Our Blue Water Properties team has many years of experience working with buyers
from around the world. We’ve compiled this list of frequently asked questions about
Costa Rica real estate to help you to understand the purchase process. Please let
us know if you have any further questions – we’re happy to help!
• Note: Click over the question and the answer will be shown.
You need an Attorney (Certified Public Notary) with a solid reputation to perform a study of your property in the National Registry and also to register the property in your name, or the name of your corporation. Although some buyers use the attorney of the seller to execute these duties, we strongly recommend that you have your own attorney represent you in any transaction so you have legal counsel looking out for your best interests. Your attorney can also assist you with the financial aspects of the purchase.
Buying in your own country can seem intimidating enough. However, buying overseas can be a whole other story. With a little education, a great Realtor, and great Attorney, you can safely purchase property in Costa Rica.
Our team at Blue Water Properties of Costa Rica is here to show you the areas that fit your lifestyle and goals, in your price range and with the amenities that you desire. We show not only our properties but those of the competition, because that is what a reputable Real Estate agent should do!
Unlike some countries, foreigners do not need to purchase property with a partner or through a trust. Costa Rica's laws and constitution, founded on over a century of democratic principals, are also extended to foreigners. There are almost no restrictions placed on ownership of land in Costa Rica (with the exception of some kinds of beachfront property--please see the Maritime and Concession Real Estate Section below). Costa Rica welcomes foreign investment, and its property laws reflect this.
Yes, you can own real estate in your own name, or in the name of your corporation or company ( or L.L.C.). Setting up a or L.L.C is not difficult, and can be arranged with the assistance of your lawyer for a reasonable fee. Purchasing via and S.A. or L. L. C. is more popular with Costa Rica property buyers than purchasing in their own names for three reasons:
(1) First, depending on the tax laws of your home country, it may be preferable to have rental income and capital gains (there is no capital gains tax in ) recognized in a corporation or company rather than in your personal name. Further, there may be flow through benefits from an L.L.C.
(2) Second, it can make estate planning less complicated, since you can transfer or will shares of your corporation or company to your family.
(3) Third, it can cut costs when selling your property, since you can transfer the shares of the or L.L.C. to the new buyer, which eliminates certain government fees during the transaction.
There are several international Title Insurance companies in , including Stewart Title (http://www.stewarttitlelatinamerica.com/).
Costa Rican property taxes are very low, only .0025% (1/4 of 1%) of the registered property value. That means that annual property taxes on a purchase of $300,000 would be only $750.
Closing costs to transfer title of the property from the seller to the buyer total approximately 3.5% of the registered value. About 2.25% goes to the government in the form of Real Estate Transfer Taxes and Documentary Stamps, and about 1.25 % to your lawyer for their services. When purchasing directly from a developer, the buyer usually carries the closing costs. However, when purchasing from a private seller, a split of closing costs may be negotiated. If the purchase is by means of a transfer of shares rather than title, the closing costs would be less than 3.5%.
Property in should be registered in the Registro Nacional, or National Registry. Both fee simple and concession properties can be registered. The National Registry shows property ownership, and if there are any mortgages, liens, or judgments against the property. Your lawyer should perform a search of the National Registry as part of his/her duties during the purchase process. Your purchase contract should stipulate that, if any problems with the title are discovered during this due diligence period, the contract would become null and void, or you may wish to renegotiate the contract or extend it if the problem can be legally remedied.
The fact that a property is unregistered does not mean that it does not qualify to be registered. However, we strongly advise against the purchase of unregistered real estate.
Each property registered in the National Registry is assigned a unique number, which is called the Folio Real. This number is used for identification, and is made up of three parts. The first group of numbers signifies the province where the property is located, the second group of six numbers is the actual property number, and the last group of numbers indicates how many individuals own the property. Properties require a Folio Real number to obtain clear title.
Also accompanying each registered property is a Plano Catastrado, or survey plan that shows measurements, size and location, as well as other details, such as whether or not the land is situated in an area with restrictions (ie near a National Park or in Private Development). The Plano Catastrado must be recorded in the National Registry in order for a property to be transferred, mortgaged, or purchased.
Technically, Costa Rican institutions offer financing to foreigners. To date, however, the process has proved arduous and on the whole unsuccessful. If you need to borrow funds, it is usually much simpler to do so in your home country, and interest rates are generally much lower. That being said, more international institutions, such as ScotiaBank and H.S.B.C., are commencing operations in and are working on financing packages for foreigner. Please ask your Blue Water Properties agent for more details about financing at the time of your purchase. You can also inquire about developer and seller financing, which may be available on certain properties.
The Costa Rican government has established certain laws to protect citizens who have resided on and maintained a property for many years. These laws are commonly referred to as “squatters rights.” Problems with squatters are extremely rare in developed areas, since you and your neighbors would quickly become aware of any unauthorized persons dwelling on your property. If you decide to purchase land in a remote region, it is recommended that you have a responsible individual, such as a caretaker, verify periodically that nobody unauthorized is residing on it.
The Maritime Zone is defined as the first 200 meters measured horizontally from the high tide mark, and includes any natural formation that overcomes the ocean, such as islands, mangroves and estuaries. The Maritime Zone is divided into two different sections: (1) The Public Area; and the (2) Restricted Area.
The first 50 meters is called the Public Area. As its name suggests, this area is for public use, so property within Public Area is cannot be privately owned. No form of construction or development is permitted within the Public Area, with the rare exception of specialized, government-approved projects such as marinas. The result of this zoning is that, in , all people enjoy access to the beaches.
In about 5% of coastal areas (for instance, much of Brasilito, Potrero, Tamarindo and their surrounding beaches), fee simple title begins after the Public Zone, that is, 50 meters from the high tide mark. The definition of fee simple property is similar to that in North America and : the owner has the right to use the property, improve it and sell it. The conditions for ownership of fee simple property are the same for both foreigners and Costa Ricans.
The next 150 meters after the Public area is called the Restricted Area. In 95% of the country, the properties that fall into this 150 meters are available for concession only. A concession is essentially a lease that is granted from the government to the buyer or “lessee” for a specified period of time. The lessee is allowed to build, improve and even subdivide concession property. As with all property in , permits to do so must be obtained from the municipal government in accordance with Costa Rican law.
When it comes to concession property, foreigners and Costa Ricans are subject to different rules. Foreigners who have lived in the country in excess of five years may be allowed majority ownership of concession property, while foreigners who have lived in the country for lesser periods are generally only permitted minority ownership.
Yes. Concession property, like fee simple property, should be registered in the National Registry. Once again, avoidance of properties that are not registered is strongly advised. Your lawyer can determine whether your beachfront property is fee simple or concession, and whether or not it has been duly registered in the National Registry. For more detailed information about Maritime and Concession property ownership, please consult your lawyer.