Buying property in Costa Rica

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Buying Property Costa Rica - Buyers' Guide

The law in Costa Rica grants both locals and foreign investors exactly the same rights regarding the purchase of property in Costa Rica. These non residential property rights and the fact that there is NO property tax in Costa Rica make investing in Costa Rica property an extremely lucrative option for many international investors.

With a stable and secure infrastructure, Costa Rica is the most prosperous and least corrupt country in Latin America. Costa Rica is most definitely an emerging market and one that serious investors should take a close look at Costa Rica is said to have the most perfect climate in the world and this is enough to entice many overseas foreigners to the country each year.

Maritime Zone

The areas along the beautiful coasts of Costa Rica are known as the Maritime Zone, and are all owned by the state and cannot be developed - this Maritime Zone applies to some 95% of coastal regions of Costa Rica - as it considered to be Concession property and is regulated by the ICT "Costa Rican Institute of Tourism".

These regulations set out the rules for foreigners and locals to own a concession property. These concession essentially stipulate the rights to use and enjoy specific properties located in Maritime Zones for a pre-determined amount of time and basically operates in the way of a lease. The law also apply to islands, estuaries, rocky peninsulas, mangroves, in fact just about any natural formation that is above sea level within 200 metres of the shoreline.

You can, on occasion, receive a grant for a property, but this will not allow you the right develop property and is only available if you have been a resident for over 5 years.

This Maritime Zone in Costa Rica is essentially broken down into two areas - the first 50 metres are designated as public areas and only government approved constructions can be built here. The second section is the area that covers the next 150 metres which is considered a Concession or Restricted area. This "Leasehold" land can be utilised for a specific amount of time only with 20 years being the norm.

The Property Purchase Process in Cost Rica

Once you have decided on the right property in Costa Rica you will begin the sale process.

• Properties in Costa Rica are transferred from the vendor to the purchaser by executing a transfer deed (Escritura) infront of a Public Notary (Notario). The Escritura will be registered in the Public Register ( Registro Nacional).
• You will be asked to sign a purchase contract with the vendor.
• You should at this point give your reservation/deposit funds to an Escrow Agent or your lawyer
• Your lawyer will perform a search on the property to ensure that the person selling the property is actually the owner and that the property is free of charges, liens and debts.
• You will need to sign the Execution of Transfer Deeds in front of a Public Notary - Overseas buyers of Costa Rican property may prefer is issue a Power of Attorney to their lawyer if they cannot attend.
• The newly signed deeds will be registered in the Public Registry

Typical transfer costs and registration fees, stamp duties, notary and lawyers fees will amount to 4% of the total purchase price

Annual property taxes are charged at 0.25 per cent of the declared value of the property. As is common in some countries, some vendors prefer to under declare the true sales price iso as to save on taxes. We recommend that you speak with your lawyer regarding this before going to the Notary

Costa Rica does NOT charge Capital gains Tax

It is customary in Costa Rica for the vendor and purchaser to share the closing costs which will need to be paid at the Notary‘s office when signing for the property.

Legal fees are usually charged, based on the sales price of the property and NOT on the declared value

Some basic terminology that you will need to understand:

Folio Real - this is the property fiscal identification number. It is unique to the property and is utilised in the registration and identification of the property. The number can be split into three different sections:

• The first number indicates the province
• The second group identifies the actual property
• The third group shows how many owners the property has or has had previously

The Folio Real is recorded in the Public registry and can be checked for both recorded and unrecorded liens, annotations, encumbrances, hidden liens and any other disparities that may need to be checked it also includes ownership details, property boundaries and tax appraisals.

Escritura de Traspaso - This is the Transfer Deed and it stipulates all of the essential facts to do with the sale and transfer of the property. The Escritura MUST be prepared by and signed in front of a Public Notary. It will be submitted by the Notary to the Public Registry which records all property ownerships and transfers. . If you speak Spanish you can take a look at http://www.registronacional.go.cr/

Poder - This is a power of Attorney which authorizes a person - normally your lawyer - to act on your behalf regarding signing documents for the purchase of your new property in Costa Rica.

Plano Catastral - This is a survey plan on which are recorded the specific details of the property, including the location, the property type, the property and land size. This survey must be validated by the municipality where the property resides as well as through the Public Notary I order for it to be binding and valid.

Having a clear title deed is extremely important because Costa Rica follows a doctrine of "First in Time- First in Right" which means that documents registered in the Public Registry are given a priority status. Discuss this with your lawyer

Given the strong squatters rights here in Costa Rica we recommend that overseas investors strategically choose resort developments where there will be onsite management and caretakers to protect their ownership rights.

 Buying Property in Costa Rica

• Property in Costa Rica is a great investment!
• You will be investing in a stunning part of the world.
• You will be investing into a booming real estate market
• You will be buying into a country with an established tourism market from North America and one that is now being discovered by Europeans.