12 steps to purchase Costa Rica real estate

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1. Can a foreigner purchase Costa Rica real estate?
Any foreigner, resident or non-resident has the same rights as a citizen, except for voting rights at presidential and municipal elections and can therefore purchase and own Costa Rica real estate legally.
There are only two exceptions:
-A foreigner cannot own 100% of a property in a Maritime Zone.
-A foreigner cannot own any IDA (now INDER) property, in which land is donated to poor farmers.

2-Real estate agent: Research the available real estate agents in the area(s) that match your requirements. Don’t hire any agents who are not an expert in the particular area that you are interested in, because the right agent can help you for years to come with all your needs. Try to stick with one agent so you can expect that outstanding service. If you contact many agents, they will all just show you what they have listed and you will never find out about the best options.

3-Real estate commissions: It is typical for the seller to pay the real estate commission, which is 5 percent in the Central Valley and can run up to 7 percent elsewhere. Exclusive listing agreements might show up to 8 percent real estate commission depending on what advertising materials are agreed on and the agency. You as the buyer will not have to pay this commission, unless you hire a buyer’s agent. In most cases, the buyer’s agent will split the commission with the listing agent, unless it’s a for-sale-by-owner listing or a foreclosure.

4. Titled property: Most property in Costa Rica is titled. Any property that is located within 50 meters of the high tide line is public and protected. The 150 meters that is adjacent to this zone is call the Maritime Zone (ZMT). This land is a concession by the municipality and a non-citizen can own only up to 49% of the concession. Very little property within the ZMT is titled in Costa Rica. Concessions can be verified in the municipality.

5-Once you found the property you want to purchase. Hire a Real estate attorney. We have a few good ones we can recommend. Citizens, residents and non-residents alike should hire an attorney for their real estate purchases. Only a notary public can record a purchase in the National Registry through a protocolized deed that will be registered in the National Registry.

6-Offer on a property: Don’t make any verbal offers. Ask your real estate agent to write up the offer and take it to the seller. Once agreed on, have your agent ask your real estate lawyer to write up a formal purchase sale agreement. When you and the seller sign the agreement, it is customary to wire 10 percent of the sales price (unless agreed differently) into escrow with your lawyer. If you have not organized this before you travelled, you can do so when you get back home, but the purchase sale agreement will not be legal until the deposit arrives in escrow.

7-For the closing: If you are not going to be able to be in Costa Rica for the closing, I recommend you leave a SPECIAL power of attorney for your lawyer’s assistant, your real estate agent or anybody you trust, that will allow that person to purchase the property in the name (personal or corporate) that you approve in this power of attorney ONLY.

8-Escrow: Wire the complete purchase price and any necessary legal fees into escrow WELL before the closing date as banks in Costa Rica, to comply with money laundering laws, might hold the money for several days. Ask your attorney to send you the “Get to know your customer” form in time, so there won’t be any time wasted in finding the necessary documents.

9-Register title in your name, a corporation or other legal entities: When you purchase Costa Rica real estate, you can register the purchase in your name. In case you would like to share the property title with your spouse, another family member or business partners and you don’t want to allow the other to be able to sell without your consent, you can share the title in equal parts as a “right” or “derecho.” The title will show for example, 1-345678-001 and -002, with as many partners as you’d like: -003, -004, -005, etc. You can also purchase any Costa Rica real estate in a corporation such as a Sociedad Anónima (S.A.) or a Sociedad Responsabilidad Limitada (SRL), which is similar to an LLC. Ask your attorney for advice on the legal part of the transaction. Another way to purchase your property is in the name of your retirement fund or the corporation that represents it, such as an IRA or 401(k). Not all Costa Rican attorneys know how to do this, so do your research.

10-Real estate title transfer costs: You can purchase a property in the same holding company or transfer the title to another company or your own name. The cost of the title transfer is 5 to 6 percent of the sales price total.

11-Annual property taxes: Besides the real estate transfer taxes that you pay at closing, you also have to pay the 0.25 percent annual property taxes at the local municipality, over the registered value in that municipality. All property owners are obliged by law to re-assess their property every five years. If you don’t, the municipality will do it for you. At closing, the seller should bring a certification from the municipality that the property taxes are paid up to date; just bringing the last paid receipts is not enough.

12-Utilities: Once the deed is registered in the National Registry, your attorney can supply you with an “estudio de registro” proving you own the property. With that and your residency ID, you can go to the power company, the water company and the phone company to change the services into your name. You need to be a resident to do so. If you’re not, I recommend you purchase the property in a corporation and have a lawyer’s runner do all the changes at the utility companies for you. It is also quite customary to leave all the utilities in the former owner’s name.

Article by the tico times.