovable Property Registry shall be applicable, respecting their nature, to registries insofar as they do not contravene the special provisions that regulate them. CHAPTER V GENERAL PROVISIONS ON REGISTRY

The acts or contracts that must be registered in the different Registries, except in cases expressly indicated by other laws, shall be subject to the payment of the following fees:

Registrars must consult the information contained in the database of the cadastral registry information system in order to proceed to qualify and authorize a registration entry in the Immovable Property Registry that is located in a cadastral zone. No transaction on irregular cadastral properties may be registered. 1) When the value of the act or contract is indeterminate or does not exceed one thousand Lempiras; 2) On the amount exceeding one thousand Lempiras, L. 1.50 per thousand or fraction of a thousand shall be paid.

In zones where the declaration has not been made or the cadastral registry survey has not yet been carried out, the registrar shall make use of the information derived from the documents that support the act or contract whose registration is requested. Payments shall be made using the electronic or physical means authorized by the Property Institute (IP). For these purposes, documents containing unilateral declarations of the will of the interested party regarding the description, area, or boundaries of the property whose registration is requested shall not be admitted when: TITLE IV IMMOVABLE CADASTRE 1) It modifies or alters the original information of the parcel and has not been confirmed by a competent judicial or administrative resolution; or, CHAPTER I OBJECT, PRINCIPLES AND DEFINITIONS 2) That the difference in area or boundaries is not within the tolerance range determined by the Cadastral Surveying Regulation to be issued, to be accepted.

The Immovable Cadastre is a unique and public technical-administrative register; it is composed of geographic information on immovable properties with the identification of natural resources, agricultural and livestock resources, and the country's infrastructure.

In cadastral zones where the registry operates under the personal folio technique, every property registrar must review the information provided by the cadastral class of the numerable property with respect to an act or contract subject to registration in order to verify whether there is concordance. It contains information on the measurements and geo-referencing of the properties, their geometric form, surface area, boundaries, adjoining properties, municipal, departmental, and national territorial limits; utilization, current and potential use of the land, and other economic and legal attributes that enhance the inventory of immovable properties and resources of the country. In the case that the comparative relationship does not agree or exceeds the tolerance margin permitted in the Cadastral Surveying Regulation to be issued, it shall notify the interested party of the provisional delegation so that they may resolve the difference or request the correction of the cadastral certificate, and once the personal folio reading has been implemented it shall be irregular. It shall be in charge of the Property Institute (IP). The provisional delegation may not exceed the term of sixty (60) business days. After this period has elapsed and the interested party has not produced the correction, the registration filing shall lapse, without further proceedings or recourse.

Every immovable property within the territory of the Republic of Honduras must be cadastrated. The holders of said immovable properties have the obligation to provide the necessary information and the free assistance that may be required of them for the fulfillment of this purpose.

The cadastral information registry shall operate in accordance with the procedures, manuals, and instructions approved by the Board of Directors of the Property Institute (IP) that ensure the optimal provision of its services and that are authorized for such purpose. A. 7 La Gaceta REPUBLIC OF HONDURAS - TEGUCIGALPA, M. D. C., JUNE 29, 2004 This registry shall have as its principal function the inscription, maintenance, organization, provision, and custody of all authorized information resulting from the cadastral registry surveys for each property with its cadastral key.

Immovable properties must be delineated in accordance with titles, possession, or tenancy.

The cadastre must be linked with the information contained in the Property Registry. There must be concordance between the content of the cadastral register and the legal registry reality in order to produce the effects of legal certainty that is the object of the public faith of the registry.

The Property Institute (IP) before a zone or territorial area is declared cadastrated shall exhibit the cadastral information surveyed with the corresponding plans and maps, including the list of immovable properties and the names of the presumed holders through an Administrative Public Hearing.

All institutions, projects, and public programs, whether sectional or municipal, that develop cadastral, registry, or territorial ordering activities are considered associated centers of the Property Institute (IP). The commencement of the Administrative Public Hearing shall be published in advance in the Official Gazette "La Gaceta", in a newspaper of greater circulation, in notices posted in the most frequently traveled public places of the locations where the process is carried out, and in at least one electronic medium of mass communication.

All cadastral activity and territorial ordering executed by associated centers must comply with the provisions established by this Law and the resolutions issued by the Institute of Property (IP) to guarantee the updating and maintenance of a cadastral registry information system. They shall be warned that if they do not appear at the offices enabled for such purpose, within thirty (30) days following the first publication, requesting the correction of errors or omissions in the published information, the same shall be deemed accurate and valid. The Associated Centers shall provide to the Institute of Property digitalized copies of the cadastral products or territorial ordering that they undertake.

If after conducting the Administrative Public Hearing, there is found to be coincidence between the physical reality and the legal situation of the real estate properties or their titleholders, the Institute of Property (IP) shall issue a resolution declaring it as a regular cadastered property. Otherwise, it shall be declared as an irregular cadastered property. CHAPTER II OF CADASTRAL PROCEDURE This information shall become part of the National Cadastral Registry Information System so that it has the legal effects that correspond in the Real Estate Registry and the Cadastre.

The Cadastral Registry Survey is the set of legal, technical and administrative activities aimed at obtaining, ex officio and in systematic form, the precise, graphic and descriptive information of the properties of the national territory.

For irregular cadastered properties, a record shall be drawn up stating the circumstances and interested parties shall be required to present a public audit of conciliation before the Institute of Property (IP) within a period of fifteen (15) days. The Cadastral Registry Survey process shall comprise the following activities: Cadastral Diagnosis; Analysis of Cadastral Information; Legal Analysis and Investigation and Administrative Public Hearing. If the parties reach conciliation, a record shall be drawn up documenting such circumstance and the cadastered property shall be declared regular.

Cadastral works shall be carried out in areas of the territory that are determined in the respective declaration. The declaration of a zone to be subject to the cadastral process is the responsibility of the Board of Directors of the Institute of Property (IP) and shall be duly publicized through the means that ensure optimal coverage and information on the process at the local and national level. If the parties do not reach conciliation, the administrative procedure shall be exhausted, leaving the judicial proceedings open in accordance with Title VI of this Law, without ordering arbitration. The declaration shall be published in advance in the Official Gazette "La Gaceta", in a newspaper of greater circulation, in notices posted in the most frequently visited public places in the locations where the process is conducted.

Once the Administrative Public Hearing has been conducted and the validation process of the Cadastral Registry Survey of a cadastral zone has been exhausted, the Institute of Property (IP) shall proceed to declare the zone as a "Cadastered Zone". The Institute of Property (IP) shall ensure that there is sufficient information on the zones that will be subject to the Cadastral Registry Survey. For regular cadastered properties, the corresponding real estate folio shall be opened.

Every centralized or decentralized government institution that has conducted its own cadastre shall place it at the disposal of the Institute of Property (IP), by means of a period of thirty (30) days counted from the corresponding notification, so that the process of integration into the cadastral information registry may begin.

The cadastral map linked to plans of subdivision, urbanization or condominium territorial ordering shall be established in which public use real estate properties such as parks, streets, avenues, bridges, riverbanks, beaches, shorelines; protected areas, works of social or public service, fiscal properties, as well as properties destined for these purposes or for green areas constitute title of ownership in favor of the State or the municipality, as applicable. Non-compliance with this provision shall incur administrative, civil and criminal responsibility in accordance with law. TITLE V OF REGULARIZATION CHAPTER I GENERAL ASPECTS

The regularization and resolution of conflicts concerning the holding, possession and ownership of real estate properties is declared a matter of national priority, as well as their incorporation into the national cadastre, the titling and registration in the real estate property registries.

Notwithstanding the fact that regularization permits the peaceful, expeditious, economical and secure resolution of these conflicts, they shall be governed by the provisions contained in this Title. Except where the law expressly permits, these procedures may not be applied in zones subject to special regimes.

Zones subject to special regimes are considered to be the following:

• 1)

  National forests;

• 2)

  Protected areas; and,

• 3)

  National parks. The special laws that correspond shall determine the manner in which the regularization of real estate properties located within those zones may be undertaken.

The regularization process shall comprise the following stages:

• 1)

  Declaration of an irregular cadastered property;

• 2)

  Declaration of Regularization: Which shall determine the legal nature, delimitation and extension of the area subject to regularization;

• 3)

  Conduct of Census: Socioeconomic survey of the inhabitants;

• 4)

  Appointment of facilitators of the regularization process by the community;

• 5)

  Definition of the form of titling: individual, collective or mixed by the benefited Community;

• 6)

  Application of the regularization mechanisms defined in this title;

• 7)

  Payment of indemnification in the case of expropriation; and,

• 8)

  Titling and registration.

The regularization process shall be initiated ex officio or upon petition of an interested party by the Institute of Property (IP) through a National Program of Property Regularization in urban and rural lands comprised within any of the following cases:

• 1)

  In those of private nature whose occupants lack a registrable document;

• 2)

  Those whose legal nature is not defined and in which human settlements are found;

• 3)

  In those of private nature in dispute by private parties in which human settlements are found;

• 4)

  In those of private nature whose occupants meet the requirements for acquisition by prescription;

• 5)

  Ejidal lands;

• 6)

  Rural national lands held by natural persons for up to twenty-five (25) hectares;

• 7)

  Those lacking title that are possessed by ethnic groups; and,

• 8)

  Fiscal nature lands where there are human settlements. CHAPTER II REGULARIZATION MECHANISMS FIRST SECTION CONSOLIDATION OF RIGHTS OVER EJIDAL OR NATIONAL PROPERTY

Rights registered in useful domain over ejidal or national real estate properties exercised before January 1, 1991 by persons who, upon the entry into force of this Law, are using, occupying or having such property personally or through third parties in their name acquire the condition of full domain based on the title of useful domain originally granted. If they are in dispute and are not comprised in spaces of public use or subject to affects for reasons of public utility. The acts and contracts entered into concerning them prior to the entry into force of this Law are confirmed. These rights may not exceed twenty-five (25) hectares in the rural area when it is a natural person and one (1) hectare in the urban area. With respect to the excess areas in which there are improvements that are deemed real estate, those who are using, occupying or having the property personally or through third parties in their name may petition the corresponding authorities for full domain when they meet the requirements established in the applicable special laws. A commission composed of delegates from the Institute of Property (IP), the National Agrarian Institute (INA) and the corresponding municipality shall verify the properties that benefit from this provision. Titles that do not comply with what is prescribed in the first paragraph of this Article shall be subject to an action of nullity before the competent judicial authority in accordance with the special procedure established in this Law. This action may be brought by any interested party or by the Institute of Property (IP).

Natural persons who for a continuous period not less than ten (10) years have been occupying rural properties not exceeding five (5) hectares located on national or fiscal lands, not comprised in spaces of public domain or other affects of common benefit or for reasons of public utility. This latter provision is applicable to the titling contemplated in the previous article. SECOND SECTION PRESUMPTION OF USEFUL DOMAIN OR USE OR OCCUPATION OVER EJIDAL LANDS

For purposes of the procedure established in this chapter, it shall be presumed that any grant of ownership made by municipalities over their municipal lands prior to the entry into force of the Law of Municipalities contained in Decree No. 134-90 dated October 29, 1990 was made in usufruct; except when it is expressly stated in the original title of concession registered in the public registries that the property was sold or granted in full ownership. In any case, good faith is presumed. For purposes of this Law, usufruct is understood to mean the right of use or habitation. THIRD SECTION PROCESS FOR REGULARIZATION OF REAL PROPERTY BY PUBLIC NECESSITY

The regularization of ownership in real property in which human settlements established prior to June 1, 1999 are located is declared to be of public necessity, provided that any of the following circumstances occur: 1) That it is not possible to establish who is its legitimate owner in view of the existence of several property titles; and/or, 2) That the ownership or validity of those property rights is disputed, judicially or extrajudicially, by third parties unrelated to these human settlements.

Similarly, the regularization of ownership in real property may also be declared of public necessity when the following circumstances occur jointly:

• 1)

  Certainty, by means of indubitable document, regarding ownership of a real property in which human settlements against the will of its owner are located prior to June 1, 1999;

• 2)

  Final judgment that as a result of a replevin action condemns the possessor to return it; and,

• 3)

  That two (2) years have elapsed since the final judgment was rendered without it having been executed.

In the cases of the two (2) preceding articles, the Property Institute (IP) shall summon the parties to a hearing so that they may present what they deem appropriate in defense of their rights and settle their differences with the holders or possessors of the real property. A record shall be drawn up of what occurs at the hearing. The record shall be considered an indubitable document and shall be registered in the special registry book kept by the Property Institute (IP) for these purposes. In the event there is no agreement, at the request of the Property Institute (IP), the Executive Power in Council of Ministers shall declare the expropriation of the real property.

Notification of the declaration of expropriation of the real property may be made personally or through the use of mass media with national presence.

The owner of the expropriated real property shall not be deprived thereof without the corresponding fair market value indemnification having been previously paid.

For purposes of determining the payment of fair market value indemnification corresponding to whoever is affected by the application of this Law, the following procedure shall be applied:

• 1)

  Once the expropriation declaration has been made, the Superior Court of Accounts (TSC) shall proceed to establish an appraisal commission composed of three (3) experts, who shall be appointed: One by the Superior Court of Accounts (TSC), one by the residents of the human settlements benefited; and one by the owner or owners of the real property. If any of the parties fails to accredit the appointment of an expert within ten (10) days following notification thereof, it shall be appointed by the Superior Court of Accounts (TSC);

• 2)

  Once the experts meet on the day and time set by the Superior Court of Accounts (TSC), they shall conduct a detailed appraisal of the property to be expropriated. For such appraisal the experts shall use as a basis cadastral, financial, technical, and market valuation criteria. If the estimate of two (2) of the experts is different, or if that of one is less than that of the other two (2) portions; but if there is a difference greater than twenty percent (20%) between them with respect to the lesser value, the Superior Court of Accounts (TSC) shall determine the value of the fair market value. The results of the appraisal shall be set forth in a record to be signed by the members of the appraisal commission;

• 3)

  Within three (3) days following the issuance of the opinion by the appraisal commission, the Property Institute (IP) shall issue the corresponding resolution, which must be published within three (3) days of being issued; and,

• 4)

  If the owner or persons who dispute ownership of the real property to be expropriated are not in agreement with the fair market value established in the resolution of the Property Institute (IP), they may appeal through the judicial procedure that the Law of Administrative Contentious Jurisdiction establishes in tax and levy matters.

Once the resolution of the Property Institute (IP) is final, it shall proceed to payment of the corresponding indemnification. Acceptance of payment authorizes the Property Institute (IP) to register the property in favor of the State of Honduras through its agency. When payment cannot be made because the owner refuses to receive it or it is not known to whom it actually belongs due to doubt in the dispute over ownership of the real property, the indemnification shall be deposited with the Civil Court of the place where the property is located, without an offer of payment being made, and the deposit may be challenged following the procedure established in Title VI of this Law. Once the deposit is final, the Judge shall proceed to carry out the transfer of ownership in favor of the State of Honduras through the Property Institute (IP).

When there is controversy over the ownership of the real property, those who dispute the ownership thereof shall determine judicially or extrajudicially which of them has the right to receive the indemnification or the deposit made. When there are pending lawsuits regarding the expropriated real property, they shall not prevent execution of the procedure established in this chapter.

In the decree in which the expropriation is declared, the registered mortgage encumbrances, the registrations and preventive annotations that exist on the expropriated real property must be noted. The constituted encumbrances that weigh on the real property shall be guaranteed by the indemnification, without prejudice to the rights of third parties.

The declaration of forced expropriation indicated above shall not presume right, benefit, or prejudice for any of the parties that are in dispute with respect to ownership of the property right to the real property. In cases where there are pending lawsuits, the Property Institute (IP) shall release communication to the court that hears the case informing it of the declaration of expropriation of the real property in litigation.

Once the real property is registered in favor of the State of Honduras through the Property Institute (IP), it shall individualize it, title it, and register it in favor of the holders or possessors. The transfer of the real property in favor of the holders or possessors shall be made at a price that may not be less than the indemnified value.

In real property where sales have been made registered in the property registries prior to the entry into force of this Law by any of those who claim it as their own, what was paid shall be applied to the individual sale price and shall be deducted from the indemnification value. If the party that emerges as winner of the dispute is different from the one that made such collections, it shall acquire a credit right against the one who made it. FOURTH SECTION REAL PROPERTY IN COMMUNITY OF GOODS

Immovable property possessed in community of goods or pro indiviso in which there are transfers of rights registered in public registries and that in reality are located in seats or agreements executed in such a manner as to allow identifying the physical individuality of each of those rights or shares of the co-assignees, the Property Institute (IP) shall proceed to individualization.

Before proceeding to partition, the competent judicial bodies shall decide the dispute over the rights subject to partition following the procedure ordered in this Law. However, these disputes may also be resolved through mediation, conciliation, or arbitration processes. FIFTH SECTION PRESCRIPTION

Acquisitive and extinctive prescription of real property rights over private immovable property may be declared by the Institute of Property (IP) at the request of a party when the requirements established in the Civil Code are proven, from the moment when the physical seizure of the immovable property occurred with the intention of an owner. The petitioner must prove the requirements of the petition by any means of evidence recognized by Honduran legislation without prejudice to the Institute conducting such investigations as it deems relevant until issuing the corresponding resolution. The petition for declaration shall be notified to the affected party by publishing it in a newspaper of national circulation and local radio media twice (2) at intervals of fifteen (15) days and notices that shall be displayed in the most frequented areas of the place where the immovable property is located at the cost of the petitioner and within five hundred (500) days counted from the last publication. Once the publication is made, the Institute of Property (IP) shall transfer the case to the Civil Court Judge of the place where the immovable property is located so that he declares acquisitive prescription. Said judgment shall serve as title for its registration in the corresponding registry.

If within the aforementioned term opposition is filed, the Institute shall forward the case to the competent Court of First Instance so that the parties may affirm their controversy in accordance with the special procedure established in this Law. CHAPTER III OF THE PROCESS OF REGULARIZATION OF IMMOVABLE PROPERTY FOR INDIGENOUS AND AFRO-HONDURAN PEOPLES

The State, recognizing the special importance that indigenous and Afro-Honduran peoples have regarding the lands they traditionally possess and which the law does not prohibit. The process established in this Chapter shall be applied by the Institute of Property (IP) to guarantee to these peoples the full recognition of communal property rights, use, administration, management of lands and sustainable use of their natural resources, through the demarcation and titling in full dominion thereof.

Property rights over the lands of these peoples shall be titled in their favor collectively. Members of communities or groups of communities have the right of tenure and usufruct in accordance with the traditional forms of communal property tenure.

In the event that the State intends to exploit natural resources in the territories of these peoples, it shall inform and consult with them about the benefits and damages that may occur prior to authorizing any prospecting or exploitation. In the event that it authorizes any type of exploitation, the peoples must receive equitable compensation for any damage they may suffer as a result of those activities.

The property and tenure rights of these peoples shall prevail over titles issued in favor of third parties who have never possessed them.

The third party who has a property title in lands of peoples and has had and possessed the land protected by that title has the right to continue possessing and exploiting it.

The third party who has received a property title in communal lands of these peoples, which due to its characteristics could be voidable, prior to the return of the lands to the affected communities shall be compensated for improvements.

Third parties in lands of these peoples without any title may negotiate their permanence with the community by paying the rental fee that they agree upon.

It is declared and recognized that the communal regime of the lands traditionally possessed by these peoples entails the inalienability, non-attachability, and non-prescriptibility thereof. Notwithstanding, the same communities may put an end to this communal regime, authorize leases or rights of retraction to third parties by authorizing contracts of another nature that allows the participation of the community in investments that contribute to development.

The management of protected areas found within the lands of these peoples shall be done jointly with the State, respecting the territorial management regulations that define uses and rights affected for reasons of general interest.

No authority may issue or register titles in favor of third parties in communal lands. Municipalities that violate the communal property rights located within their jurisdiction incur administrative, civil, or criminal responsibility, without prejudice to the nullity of their acts. Any conflict that arises between these peoples and third parties regarding communal lands shall be subject to the special procedure created in this Law. CHAPTER IV GENERAL PROVISIONS FOR REGULARIZATION

All property titles that are issued as a result of the regularization process and that benefit a family must be issued jointly to the spouses or common-law union. When controversies exist between both, it shall be granted to the spouse or household partner who has personal and continuous care of the children. Every person over eighteen (18) years of age is considered qualified to receive the benefits of these regularization processes.

In the application of property regularization norms in immovable property where there are human settlements, no title of remedy shall be considered valid—even when there were several remedies—that increases more than twenty percent (20%) the original area of the immovable property subject to these special processes or attempts to make private lands ejidal or national lands or usurp third party rights.

When there is no authentic documentation that makes it possible to reconstruct successive chains where the chain of transmissions has been broken, the registrar may make said reconstruction ex officio or at the request of a party through the presentation of the corresponding documents. This chain may also be reconstructed using documentation relating to land titles that appear in the National Archives, in the archives of the Supreme Court of Justice, or in the possession of whoever has interest in the reconstruction of a successive chain of an immovable property subject to regularization. In cases where title invalidation is required to make the correction of the chain, the registrar shall proceed with the jurisdictional authority on the respective actions, with the registry annotations remaining suspended until the judicial judgment is issued.

In cases where there exists a dispute between the national government and a municipality and it cannot be determined with clarity, through successive possession, the legal nature of the immovable property is presumed to be of national nature and shall be proceeded with as indicated in the present Law.

To resolve any dispute between inhabitants of human settlements originated from the application of the regularization procedures contained in this Title, the documents that the benefited communities recognize as valid shall have probative value to accredit possession, use, tenancy, or habitation.

The subdivision and urbanization plans of the human settlements regularized by the Property Institute (IP) shall be sent by it to the corresponding municipal corporation so that they may be incorporated free of charge into municipal cadastres, regulatory plans, and zoning maps. These shall be considered as approved municipal plans.

The plans that the Property Institute (IP) prepares at the request of the municipalities, which must make reference to Article 125 of the Municipalities Law as well as the rural axes of forest vocation, technical instrumentation service for surveying, in full dominion by the National Agrarian Institute (INA) of the municipal common lands referred to in Articles 69 and 70 of the Municipalities Law. As regards the human settlements that existed in these properties before June 1, 1999, the municipalities shall grant title in accordance with the provisions of Article 126 of this Law. TITLE VI PROCEDURE FOR THE JURISDICTIONAL RESOLUTION OF CONTROVERSIES SINGLE CHAPTER OF SPECIAL PROCEDURE

The knowledge of the matters attributed by this Law to jurisdictional bodies shall correspond to the Civil Courts of Law and shall be subject to the following special procedure:

• 1)

  Once the complaint is filed in writing, its admission shall be resolved within two (2) days or an order shall be issued for it to be corrected within three (3) business days;

• 2)

  Once the complaint is admitted, the defendant shall be cited and summoned to answer it within three (3) business days;

• 3)

  Once the complaint is answered, a hearing shall be scheduled, which shall be held within five (5) business days following the answer;

• 4)

  At said hearing the parties may file incidentals and oppose the defenses and exceptions they deem pertinent, and immediately thereafter evidence shall be proposed and presented;

• 5)

  If it is not possible to present all the evidence proposed by the parties in the same proceeding, the hearing shall be suspended as many times as necessary until all proposed evidence is presented, without said time exceeding a period of thirty (30) business days; and,

• 6)

  Once the hearing is closed, the Judge shall schedule within the term of five (5) business days a judgment hearing in which he must rule on the principal matter and incidentals or exceptions proposed. Actions subsequent to the answer to the complaint shall be notified to the parties by public notice, and the Court shall impel the substantiation of the proceeding on its own motion.

Against the aforementioned judgment, only a Cassation Appeal by saltum shall proceed before the Supreme Court of Justice. TITLE VII OF THE NOTARIAL PROTOCOL

To strengthen the legal security of acts, contracts, or documents in which the law requires the intervention of a notary or to facilitate their registration, in addition to the physical protocol the same may be kept in electronic form. When one of the two means is chosen for use in one year, only the other may be used until the following year. The digital support may be on an Internet page, in an electronic database, or in a similar medium. The technological development of said supports and their administration corresponds to the Property Institute (IP). It creates mechanisms and controls that guarantee the confidentiality of the information contained therein.

Every act, contract, or document that is authorized or certified by a notary or electronic support shall be incorporated in the database created for that purpose by the Property Institute (IP). The authentications of signature or document shall be incorporated into the digital protocol as annexes thereof. Of each act, contract, or document, the notary shall keep one electronic copy for two (2) or more identical physical copies. These shall be signed by the parties, witnesses if applicable, and the authorizing notary. Next to each signature the digital fingerprint of the index finger of each party, witness, and authorizing notary shall be included. One of the physical copies shall form part of the physical protocol and the other shall serve as a document for the parties or applicants, and in case the act or contract requires registration it may be presented electronically.

The digital support shall automatically generate the order of the instruments authorized by the notary in accordance with their date and time of execution, preserving its content so that it is not subject to subsequent alteration. Without requiring the opening and closing note that the Notary Law requires, said digital support shall open the protocol with the first act authorized by the notary and shall close it automatically at the end of each calendar year.

Access to the digital support of the notary's protocol shall be made through use of a username, a permanent access code, and a temporary access code for the transaction that is authorized. Use of the digital fingerprint of the authorizing notary may also be made.

The physical support of acts, contracts, or documents authorized or certified by a notary shall include means that prevent fraud and allow verification of the statements of the parties, such as encrypted barcodes, digital seal to verify the identity of the parties and other advances that technology permits.

Acts or contracts that must be registered and authorized by a notary may be admitted electronically to registration. The electronic notice shall be inscribed as a preventive annotation while one of the original physical supports is presented to the registry. The notary has the obligation to present the acts or contracts that must be inscribed to the registry. The presentation of the physical supports may be made personally or through the person designated by the notary in the notice of presentation. If ten (10) days elapse from the date of the electronic notice without the physical support being presented to the registry, the cancellation of the preventive annotation shall proceed automatically.

In the event that a discrepancy is found between the text of the electronic support and the physical support, the latter shall prevail. If the difference is observed at the moment the document is presented for inscription, the registry shall not carry out the inscription.

The Property Institute (IP) shall generate electronic formats for the authorization of the most common Public Instruments subject to registration. These formats shall be available in the digital support of the protocol and shall be of voluntary use.

The size and quality of the paper, the number of lines that may be included on each page, and the margins that must be respected shall be determined by the Property Institute (IP). The fees, taxes, or rights derived from the authorization or certification of acts, contracts, or documents by a notary may be paid electronically, through credit to the account designated for that purpose or through another electronic payment medium determined by the Property Institute (IP).

In both the physical and electronic protocol, alongside each signature shall be included the digital fingerprint of the index finger of each grantor, witness where applicable, and authorizing notary.

Matters not provided for in this title shall be governed by the rules contained in the Notarial Law. TITLE VIII INFRACTIONS AND SANCTIONS SINGLE CHAPTER OF INFRACTIONS AND SANCTIONS

The following are considered infractions committed by third parties:

• 1)

  Altering official seals or proof of payment documents;

• 2)

  Theft, deterioration, or alteration of documents, certifications, or seals from the Registry;

• 3)

  Entering, using, and modifying digitalized files and databases without authorization;

• 4)

  Concealing or altering plans, maps, cadastral identification numbers, or any other graphic information;

• 5)

  Attacking physical facilities, infrastructure, and equipment; and,

• 6)

  Bribery or exercise of violence against officials and employees. These infractions shall be sanctioned with a fine of between five (5) to ten (10) average monthly minimum salaries to be imposed by the Property Institute (IP), without prejudice to civil and criminal liability.

The following are infractions attributable to officials and employees:

• 1)

  Unjustifiably delaying the prompt performance of the functions under their charge;

• 2)

  Altering the order of registry priority;

• 3)

  Engaging in the registration of documents that show irregularities;

• 4)

  Altering the data contained in entries of certificates, registrations, and records;

• 5)

  Non-compliance with security standards for archives and digital media;

• 6)

  Unauthorized access to electronic files or databases;

• 7)

  Accepting gifts, donations, or benefits for the performance of the functions under their charge;

• 8)

  Unauthorized theft or copying of computer applications and technologies;

• 9)

  Unauthorized introduction of software; and,

• 10)

  Regularizing prices through the expropriation mechanism without observing the requirements indicated in this Law. These infractions shall be sanctioned with fines equivalent to between twenty (20) to fifty (50) average minimum salaries to be imposed by the Property Institute (IP), without prejudice to administrative, civil, and criminal liability.

In non-cadastered zones of indigenous and Afro-Honduran peoples, the National Agrarian Institute (INA) shall be responsible for executing regularization processes in their favor. It shall also title national or rural ejidal lands of agroforestry vocation in favor of peasant groups or settlements that have possessed them for at least three (3) years prior to the date this Law enters into force.

The titles issued by the Property Institute (IP) as a result of regularization processes shall be exempt from the payment of all classes of taxes, fees, and formalities for their registration. The same shall be issued through the use of standardized forms without the assistance of a notary, except for subsequent acts or contracts derived from the same.

The Property Institute (IP) is authorized to make use and possession in writings and digital systems that allow the electronic implementation of procedures.

To fulfill the objectives indicated in the preceding Article, the Property Institute (IP) shall: 1) Process and file electronically the files that are presented; and, 2) Notify by electronic mail, Internet page, or any other similar means regarding the status of requests presented whenever the private parties have authorized it.

The Property Institute (IP) shall create a mechanism for the issuance of electronic certifications regarding acts, contracts, or rights that appear in public files, having the same force and evidentiary value as public documents.

The Property Institute (IP), by itself or at the request of beneficiaries, may establish trusts to guarantee the effects of the regularization process by expropriation. The same shall be exempt from the formalities required by law.

Requests submitted to the Property Institute (IP) are excluded from the application of the affirmative silence doctrine.

To determine the date on which occupation of a property by a natural person or human settlement occurred, in addition to the means of proof established in the Civil Code, aerial photographs, orthophotomaps, satellite photographs provided by the National Geographic Institute or by the Property Institute (IP) may be used.

The Property Institute (IP) shall perform the corresponding procedures to facilitate the organization and orderly and efficient transfer of assets and information to it. The transfer and operation of the Executive Directorate of the Cadastre of the State Secretariat in the Offices of Interior and Justice, the Intellectual Property Directorate of the State Secretariat in the Offices of Industry and Commerce, the National Geographic Institute of the State Secretariat in the Offices of Public Works, Transportation and Housing (SOPTRAVI) shall be carried out within ninety (90) days following the publication of this Law; the same shall remain physically in the places where they are currently located while the Property Institute (IP) creates the corresponding infrastructure. The property, rights, financial and budgetary resources as well as documents, records, plans, maps, photographs, satellite images and their byproducts and other property that had been affected for the provision of services of the aforementioned institutions shall become part of the assets of the Property Institute (IP) as of the date this Law enters into force.

The Real Property and Mercantile Registries that are currently under the authority of the Judicial Branch shall be transferred to the Property Institute (IP) in accordance with the following rules:

• 1)

  The Board of Directors of the Property Institute (IP) shall order that inventories of Registries, Books, and Personnel working for the Judicial Branch be taken within a period not to exceed three (3) months after this Law enters into force;

• 2)

  The Judicial Branch shall permit the entry to the Real Property and Mercantile Registries of the members appointed by the Board of Directors of the Property Institute (IP) for purposes of the transition;

• 3)

  Personnel working in the Real Property and Mercantile Registries at the moment this Law enters into force shall become an integral part of the Property Institute (IP). The same shall be evaluated by a Commission appointed for such purpose by the Board of Directors within a period of six (60) days from the date this Law enters into force. The result of the Board's evaluation shall determine whether they are terminated or hired permanently by the Property Institute (IP). Payment of labor indemnifications for workers employed in these registries shall be paid from the Budget of the Property Institute (IP) within twenty (20) days from the date of the payment decision. For these purposes, the respective reports shall be sent to the State Secretariat in the Office of Finance;

• 4)

  Requests for entry of documents by users of the services of the Real Property and Mercantile Registry at the moment this Law enters into force shall be resolved under the current system, until the Board of Directors has issued the corresponding resolutions under the norms of this Law; and,

• 5)

  The assets of the Real Property and Mercantile Registries shall become part of the Property Institute (IP). Payment for public services and rentals currently enjoyed by such registries shall be absorbed by the Property Institute (IP).

Special Registries shall be governed by their own laws in those aspects that do not conflict with this Law. Special registries shall be operationally integrated in a progressive manner within a maximum period of twelve (12) months from the date this Law enters into force.

The vehicle registry operated by the Executive Directorate of Income (DEI) shall be transferred to the Institute of Property (IP) within twelve (12) months from the effective date of this Law.

The Secretary of State in the Office of Finance is authorized to make the corresponding adjustments in order to put into operation the Institute of Property (IP). It is likewise authorized to transfer the amounts required for the payment of debts contracted by the institutions that are transferred and the labor benefits and indemnities corresponding to all personnel who must cease their functions as a result of the application of this Law.

The regularization process referred to in this Law shall only be applicable to cases existing at the moment of its effective date as established by the same.

Within six (6) months following the effective date of this Law, notaries shall send to the Supreme Court of Justice copies of the public deeds authorized that contain their protocol from the preceding year or years, exempt from the payment of any fine or sanction. The notary who fails to comply with this provision shall be subject to greater sanctions imposed by the Supreme Court of Justice (SCJ).

This Law repeals Article 6 of the Law on Stamped Paper and Tax Stamps contained in Decree No. 75 of April 7, 1911 and its amendments; the Law on Property Registry contained in Decree-Law No. 171 of December 30, 1974 and its amendments; the National Cadastre Law contained in Decree-Law No. 933 of May 7, 1980 and its amendments.

This Law enters into force as of the day of its publication in the Official Gazette "La Gaceta" with the exception of what relates to the reform of Article 2 of the Law on Tax for Transfer of Real Property, the repeal of Article 6 of the Law on Stamped Paper and Tax Stamps, and the use of the notarial document support provided for in Title VII, which enter into force on January 1, 2005. Given in the city of Tegucigalpa, Municipality of the Central District, in the Session Hall of the National Congress, on the twenty-eighth day of the month of May of two thousand four. PORFIRIO LOBO SOSA President JUAN ORLANDO HERNANDEZ A. Secretary ANGEL ALFONSO PAZ LOPEZ Secretary To the Executive Branch. Therefore: Let it be executed. Tegucigalpa, M.D.C., June 15, 2004. RICARDO MADURO President of the Republic The Secretary of State in the Office of the Presidency LUIS COSENZA JIMENEZ