On this page you will find helpful information about Real Estate in Costa Rica, rules, laws and general information.

Foreigners can buy real estate in Costa Rica as they have the same rights as any Costa Rican. Your attorney will search the national Registry of Property for clear title and the transfer fees will run about 2.5% of the registered value of the property. The article and links below explain in detail about these issues and more.

Most clients ask us the same question: what are the advantages of incorporating and is it necessary? You can purchase property in your own name, it is not necessary to purchase through a Sociedad Anónima (corporation or LLC). There are some advantages to purchasing property through a S.A.:

• Personal liability
• Easy transfer of the property when you sell again (though most attorneys recommend against it)
• When you need to buy a phone line (land and cell phones), since only a resident is allowed to have a phone line.
• If you don’t want to have the ownership publicly known.

Buying? Building?
Here is what you need to know

By Lic. Roger A. Petersen
Attorney At Law

Buying property and constructing buildings or a home can be an intimidating process, even when you are at home in your own culture and knowing what to expect and plan for. In a foreign country, the same processes can be downright frightening.  In a new setting, you need to learn what the usual way to go about things is and also who is legally and ethically responsible for what-in other words you should invest some time in learning how things work and how to protect your investment.

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. But let's start at the beginning.

I want to purchase property in Costa Rica. What is required?

So you've found, either through a real estate agent or your own searches, a piece of property that is perfect for you. Once you have negotiated a sales price and the seller has accepted your offer, then the legal procedures for transferring ownership of title begin.

How is title transferred?

In Costa Rica, property is transferred from seller to buyer by executing a property  transfer deed (escritura) before a Notary Public. Unlike common law countries, such as the United States and Canada, where the role of the Notary Public  is limited to authenticating signatures, in Costa Rica the Notary Public has extensive powers to act on behalf of the state. The Notary Public must be an Attorney and he or she may draft and interpret legal documents, as well as authenticate and certify the authenticity of documents.

In order to close on the property, the buyer and seller must select a Notary/Attorney who will draft the transfer deed and register the sale in the centralized property registration office known as the Public Registry (Registro Nacional). All documents are centralized at this location. As such, all deeds executed in the provinces of Costa Rica must be filed in the Public Registry.  The local custom is that the buyer may select his or her Notary/Attorney to draft the property  transfer deed if the buyer is paying cash for the property. If the a portion of the  purchase price is financed by the seller, there are generally three alternatives for selecting the Notary/Attorney.

1. If a large percentage of the purchase price is being financed by the seller 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.
2. If a property is purchased 50 percent cash and 50 percent 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.
3. 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 registration fees are discussed below in the section on closing costs.

 At your option, the property can be purchased in an individual's name, jointly with other persons, or in the name of a corporation. The decision as to ownership should be based upon your particular situation and after consultation with your Attorney.

How can I ensure that I have clear title to the property?

Costa Rican law requires that all documents relating to an interest and/or title to real property be registered in the property section of the Public Registry (Article 460 of the Civil Code). Most properties have a titled registration number known as the folio real, and the records database can be searched with this number or by name index. 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.

Since Costa Rica follows the doctrine of first in time, first in right, recorded instruments presented to the Public Registry are given priority according to the date and time in which they are recorded. Obviously, every situation differs and in some cases a review of the Public Registry record will not be enough to uncover all encumbrances. That is why it is important that the buyer have her or his own attorney conduct an independent title search and investigation rather than rely on the seller's attorney.

For more on this article, go to http://www.costaricalaw.com/LEGALNET/real_estate_law/rebuyart.php

All About Property Closing Costs

Unless agreed otherwise, it is customary for the buyer and seller to share equally in the closing costs. The typical real estate closing will involve the following costs:

1. Real Estate Transfer Tax. - The government collects a property transfer tax (Impuesto de Traspaso ) which is equal to 1.5% of the registered value of the property. The Public Registry will not record a transfer deed unless the transfer taxes and documentary stamps have been paid.
2. Documentary Stamps - The government also requires that documentary stamps be affixed to the deed. These stamps include the following: Municipal Stamp: (Timbre Municipal);Legal Bar Association Stamp (Timbre del Colegio de Abogados); Fiscal Stamp: (Timbre Fiscal); Agricultural Stamp (Timbre Agrario); National Archives Stamp (Timbre del Archivo Nacional); Fiscal Stamp:(Especie Fiscal). The Public Registry also imposes its own tax of .05% on documents presented for recordation to the Public Registry. (Derechos de Registro)
3. Notary Fees- The Notary Public that drafts the property transfer deed and conducts the closing and registration of the deed in the National Registry customarily charges a fee which consists of 1.5% of the first one million Colones of the actual purchase price and 1.25% on the balance.

Costa Rica Property Taxes

Property Taxes in Costa Rica are levied and administered by the Municipal Government where your property is located.  The current property tax rate is 0.25% of the recorded property value per year. The tax is generally paid on a quarterly basis. Property values are determined by the Municipal Government by

1. The value stipulated in a property sales deed,
2. A mortgage recorded against the property or
3. By direct appraisal from Municipal officials.