Questions when buying in Costa Rica Faqs
WHATSAPP
@CONTACT US
SIGN UP
(+1) 888-607-6772
LIST WITH US

FAQ Property Ownership

Search Your Property

Search by Title or Keyword

Can foreigners own property in Costa Rica?

Yes, foreigners are permitted to own property outright in Costa Rica. Foreigners have the same property rights as Costa Ricans. Private property is protected by the Constitution of Costa Rica. It is no different than owning real estate in the US or Europe. Costa Rica is definitely a beautiful country to live, invest and retire.

What are the restrictions for a foreigner to buy property in Costa Rica?

There are no restrictions that specifically apply to foreigners when purchasing property in Costa Rica.  A Costa Rican partner is not required to buy land in Costa Rica.

What is the procedure to buy a Costa Rica property?

First: After you have found the right property with your Real Estate agent, have them submit an Offer to Purchase (also known as a Letter of Intent) to the Seller or the Seller’s listing agent in order to agree upon the sales price and basic terms of the deal.

Second: Once the Offer is accepted, you take it to your Costa Rica attorney and they draft the formal Sale and Purchase Agreement.  This document is a legally binding document, and it clearly states all conditions necessary for the transfer of the deed.

Third: The period of Due Diligence, which is the complete legal research of the property to insure there are no liens, contingencies, legal issues, and that it has absolute fee simple title.  Surveys, soil tests, home inspections, and other studies requiring professional services are included in this period.  If the property is being sold with an existing company, then the research of the company for any legal contingencies will also be completed during Due Diligence.

Fourth: The Closing (conveyance of the deed) occurs before a Costa Rican Notary Public, who will register the property under the new company or owner.  Alternatively, if the property is being purchased with an existing company, then the shares of the company are transferred at this time by a Shares Transfer Agreement.  In this case the Notary Public will make the corresponding changes to the company’s ownership in the National Registry.

Fifth: Declaring the property before the corresponding Municipality for property tax purposes by filling out a simple form and presenting it along with the some other documents either yourself or through your attorney.

Can I acquire a property under my personal name, even being a foreigner?

Yes, however, it is more common and recommended to acquire the property through a corporation in order to separate potential personal liabilities, facilitate the closing procedure, and allow for easier transfer to relatives in case of casualty.  The Costa Rica holding company will also make it easier to obtain services such as electricity and cell phones, as well as, opening a bank account.

Exception: A foreigner can only own up to 49% of the concession rights for a Concession Property within the Maritime Terrestrial Zone (MTZ).  Without getting too technical, the MTZ is limited to the area 200 meters from the median high tide line.  All other property outside of the 200-meter zone can be owned free and clear.

If I live outside of Costa Rica, do I need to be present to sign for the transfer of the deed at closing?

Although recommended, the answer is no.  The closing can be executed through a Power of Attorney with a third party in Costa Rica that you trust.  This Power of Attorney can be specifically for the sole purchase and signing the closing document.  Another option is to DHL or FedEx the documents after signing them in front of a licensed Notary Public at your nearest Costa Rica Consulate. Considering the cost of the shipping and the distance to the nearest Costa Rica Consulate, many buyers fly down and sign in person.

What are the common taxes, legal fees, and closing expenses included in the purchase of property in Costa Rica?

Every property acquisition in Costa Rica has to pay the following National Registry Fees:

Transfer Tax:  This is a national tax of 1.5% of the purchase price that is paid (by your lawyer) to the National Registry.  Prior to 2013, the cost for transferring the shares (instead of a direct property transfer) of the existing corporation to the new owner was significantly less.  Now in 2013, that option does not offer any significant financial savings.  These costs are often split by the Buyer and the Seller.

Legal Fees: for the purchase of property in Costa Rica are 1% to 2% depending on the sales price, complexity of the transaction, and the allotted time spent by the attorney on the deal.  Additional legal costs may include the formation of a Costa Rica corporation of around $600 USD; drafting of any supplementary contracts or Seller Financing Agreements and registering of such contracts; and translation of contracts into your native language.  The Buyer and Seller typically pat for the separate attorneys.  If one attorney is used by both Buyer and Seller, then some for these legal fees can be split.  However, the Buyer is usually solely responsible for starting a new company, any contracts for Seller Financing (if needed) and registration of those contracts, and translations if the Seller is Spanish speaking.

Lesser Fees include:

Registry: 5 colones per every 1,000 colones of purchase price

Municipal: 2 colones per every 1,000 colones of purchase price

Fiscal: a maximum of 625 colones

Bar Association: a maximum of 10,000 colones

Archive: 20 colones.

Other Closing Fees: may include topographer fees when you have the boundaries of the property (the cost of which varies depending on the size and terrain), soil tests, home inspections, etc.  These items are typically paid by the Buyer.

Total property transaction costs are about 4% of the property’s value, and are usually split 50/50 between buyer and seller.

How can I transfer funds for a property acquisition from my home country?

The easiest way is to make an international wire transfer from your home bank to an escrow company in Costa Rica.  These registered companies are dedicated to protect funds and provide escrow services in Costa Rica. A direct wire transfer from the Buyer to the Seller can be done in certain cases.

Where and how are properties registered in Costa Rica?

All titled properties are registered in the Registro Nacional or National Registry located in Zapote, San Jose, Costa Rica.  There are satellite offices of the “Registro” around the country in larger cities.  This is the agency that keeps the public, property record with the owner’s name or corporate name, any liens, mortgages, or damages against the property.  In order to transfer a registered property the recorded owner must appear before a Notary Public and that signed documentation is then presented and recorded in the National Registry.

Exceptions: (1) Concession property located in the Maritime Terrestrial Zone (MTZ); which is the 200 meters from the median high tide mark on both Pacific and Caribbean coasts.  The first 50 meters is public zone and free for the public to enjoy, where as the remaining 150 meters is the restricted zone where concession property can be granted by the local municipality.   Although there can be titled property with the MTZ, it is very rare and may have been titled since before the MTZ was put in place; but should be carefully investigated by your Costa Rica attorney to insure the validity and legality of the title.

Concession property is registered in different section of the National Registry called the Concession Registry and has an independent registration number.  Concession property is typically used for tourism and if this type of property is a consideration, then it is highly recommended your attorney review the concession and feasibility of your plans for the property before pursuing it further.

(2) There are also Possession Properties, which are untitled and are not registered in the National Registry.  These properties can obtain title through a lengthy process and if they comply with certain requirements; one of which is a minimum possession of 10 years.  These types of properties are the most risky and professional legal counsel is needed in this situation to advise if receiving title is possible before even considering such a property.

What is a Plano Catastro?

Recorded and titled property has a plano catastro, also known as, a survey plan.  It details the boundaries of the property, the total size, ownership, the Folio Real number, and the date it was registered among other things. Planos, as they are referred to in Costa Rica, can be found in the Registro Nacional (Public Registry), as well as, at the municipality in which the property is located.

What is a Folio Real number?

All registered properties have a folio real number (i.e. 6-123456-000) of which the first number represents the province where it is located, the second refers to the specific folio property number, and the third to the property rights as in number of owners (000 means only one owner).

How can I check the status of a property in Costa Rica?

You can go to the National Registry: http://www.rnpdigital.com/index.htm where anyone can check the status of a property.  Go to “Sistema de Certificaciones y Consultas Gratuitas” on the top left side of the webpage.  A new tab will open and then first time users will have to go to “Registrarse por Primera Vez” in the top left hand portion of the page.  After filling out the form you will receive an email and click on the link and enter your user email and password on the left hand side under “Ingreso para Usuarios Registrados”.  Then go to “Consultas Gratuitas” on the left hand side and next you will see a list of all the types of “Consultas” you can do for “Bienes Immuebles” (Real Estate).  To obtain a certified property report click on “Consulta por Numera de Finca”.  After this, you will have to enter the number of the property’s province or “Provincia” (first number of the Folio Real number on the Plano), the folio real number of the property (middle numbers of the Folio Real number on the plano), and the number of the property right “derecho” (which is the last 3 digits of the Folio Real number on the Plano). Once you enter the said information click on the “Consultar” (consult) button.  A certificate with all the information of the property will appear on the screen.

How much are property taxes and other taxes associated with owning property in Costa Rica?

Property Tax:  This annual tax is 0.25% (one quarter of one percent) of the registered property value and are paid to the local Municipality for where the property is located.  These taxes are paid every 3 months or can be paid in full for the year in advance.  For example a $100,000 USD property pays $250 USD per year in Property Tax.  Low property tax is one of the many reasons to invest in Costa Rica real estate.

Corporation Tax: This new tax was passed in 2012, and it is a fixed fee of $180 USD for inactive corporations and $360 USD for active corporations.  Most properties are held in an inactive corporation, because it will not be reporting income.  If you have a rental property, you can open an additional, active corporation to report income and expenses.  These taxes are paid to the “Ministerio de Hacienda”.

Luxury Tax:  A tax levied against luxury homes valued at $250,000 USD and is also paid to the “Ministerio de Hacienda”.  This tax is around $2,500 and up depending on the registered value of the home.

Why buying in Costa Rica rather than any other Central American country?

Costa Rica is, by far, the best place to invest in Central America. Almost 60 years of democratic tradition, a nonexistent army, 97% literacy, and a prosperous, fast developing country makes buying and investing attractive. Costa Rica is a great place to retire or raise a family. An ecologically oriented country, Costa Rica offers beautiful national parks, amazing beaches, wonderful adventure sports, and relaxation. Here you will enjoy the advantages of living in the tropics with all the conveniences of a developed country.

Lifestyle and Immigration FAQ

When coming to Costa Rica, do I need a passport or/and visa?

As a tourist, you need a passport, but you do not need a visa if you are planning to visit less than 90 days. If you are already in Costa Rica and want to stay longer than 90 days, then you’ll have to leave the country for 72 hrs and re-enter legally again for another 90 days. You can exit into Panama or Nicaragua; both countries border Costa Rica.

Your passport should be valid for at least 60 days after the arrival date. You should always carry it. A copy of the passport and stamps may not be enough as proof of legal status. It is a good idea to register with the Consular Section of the US Embassy to let them know how long you would be in the country.

What do I need to pass through Customs?

One customs declaration form should be filled out per family, and this form is usually handed out on the plane or boat when you enter the country. They are also available in the baggage claim area in the airport terminal. You will not have to pay for any personal luggage, unless it is new in a box. If you bring multiple units of the same item, the customs’ officer could deem them to be commercial goods and assess a customs fee.

Your luggage could be inspected, and you must fill out a customs’ declaration. This list should include any alcoholic beverages, electrical appliances, any computer and electronic equipment, and food or biological products.

Do I require a specific vaccine to enter Costa Rica?

For most North American, Central American, and European visitors, the answer is no.  The Yellow Fever Vaccination is required to people that live in certain countries in South America and Sub-Sahara Africa. People from Angola, Benin, Burkina Faso, Cameroon, Democratic Republic of Congo, Gabon, Gambia, Ghana, Guinea, Liberia, Nigeria, Sierra Leone, Sudan, Bolivia, Brazil, Colombia, Ecuador, Peru, French Guiana and Venezuela are required to have an International Certificate of Vaccination against Yellow Fever.

Do I need to get a Costa Rican Driver’s license?

Your own driver’s license with a valid passport will allow you to drive in Costa Rica. However, it will only be good just for 3 months, as per Costa Rican immigration/visa requirements. You may rent a car with your driver’s license, passport, and a credit card. If you have your Costa Rican residency, you can apply for a Driver’s License.

When is it best to visit Costa Rica?

Anytime of the year is a good time to visit Costa Rica. This really depends on individual taste and on the activities you want to experience during your stay.

If you are looking for maximum sunshine and water activities, the Dry Season (also known as, the High Season) may be your best option. From December thru April, the weather is sunny and warm (hot at sea level). Beach resorts and tour companies are very busy during this time of the year. The Peak Season includes Christmas, New Years, and Easter. These three weeks are the most expensive and busy of the year. Finding accommodations can be difficult during this time, so plan ahead.

The Green Season (Rainy Season) typically runs from May to November.  The countryside is lush and the rivers and creeks are full. There is usually sun in the mornings and rain, typically for a couple of hours, in the afternoon. Some days it may rain for more than that or until next day, but those are the exception. The Green Season is attractive because the price for rooms and rentals are lower.

Are dollars accepted in Costa Rica or I have to change currency?

The official currency in Costa Rica is the Colon. Most prices will be in colones but you will find some stores (specially souvenir stores) that have all items marked in dollars. Credit cards and dollars are accepted almost everywhere but not in $50 or $100 bills. Smaller bills will always be accepted. All major credit cards are accepted (Visa, Master Card, AMEX)

What documents do I need to get married in Costa Rica?

Costa Rican law permits U.S. citizens to get married here. A lawyer can perform the required legal ceremony. You will need the following documents:

  • A valid passport;

  • A certified copy of your birth certificate;

  • If you have been married before:

    • 1. A certified copy of the divorce decree or

    • 2. A certified copy of your previous spouse’s death certificate;

  • If you have not been married before, you must come to the Embassy’s Consular Section and make a sworn statement to that effect before a consular officer (there is a $30 fee for this service).

If you are marrying a Costa Rican citizen, he/she will need:

  • A Costa Rican ID (cédula de identidad)

  • A Certificate from the Civil Registry that he/she is single (certificado de soltería del Registro Civil).

In the United States, laws regarding marriage vary from state to state. Please contact the County Clerk’s office in the county in which you plan to reside in or in which you are a resident with any questions regarding recognition of your Costa Rican marriage documents in the United States. (Information provided by the US Embassy)

How can I get a job or internship in Costa Rica?

Some Americans can get a job in Costa Rica. They may teach English in one of many private language schools in Costa Rica. The salary is not very attractive for US standards. If you have an elementary or secondary education certification you might get a job in a primary and secondary school as a teacher or office clerk also. You may also try at one of the English Language publications like The Tico Times, The Beach Times, For Sale by Owner, among others. You may get lucky and get a job at a beach hotel and be near the ocean (Wow!) Just remember that these jobs are not legal because only residents and citizens are allowed to work in Costa Rica.

You can also volunteer in Costa Rica. There are some U.S. non-profit programs such as “World Teach” that place volunteers in Costa Rica every now and then. The Costa Rican Embassy in Washington may help you on this topic. There are also volunteer opportunities with the Costa Rican Energy and Environment Ministry.

What should I bring on my trip to Costa Rica?

Every person has different needs and desires, but here are a few things that may improve your experience:

Medication: if you are allergic to some insect bites or plants or food, pack your medicine. There are pharmacies all over Costa Rica, but we recommend that you bring your own.

Get ready to communicate: a pocket-size English/Spanish dictionary can come in handy.

Get ready for adventure: do not forget to pack a pair of comfortable shoes for every occasion and place (sneakers, hiking boots, sandals, etc). Also, comfortable, loose clothes will allow you to climb. Sunscreen is a must! Even in a cloudy day you may burn in the sun. You are encouraged to wear it. Insect repellent, sunglasses, a hat, and a rain jacket can also be useful.

Can you own a beach front land in Costa Rica?

Dreaming of purchasing a Costa Rica beachfront property where your backyard is the ocean is close to impossible to find. Most of the beachfront property is actually concession land, which means it is in the public domain and not available for private ownership. In Costa Rica, concession properties are generally avoided because they don't grant the ownership rights. Taking possession of these properties is the equivalent of a long-term lease.

95% of the beachfront property is concession and governed by maritime zone law. The first 50 meters of beachfront are held under public domain, and the next 150 meters of land are held under concession. The buyer may use the land for a number of years. Generally, concession land is far less money because of their complicated status. When you purchase concession property, than you are agreeing to the fact the government maintains the right to seize the property if it is needed.

If you decide to go ahead and purchase a concession property, consult with an attorney to make sure the seller has the rights to occupancy, and is in fact in a position to offer you the rights to the land. The land use rights can range anywhere from 5 to 40 years. Most concession properties offer 20-year occupancy rights. If you're a die hard beach lover with your heart set on having the ocean as your backyard you may take the risk. Be clear that you are essentially signing a long term lease on the land not purchasing the property.

Do you need any tips to rent in the Central Valley?

I'm most certain that looking forward to moving to Costa Rica might sound like one of the greatest adventures in one's life, and it actually is. However, be smart when it comes to renting a property so that you get to enjoy first, instead of having trouble with the place you choose.

The first thing you should consider when moving to Costa Rica, is the area you want to live in: for someone who has never been to the country, this could be tough but hey! Cheer up! That's why we are here for.

Make sure you find real estate agent you can trust and once you do, talk about what your expectations are. Tiny things such as "waking up to a mountain view", "being in touch with nature", "proximity to grocery stores", "having a nice garden do matter", so be sure to mention this kind of details.

Another thing to consider is San Jose's ever-lasting traffic: People in Costa Rica live life very stress free and this perhaps will be one of the things you first notice BUT, and this is a big but, when it comes to traffic things might get a little tense. The driving is a bit rough and there is really no way to sugar coat it, there is always a traffic jam so be smart on the location you pick to move in. Ask the agent who is helping you if there are alternative routes to get to what you will soon be calling home. Maybe being close to work or school could save you hours stuck in traffic.

Even though Costa Rica is really safe, it is still really important to check if the neighborhood you are moving into has 24/7 security or if it is considered a good area by locals. There are a few areas, as in any other country, that's best to keep away from. Most expats search for areas such as Escazu , Santa Ana, Heredia, Grecia. So maybe try and look for options around these neighborhoods.

Make sure you mention if you are looking for a long term rental or a short term rental. Furnished or unfurnished. Do know that if you are committed to a long term rental and you don't stay the full year you lose the fully security deposit.

Once you have found the perfect place to call home for a while, the process of renting isn't complicated at all. Make sure you read the leasing contract very well, in it you will find your obligations as tenant and the obligations of the landlord. Also, if you are not fluent in Spanish, ask your real estate agent for a contract in English, they should provide it for you.

It is important for you to check the condition in which they are giving you the property: it should be flawless but if it's not, be sure to let the owner know so that he can fix it or so that he can keep in mind the state in which things are. Dirty walls, for instance, is something you should notify to the owner or the agent before you sign the contract, so that you get a response before you move, maybe the owner isn't willing to paint the property but can lower the rental price a bit. In addition, if once you already moved in something inside the apartments stops working, let's say it's a broken sink, notify to the owner the issue, he is in charge of fixing it.

What is the time zone in Costa Rica?

Costa Rica does not observe daylight savings time.  For citizens of the U.S. and Canada, countries that do observe daylight Savings time, the time zones vary between Mountain and Central time.

Are there any restrictions on bringing pets into the country of Costa Rica?

If you want to bring your dog or cat, you will need to get in touch with the Consulate of Costa Rica in your country. Bring a health certificate from a licensed veterinarian, plus all vaccination given to your pet. These certifications include:

  1. The dog/cat was examined and found to be healthy and free of any clinical signs of infectious disease. Note: In general this examination should be conducted within 2 weeks of the departure date.

  2. Dogs vaccinated against distemper, hepatitis, Leptospirosis, parvovirus and rabies.

  3. Cats vaccinated against rabies.

Forms:

  1. It is recommended that a State or Federal (VS Form 18-1), U.S. Interstate and International Certificate for Small Animals be used.

  2. The accompanying health certificate should be made out at teats in duplicate.

  3. The health certificate does NOT need to be notarized by a Notary Public, nor does it need to be stamped by the Costa Rican Consular office.

  4. Animals exported in commercial lot numbers must be accompanied by an import permit. Personal pet dogs or cats do need an Import permit.

  5. The rabies vaccination certificate should accompany the health documents.

Once you have all these papers, the Consulate of Costa Rica will process and stamp all of these documents and your pet to come into the country.

Buying a Property in Costa Rica A-Z

Costa Rica has long been a dream destination for those looking to invest in property, whether for a vacation home, retirement haven, or a profitable rental. Its landscapes, combined with a stable political climate and friendly locals, make it an attractive place to buy real estate. Moreover, the country's dedication to environmental preservation and sustainable living enhances its appeal, offering a unique blend of natural beauty and modern amenities.

When considering purchasing property in Costa Rica, it's key to understand the legal landscape. Unlike some countries, Costa Rica offers foreign buyers the same rights as locals, making the process relatively straightforward. However, this does not mean it’s free from potential pitfalls. The real estate market, like any other, has its complexities and risks, which necessitate thorough due diligence. This is where understanding local laws, regulations, and practices becomes essential.

Due diligence involves verifying the property's legal status, ensuring clear title, and checking for any encumbrances or restrictions that might affect your ownership. This process is not just a bureaucratic formality; it is your safety net against future legal disputes and financial losses. Investing time and resources in due diligence can save you from a costly mistake, ensuring that your dream property doesn’t turn into a legal nightmare.

Step-by-Step Guide to Buying Property

Initial Research and Planning

Identifying the type of property you want to purchase in Costa Rica is the first key step. Whether you're looking for a residential home, a commercial property, or an investment opportunity, understanding your objectives will guide your research and decision-making process. Residential properties might range from beachfront villas to mountain retreats, while commercial properties could include hotels, retail spaces, or office buildings. Investment properties might be aimed at generating rental income or appreciating in value over time.

Understanding the local real estate market and price trends is equally important. Costa Rica's real estate market can vary significantly depending on the region. For instance, properties in popular tourist areas such as Guanacaste or the Central Pacific Coast might have higher price tags compared to those in less frequented areas. Familiarize yourself with recent sales data, average prices, and market dynamics. This knowledge will empower you to make informed decisions and identify good deals. Utilize online resources, local real estate websites, and market reports to gather comprehensive information.

Moreover, consider the economic factors that might impact property values, such as tourism trends, infrastructure development, and government policies. Costa Rica's commitment to sustainability and eco-tourism often drives demand in certain regions, so keep an eye on projects and initiatives that might enhance o decrease property value. Engaging with local communities and expats can also provide valuable insights and firsthand experiences that can inform your planning and research process.

Engaging a Real Estate Agent

The role of a licensed real estate agent or broker in Costa Rica is important in ensuring a smooth and successful property transaction. However, bear in mind that in Costa Rica there no difference between a realtor, a broker and an agent, and there is no legal obligation to obtain a license to provide such services. Therefore, a knowledgeable, reputable and experienced agent is a must. The agent will not only help you navigate the local market but also provide insights into neighborhood dynamics, property values, and potential investment opportunities. They can save you time by filtering properties that meet your criteria and arranging viewings, and they will negotiate on your behalf to get the best possible deal.

Choosing a reputable real estate agent requires some due diligence on your part. Start by seeking recommendations from friends, family, renown franchises or colleagues who have experience in the Costa Rican real estate market. Online reviews and testimonials can also be useful in assessing an agent's reputation and track record. Ensure the agent is affiliated to the Costa Rican Chamber of Real Estate Brokers (CCCBR) and registered before the Superintendencia de Entidades Financieras (SUGEF) , which upholds standards and ethics in the industry.

When selecting an agent, conduct interviews to gauge their knowledge, experience, and approach. Ask about their familiarity with the type of property you are interested in and their experience in handling transactions with foreign buyers. A good agent should be communicative, transparent, and responsive to your needs and concerns. Remember, the right agent is not just a facilitator of the transaction but a valuable advisor who can significantly influence the success of your property purchase in Costa Rica.

Legal Representation

Hiring an experienced real estate attorney is perhaps the most important step in the property buying process in Costa Rica. Unlike in some countries, where a real estate agent may handle most aspects of the transaction, in Costa Rica, the legal landscape demands the involvement of a qualified attorney to ensure all legalities are correctly managed. A real estate attorney will conduct a thorough due diligence process, including title searches, verification of ownership, and ensuring that there are no liens or encumbrances on the property. They will also review and draft all necessary legal documents, ensuring that your interests are protected throughout the transaction.

Selecting the right attorney for your needs involves careful consideration and research. Look for attorneys who specialize in real estate law and have extensive experience with property transactions in Costa Rica. Recommendations from trusted sources, such as friends, family, or colleagues who have previously purchased property in Costa Rica, can be invaluable. Online reviews and testimonials can also provide insight into an attorney’s reputation and track record. Ensure the attorney is licensed to practice law in Costa Rica and is a member of the Colegio de Abogados y Abogadas de Costa Rica, which is the country’s bar association.

During your initial consultations with potential attorneys, evaluate their communication skills, responsiveness, and willingness to explain complex legal concepts in an understandable manner. An effective real estate attorney should be proactive, detail-oriented, and committed to safeguarding your interests. They should be able to provide a clear outline of the steps involved in the transaction, potential legal pitfalls, and strategies to mitigate risks. By hiring a competent attorney, you can navigate the legal complexities of buying property in Costa Rica with confidence and peace of mind.

Property Search and Selection

When it comes to selecting a property in Costa Rica, several key considerations can significantly influence your satisfaction and the property’s long-term value. Location is paramount; consider proximity to amenities such as schools, hospitals, shopping centers, and transportation hubs. Properties in popular tourist areas or those with unique natural features (e.g., beachfront, mountain views) tend to retain value well and may offer better rental income opportunities if you plan to invest. Additionally, consider the safety, infrastructure, and community feel of the area. Visit the location at different times of the day to get a sense of the neighborhood’s dynamics.

Infrastructure and amenities are also key. Ensure that the property has reliable access to essential services such as water, electricity, and internet. Evaluate the condition of the roads leading to the property, as well-maintained infrastructure can significantly enhance your quality of life and the property’s value. If you are considering rural or less developed areas, check for any planned infrastructure projects that might improve accessibility and increase property values in the future.

Verifying property listings and avoiding scams is another critical aspect of the property search. Always work with licensed real estate agents and insist on viewing the property in person. Be wary of deals that seem too good to be true, as they often are. Ensure that the property has clear and legitimate title by having your attorney conduct a thorough title search. This step will confirm the ownership status and reveal any potential legal issues. Additionally, be cautious of properties advertised without proper documentation or those requiring upfront payments before due diligence is completed. By taking these precautions, you can minimize the risk of falling victim to scams and ensure that your property investment in Costa Rica is secure and legally sound.

Conducting Due Diligence

Conducting thorough due diligence is an indispensable step when buying property in Costa Rica. This process ensures that you are fully aware of the property's legal status and any potential issues that could affect your ownership or use of the property. The first part of due diligence involves a title search and verification. Your attorney will check the National Registry and the National Survey Office to confirm that the seller has a clear title to the property and that there are no disputes over ownership. This verification process is very important to avoid future legal complications and to ensure that the title can be transferred smoothly to your name.

Another essential aspect of due diligence is checking for any liens, encumbrances, or legal restrictions on the property. Liens could include unpaid taxes, mortgages, or other debts secured against the property, which could affect your ownership rights. Encumbrances might involve easements or rights of way that allow others to use part of your property. Your attorney will review the property’s legal history to identify any such issues and advise you on their implications. Resolving these matters before proceeding with the purchase can save you significant headaches and potential financial losses down the road.

Environmental and zoning considerations are also critical in Costa Rica, known for its stringent environmental laws and diverse ecosystems. Ensure that the property complies with local zoning laws and that its intended use aligns with these regulations. For example, certain areas may be designated for agricultural use only, while others might have restrictions on construction to protect wildlife habitats or water resources. Additionally, properties near protected areas or coastal zones might be subject to additional regulations. Your attorney should verify that the property meets all environmental and zoning requirements, helping you avoid legal issues and ensuring that your investment is secure and sustainable.

Making an Offer

Once due diligence is complete, you must demand a written due diligence report. If you are satisfied with the report, the next step is making an offer. Negotiation is a critical aspect of this process. Start by researching comparable properties in the area to understand the market value and determine a fair offer price. Be prepared to negotiate with the seller, considering factors such as property condition, market demand, and any potential repairs or improvements needed.

When both parties reach an agreement on the price and terms, the next step is drafting an option or promise to purchase agreement, which by the way are different agreements. Either legally binding document outline the conditions of the sale, including the agreed-upon price, payment terms, and any contingencies such as financing approval or satisfactory completion of inspections. Your attorney should draft or review this agreement to ensure it accurately reflects the negotiated terms and includes provisions to protect your interests. Important clauses might cover deadlines for inspections, deposit payments, and the conditions under which either party can terminate the agreement without penalty.

The purchase agreement also serves as a roadmap for the remaining steps of the transaction, providing clear timelines and responsibilities for both buyer and seller. By carefully drafting and agreeing on this document, you can mitigate potential misunderstandings or disputes, paving the way for a smooth and successful property transfer. Engaging both your attorney and real estate agent in this process ensures that your offer is not only competitive but also legally sound, setting the stage for a seamless transition to property ownership in Costa Rica.

The Importance of Opening an Escrow Account

When purchasing property in Costa Rica, one important step that cannot be overlooked is the establishment of an escrow account. An escrow account acts as a secure holding area where funds are kept until all conditions of the property transaction are met. This account not only provides a safeguard for both the buyer and seller but also ensures that the funds are transferred legally and in compliance with Costa Rican regulations.

Opening an escrow account is particularly important for foreign buyers as it helps facilitate the legal transfer of funds into Costa Rica. The country's financial regulations require that all incoming funds be properly documented to prevent issues related to money laundering and tax evasion. By using an escrow account, you ensure that your funds are received by a licensed and regulated entity in Costa Rica, which then disburses the funds according to the terms of the purchase agreement once all legal requirements are satisfied. This process also provides an additional layer of transparency and security, protecting both parties from potential fraud or disputes.

Moreover, using an escrow account can also help in satisfying U.S. and Costa Rican tax obligations. Since the account is managed by a third party, there is a clear record of the transaction, which can be essential for tax reporting purposes. This transparency is especially important when dealing with significant sums of money and can help prevent legal complications arising from international transfers. The escrow agent, who is typically a licensed professional or company, will ensure that all necessary documentation is in place, and that the funds are released only when all conditions of the sale have been met, providing peace of mind throughout the transaction.

The use of an escrow account is a key step in the property purchasing process in Costa Rica, particularly for foreign buyers. It not only ensures that funds are transferred legally and securely but also provides an additional level of protection and compliance with both Costa Rican and international financial regulations. By working with a reputable escrow agent, you can navigate the financial aspects of your property purchase with confidence, knowing that your investment is safeguarded from start to finish.

The Purchase Process

The purchase process in Costa Rica involves several steps from the initial offer to the final transfer of ownership. Once your offer is accepted and the purchase agreement is signed, the process moves into the closing phase. This phase begins with the payment of a deposit, typically held in an escrow account until the closing date. The remaining balance is usually paid at closing, either through your financing arrangements or directly if you're paying in cash.

The role of the notary public is central to real estate transactions in Costa Rica. Unlike in some countries where notaries primarily witness document signings, in Costa Rica, a notary public is a legal professional with significant responsibilities. The notary public will draft the deed, verify all legal documents, and ensure that the transaction complies with Costa Rican law. They also conduct a final title search to confirm that the property is free of any encumbrances or liens and that the seller has the legal right to transfer ownership. The notary's involvement provides an additional layer of security and legal oversight to the transaction. It's important to note that there are specific costs associated with the transfer of property in Costa Rica: the transfer tax is 1.5% of the transaction value, stamp duties (known as timbres) amount to 1%, and the notary’s fees are approximately 1% of the transaction value.

Finalizing the transfer of ownership involves several key steps. On the closing date, the buyer, seller, and notary public meet to review and sign the necessary documents. The deed is then registered with the National Registry to officially transfer ownership to the buyer. This registration process can take a few days to a few weeks, depending on the workload of the registry office. Once the registration is complete, the buyer is issued a new title deed in their name, confirming their ownership of the property. Ensuring that all taxes and fees are paid, and that the property is properly insured, are also important steps to finalize the purchase. By following these steps diligently and with the guidance of your attorney and real estate agent, you can ensure a smooth and successful property transaction in Costa Rica.

Legal Tips

Overview of Property Taxes in Costa Rica

Property taxes in Costa Rica are relatively low compared to many other countries. The annual property tax, known as "impuesto sobre bienes inmuebles," is set at 0.25% of the registered property value. This tax is typically paid quarterly to the local municipality where the property is located. It is key to ensure that the property value is accurately registered to avoid overpaying or underpaying taxes. Additionally, there is a luxury home tax, or "impuesto solidario," for properties valued over a certain threshold, which is recalculated every few years.

Foreign Ownership

Rights of Foreign Buyers

Foreigners enjoy the same property rights as Costa Rican citizens. This means that foreigners can own, buy, and sell property without any restrictions in most parts of the country. This parity in property rights makes Costa Rica an attractive destination for international investors and expatriates looking to purchase real estate. The legal process for foreigners purchasing property is the same as for locals, ensuring a transparent and straightforward transaction. Restrictions and Benefits for Foreign Property Owners

While foreigners can freely own property, there are some restrictions in specific areas. For example, in maritime zones, which include land within 200 meters of the high tide line, foreigners can only own concession property, and even then, they must partner with a Costa Rican citizen or corporation. Despite these restrictions, foreign ownership of property in Costa Rica offers several benefits, including the potential for appreciation, rental income, and a stable investment environment supported by the country’s strong legal framework. Additionally, owning property can provide a pathway to residency, with certain investment thresholds qualifying foreign investors for temporary or permanent residency.

Common Pitfalls and How to Avoid Them

When buying property in Costa Rica, several typical legal issues and disputes can arise, potentially complicating or derailing the transaction. One common issue is unclear or disputed property titles. In some cases, properties may have multiple claims of ownership or unresolved legal disputes that can cloud the title. Another issue is the presence of liens or encumbrances, such as unpaid taxes, mortgages, or legal judgments, which can attach to the property and affect its transferability. Additionally, zoning and land-use disputes can arise, especially if the property is located in areas with strict environmental regulations or protected zones.

Another frequent problem is the misrepresentation of property details by sellers or agents. This can include overstating the size of the property, failing to disclose structural issues or legal restrictions, and providing false or misleading information about the property's legal status. Buyers, particularly those unfamiliar with the local market and legal system, may also face challenges with bureaucratic hurdles, such as delays in property registration or difficulties in obtaining necessary permits.

Buyers should also be proactive in understanding and complying with local zoning and environmental regulations. This includes obtaining the necessary permits and approvals for any intended use or development of the property. Consulting with local authorities and experts can help clarify any restrictions and ensure that your plans for the property are feasible and legally compliant

To avoid these common pitfalls and ensure a smooth transaction, there are several preventative measures that prospective buyers should take. First and foremost, conducting thorough due diligence is essential. This involves hiring an experienced real estate attorney who can perform a comprehensive title search to verify the property's ownership and ensure there are no outstanding liens or encumbrances. The attorney should also review all legal documents, including the purchase agreement and any existing contracts related to the property, to identify and address any potential issues.

Finally, clear and open communication with all parties involved in the transaction is very important. This includes setting realistic timelines, keeping track of all documentation, request any and all reports in written and addressing any concerns or questions promptly. By taking these preventative measures, buyers can minimize the risk of legal issues and disputes, ensuring a smoother and more secure property purchase process in Costa Rica.

By understanding and addressing these common pitfalls, prospective buyers can navigate the complexities of the Costa Rican real estate market more effectively, safeguarding their investment and achieving their property ownership goals with greater confidence.

For more information on real estate, click here.  For more information on rentals in Costa Rica, click here.  Or, you can contact us at:

Properties in Costa Rica
info@propertiesincostarica.com

Member of The International Real Estate Federation Member of Costa Rica chamber of toursim Member of National Association of Realtors Google+ Facebook Linkedin Youtube Twitter Blog Instagram