If you are buying property in Costa Rica, you should always solicit the services of a reputable and well-respected real estate company. There are many "Street Realtors," as well as taxi drivers, bar-tenders, receptionists, tour operators, etc., who are more than willing to show properties seeking a sales commission, yet lack the resources and knowledge necessary to provide you with information critical to complete a legal and successful transaction. Do not think you will get it cheaper by using anybody else who is helping you with the purchase. It is like an unwritten law in Costa Rica that everybody has the right to ask a commission by just bringing Buyer and Seller together. The services of a professional real estate company can be invaluable when you are buying property in Costa Rica, both during and after the purchase. Choosing the right agent will help you to build your knowledge of the area and compare values of properties. ABC Real Estate will provide the experience and expertise to answer all your questions.
Always be sure to meet with an attorney who can speak your language and answer your questions. ABC Real Estate will refer the services of a reputable attorney in the area who speaks your language and knows the specific needs of foreign property purchasers who wish to buy property in Costa Rica.
Having selected your ideal property in Costa Rica, you will want to be absolutely certain of the legalities of the purchasing process, and particularly your rights in a foreign country. This is where ABC Real Estate will ensure that you have expert assistance and will guide you through each step of the buying process. When you have decided on a certain property, the first step is to deposit a small amount in order to take the property off the market and reserve it until the remaining steps have been completed. The most common procedure is to establish an earnest money deposit agreement together with a down payment. This is usually 10% of the purchase price. Within this agreement you accept the terms and conditions to purchase the property.
ABC Real Estate will help you to establish this agreement and include all the necessary paragraphs in order to have a smooth and secure transaction.
Ask to see an official Costa Rican Registry Survey of the property. If one has not been completed, which can be common when purchasing a section of a larger parcel, request that any deposit be held by the attorney until an official survey has been provided. If this is the case, ask to review the official Registery Survey of the mother parcel.
Always be sure to include any obligations promised by the owner (water, road access, etc.) in the written agreement. If the promised time for completion of these obligations is considerable, request an amount of the purchase funds to be held by the attorney until the obligations have been met. Check if all taxes on the property have been paid up-to-date.
These are the basic steps, but the process of buying property in Costa Rica requires further due diligence to do before we can close. ABC Real Estate will work closely with the attorney and will do the follow up in order to have a smooth closing that will be completed to everybody's satisfaction.
When buying property in Costa Rica, property is transferred from Seller to Buyer by executing a transfer deed (escritura) before a public notary. Unlike common law countries, such as the United States and Canada, where the role of the notary is limited to authenticating signatures, in Costa Rica the public notary has extensive power to act on behalf of the state. The public notary must be an attorney and she or he may draft and interpret legal documents, as well as authenticate and certify the authenticity of documents.
Once a transfer deed is accepted for registration, the Public Registry will return the original document with all the documentary stamps affixed to it and properly sealed. Assuming no defects in the transfer deed, it should be registered by the Public Registry within 45 to 60 days after presentation.
ABC Real Estate has served as a Buyer's agent many times and will be glad to assist you. We can offer you professional service during the whole purchase process. We have also worked as an intermediary where Seller and Purchaser contracted us in order to help with the negotiation and purchase.
Financing for a non resident through a bank is still kind of complicated because of the bureaucracy. The interest rate is between 8.5% and 12% in a US$ loan. Most of the deals in real estate are cash deals or financed by the Owner or Seller, usually very short- term with high down payments (like 30%-50%). Sometimes the buyer can get better rates and faster approval (or easier approval) using a first or second mortgage in their home country on property they have there, then the cash can be used for buying property in Costa Rica.
If the purchase price is financed, there are generally three alternatives for selecting the notary/attorney. If the Seller is financing a large percentage of the purchase price and a mortgage needs to be drafted to guarantee payment, then the Seller may request that her or his notary/attorney draft the transfer deed.
If a property is purchased with 50% cash and 50% financed, it is common for the Buyer's attorney and Seller's attorney to jointly draft the transfer deed and mortgage in a single document. This is known as co-notariado.
Finally, the Buyer may insist that his or her notary/attorney draft the transfer deed and let the Seller's notary/attorney draft a separate mortgage instrument. In this case, because the mortgage is being drafted separately, it carries a higher registration fee.
The general custom is for the Buyer and Seller to share equally in the closing costs. This can be modified by agreement and usually depends upon the particular transaction. Closing costs containing the notary fees are, based on the real sales price, 1.5% from the first one million Colones, the local currency, and 1.25% on the balance.
Further, the transfer land tax, legal fees, and miscellaneous fees are about 2.78% of the declared value of the property. As always, it is recommended that you consult a lawyer about closing costs before buying property in Costa Rica.
Property taxes (Municipal Tax) throughout Costa Rica are very low when compared to the United States, Canada, or Europe. They are 0.25% out of declared value. This tax is administered at the municipal level and varies throughout the country. Paid quarterly, the type of property, location, and other factors contribute to the calculation of this tax.
The real estate tax is based on the declared value of the property. This tax is applicable throughout the country regardless of the property's location and is payable when transferring title.
A nice incentive for foreign investment is that there is no capital gain tax. The Costa Rican government will not tax you on the profit from the future sale of your property as long as this is not undertaken as a means of business. You would be obligated to pay taxes on any "declared" earnings being brought back to your country of citizenship.
The most common way is that the Vendor, Seller or Owner pays the commission to the realtor or broker at closing. The Buyer or Purchaser does not have to pay any commission when buying property in Costa Rica, unless they specifically agreed to do so.
The decision to have the property that you are buying in Costa Rica in your own personal name or in the name of a corporation is strictly up to the investor. To put it in the name of a corporation is very common and easy; it can offer benefits of asset protection and anonymity for the actual owner. A valid passport for three representatives (president, vice president, and treasurer-all can be foreigners) is the only requirement for a foreigner to form a corporation in Costa Rica; the cost is between US$600 -1500.
It is important that you or your attorney take the necessary steps in order to properly register the property and, more importantly, be assured that the property in question is free of all liens and encumbrances before buying property in Costa Rica. The Registro de la Propiedad (Property Registry) is located in San Jose - Zapote, where all property documents are recorded. A title search at the Registry would confirm good title and proper ownership. In the event that adjustments were made to any given title, these alterations must be recorded at the Registry. The Public Registry report (informe registral) provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title. Based on this information a title insurance can be obtained.
Ownership of real estate in Costa Rica by foreigners is fully guaranteed by the constitution. In addition, foreigners enjoy the same ownership rights as Cost Rican citizens, regardless of whether the property is placed in the name of a corporation or in the name of an individual.
No, it is not necessary to have residency to be able to buy property in Costa Rica. You can buy with your tourist status. Living here is another matter. As a foreigner and tourist you have to leave the country for 72 hours once every 3 months in order to renew your legal status in Costa Rica. Some of the foreigners without residency enjoy traveling and are visiting Nicaragua or Panama for a couple of days or discovering more of Central America in order to renew their visas.
There are many forms of residency available, we can help you to contact an attorney who can assist you in determining what residency status would work for you. If you plan on living here year round, you will find it easier if you have legal residency.
There are several ways to get residency with a different status like Pensionado, Rentista, or Inversionista. It depends on your individual situation; we recommend consulting a lawyer regarding the residency.
When buying property located on Costa Rica's beaches, you should be aware of the following: building a home adjoining beach areas falls under a category known as the Maritime Zone Law, the first 200 meters of land measured from the high tide line. The first 50 meters from the mean high tide mark cannot legally be built on by anybody, as it is public beach. From that point, the next 150 meters is subject to the Maritime Zone Law (Concession), unless the property is registered prior to 1973, in which case it has full title and can be transferred as such and called titled to the 50 meter line.
Concession, which is in effect a lease from the government and local municipality, must be approved by the I.C.T. (Tourism Institute) and normally run for a period of 20 years. At the moment of expiration, concessions can be renewed for a similar period of time.
To legally lease concession property, the property must be subjected to a "Plano Regulador" (a type of zoning and approval plan). It is also required that you have a Costa Rican partner that owns part of the company that obtains it. A Costa Rican citizen is required to hold at least 51% of the corporation until the lease-concession is granted by the government. Most importantly, keep in mind that when you buy concession property you do not actually acquire title to the land, but rather the right to utilize it for a specified period of time.
An exception to the concession properties located inside the Maritime Zone is when the property was registered prior to 1973, in which case it has full title and can be transferred as such. This is a rare opportunity because of 100% ownership, like any other properties outside the Maritime zone. No concession property can be converted to titled property.
Well, building is not easy, no matter where you are in the world. It is much easier to buy property already established; you know what you are buying. Costa Rica changed a lot within the past few years in terms of availability of good, quality construction materials, reputable contractors, and construction companies, especially in more remote areas like on the beaches. An existing structure or an older home might not provide what is possible today. Let's put it this way, if you can't find what you are looking for out of the existing possibilities or you have to make too many compromises, we recommend that you think about building.
Fortunately, in Costa Rica there is a defined process through which an intelligent Buyer and builder should proceed. In addition, there is a licensing body for architects and engineers, which also sets standards for fees should you decide to build.
The building costs are estimated per square meter and range between US$800-1500 (US$75-140 per sqft) (and up) for a closed, good quality construction. This will include the walls, floors, windows, doors, roof, electric, and plumbing; excluding furniture, appliances, pool, and landscaping. These costs depend on the type and price of material you use, construction style, the contractor you are using, and the soil, the location, and the area.
ABC Real Estate can assist you in finding a reputable architec, engineer, or contractor. Based on our experience, you will easily find the right company or person. You will make the final decision on the examples we have shown you, depending on the style you like and the one you would like to work with.
This is a good question and is often asked after buying property in Costa Rica. If you have not bought a property within a complex like a condominium or gated community with administration on site, we recommend that you hire a caretaker, especially if it is a larger piece of vacant land and in more remote areas.
ABC Real Estate can recommend to you reliable people or services. We can also give you tips and hints depending on your individual situation and the type of the property.