Buyers Guide to Real Estate in Costa Rica
- Introduction
- Property Types
- Sale/Purchase Process
- Basic Terminology
- Structuring Property Ownership
- Costs Associated with Purchase
Introduction to Buying Property in Costa Rica
The acquisition of real estate is one of the most significant investments a person can make during his or her lifetime. Serious due diligence is required and care and patience must be exercised to avoid common mistakes. Language barriers, unfamiliarity with local laws and procedures, and lack of a true Multiple Listing Service are among the reasons why you should get proper and trustworthy counsel during your real estate transaction. This means you should deal with both an experienced professional Realtor and a seasoned Real Estate Attorney.
Property Types
Titled Property
The most comprehensive form of property ownership in Costa Rica is titled property. Fortunately for foreigners, ownership rights and responsibilities are the same for Costa Rican nationals as they are for foreigners. The concept of titled property is very similar to the concept of fee simple title in the US. Basically, titled property gives the owner of that property the absolute right to materially own the property, use it, enjoy it, sell it, lease it, improve it, etc., subject only to conditions outlined in the Costa Rican Laws. Buyers who purchase fee simple titles have the most rights under the law to enjoy and use the property as they see fit.
Condominium Properties
Condominiums can be owned in either a horizontal condominium (subdivision) or a vertical condominium (multi-family housing). In Costa Rica, there is a specific law that, in combination with other legal dispositions, regulates all conditions required in order to set up a condominium. Each Condominium development has its own bylaws containing all of the restrictions, limitations, and privileges that can be enjoyed by individuals who purchase a property in such development. Ownership of property "in condominium" is fee simple ownership but specifically restricted to secure the interest of the condominium community set initially by the Developer and later by the Home Owners Association (HOA). It is advised that you require the owner of the property to give you a copy of the by-laws to check for architectural guidelines, land use and others.
Concession Property in the Maritime Zone
In Costa Rica, 95% of beachfront property is considered concession property and is governed by the Maritime Zone Law and other specific regulations including but not limited to special dispositions stated by municipalities and the ICT (Costa Rican Institute of Tourism). These legal dispositions set forth the conditions under which foreigners and local residents can own concession property. A concession in Costa Rica is defined as the right to use and enjoy a specific property located on the maritime zone for a pre-determined period of time. The Estate through the respective municipality grants this right.
The Sale/Purchase Process for Buying Property in Costa Rica
Once the Buyer has identified a property they wish to purchase, the next step is to understand what the process of acquiring the property may entail. The following are basic steps that a purchaser must follow when buying a property:
Step 1: Sign a Purchase/Sale Contract with the seller. This is most likely negotiated with the professional help of your Realtor. In some cases, the parties choose to go further and have their Attorney prepare The Purchase and Sale Contract.
Step 2: Engage the services of an Escrow Agent who will hold all funds deposited by the Buyer and remit the proceeds of the sale to the Seller at the closing date in accordance with the Purchase and Sale Agreement. All Costa Rican real estate transactions are required to be handled through a government-sanctioned Escrow agent.
Step 3: A Title search is performed and the due diligence is performed to ensure all requirements of the Purchase and Sale Contract are fulfilled and the property is received free and clear of defects, liens and encumbrances.
Step 4: Closing - Execution of Transfer Deed or Endorsement of Shares.
Step 5: Record new transfer deed with the Public Registry.
Basic Terminology
Here are some common terms used in real estate transactions in Costa Rica:
Structuring Your Property Ownership
For the majority of Real Estate transactions in Costa Rica the ownership is structured in the following two ways...
Costs Associated with Purchasing Process
Transfer taxes and stamps: In order to record the transfer of the property a 1.5% shall be paid for transfer taxes and .84% for other stamps at the Public Registry.
Conclusion
The real estate buying process in Costa Rica should be stress-free and your time should be spent on making sure you find and choose the Costa Rica property that is going to best fit your personal needs. By insisting on working with professionals you will have the confidence you need to make a well-informed and safe investment that will give you years of enjoyment to you and your family.