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Owning Real Estate in Costa Rica

These are frequently asked questions regarding Real Estate in Costa Rica.
If you have other questions, please contact us!

costa rica real estate

Revised by
Guillermo Zuniga
Guitierrez, Hernandez y Pauly Law Firm


Is this a partnership, limited partnership or corporate real estate investment?

How do I purchase Costa Rica Real Estate?

How is the property title transferred in Costa Rica?

How can a buyer ensure receipt of clear title to the Costa Rican real estate property?

How does the registration of the transfer deed work in Costa Rica?

Closing costs?

Land taxes and public services in Costa Rica

Selling Costa Rican property?


Is this a partnership, limited partnership or corporate real estate investment?

Century 21 Beach Area Properties Real Estate recommends that you buy real estate property and do not participate in partnerships or investments in corporations. Century 21 recommends that you buy real estate property and make the procedure to record the property bought under your name or under the name of your corporation in the Real Estate Property Registry. The buyer of land may sell his real estate to anyone at anytime. The real estate buyer receives a fee simple absolute of the properties in Costa Rica.

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How do I purchase Costa Rica Real Estate?

Before you decide to purchase real estate in Costa Rica, Century 21 Beach Area Properties real estate strongly urges all interested parties to visit Costa Rica. After deciding to purchase, the Client may, if he so wishes, use the lawyer whom we prefer to work with, or a lawyer of his or her own choice. We will represent the buyer, not the seller.

How is the title transferred in Costa Rica?

In Costa Rica, the Property will be transferred from the seller to the buyer by executing a transfer deed at closing before a Notary Public, who is also a lawyer, whom we can recommend to you. Unlike common law countries, such as the United States and Canada, where the role of the Notary Public is limited to authenticating signatures, in Costa Rica the Notary Public is an agent with extensive powers that have the faculties to record transactions in Government offices. The Notary Public may draft and interpret legal documents, as well as authenticate and certify the authenticity of documents.

Real estate properties are recorded in the central Real Estate Property Registry, located in San José. All the information is centralized in digital databases.

In order to close a real estate transaction in Costa Rica, the seller will select a Notary Public who will prepare the transfer deed and record the transaction in the Real Estate Property Registry (Registro Nacional).

At the buyer option, the property can be purchased by an individual, in co-ownership with other individual persons, or in the name of a corporation. The decision as to the ownership should be based upon the buyer’s particular situation and after consulting with a Costa Rican attorney.

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How can a buyer ensure clear title to Costa Rica real estate?

Notary Public will be in charge to make a due diligence over the real estate property in order to determine the history of the real estate property in the Real Estate Property Registry. All documents related to an interest and/or title to a real estate property shall be registered in the Real Estate Property Registry. Most properties have a titled registration number known as the folio real and the records database can be searched with this number or by name index. Notary Public shall obtain a report from the Real Estate Property Registry that will show the situation of the property. The Report will contain the name of the owner, boundaries, location, cadastral surveys and the area, as well as recorded limitations, liens, mortgages, annotations, civil procedures and other encumbrances. The Notary Public in charge of the transaction will review such report in order to determine if the Costa Rica real estate property can be subject of transfer and negotiations.

It should be noticed that there are some un-recorded real estate properties that can be acquired but through a different procedure.

How does the registration of the transfer deed work in Costa Rica?

Once the transfer deed is executed before the Notary Public, the Notary Public shall act as agent of the Tax Authorities collecting the transfer tax and Real Estate Property Registry taxes. Then, upon payment of taxes, the Notary Public shall file the transfer deed in the Real Estate Property Registry and the real estate property will be annotated. A Registrator will verify that the information contained in the transfer deed is correct and then, the Registrator will proceed to record the Costa Rican real estate property under the name of the new owner.

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What are the closing costs for Costa Rica Real Estate?

Closing costs consist of transfer taxes, Real Estate Property Registry taxes and Notary Public fees. These costs are normally around 3.785% of the sales price.

See the following calculation table for a more specific overview of the costs.

Stamps

% or fixed

Real Estate Property Registry

0.5%

Agrarian Tax

0.1%

Costa Rican Treasury Department Tax

0.2%

Municipality Taxes

0.2%

Costa Rica Lawyers Association

0.025%

Costa Rica National Archive

¢20

Treasury Department Costa Rica

¢625

Transfer Taxes

1.5%

Notary Public fees

1.25%

Total (excl. ¢645 fixed)

3.785%

*Exchange rate on December 1, 2007 is ¢495 to $1.00

In Costa Rica the buying of real estate, segregation of lots, constitution of mortgages, cancellation of mortgages or any kind of movement of land requires that the parties have to appear before a Costa Rican Notary Public.

The Transfer Deed is executed on the Notary Public Official Book. A transcription of the transfer deed is sent to the Real Estate Property Registry, a Governmental Office in charge of the recording of the owners of land in Costa Rica.

The average time to record a document, which does not present any objections from the Real Estate Property Registry, is one month. Once the document is recorded, any third party researching in the Costa Rican Public Registry will determine the owner of a real estate property.

Land taxes and public services in Costa Rica

The municipalities are responsible for collecting property taxes in Costa Rica. Property taxes apply to the permanent and established installations and/or constructions. Each Costa Rican property owner is subject to the payment of property taxes according to the location of the land.

The taxes are paid depending on the value assigned to the specific Costa Rica real estate. The value of the land has to be declared by the owner of the land every five years. If the owner does not file the valuation, the Municipality can proceed to appoint an appraiser to determine the value of the land.

Property taxes must be paid in Municipalities on a quarterly or yearly basis and the rate is up to a maximum of zero point twenty five percent (0.25%) per year over the value of the property. In any transaction of real estate properties, the Notary Public requests from the seller a certificate of payment of the municipal taxes.

Debts caused because of the non-payment of the property taxes are considered pre-eminent legal mortgages and the Municipality can follow a collection procedure against the owner of the land to look for payment of taxes. In an extreme case, the Municipality is authorized to foreclose the property.

Selling Costa Rican real estate?

Because the buyer owns the Costa Rican property, they can sell their real estate property in Costa Rica at any time. The buyer may choose to list the property with a local realtor in Costa Rica or international newspapers. It should be noticed that there is a well-organized active real estate market in Costa Rica and working with a knowledgeable Costa Rican realtor is just the same as working with a realtor in the U.S.A.

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Costa Rica Tax Considerations

PROSPECTIVE BUYERS ARE NOT TO CONSTRUE THE CONTENTS OF THIS MATERIAL AS LEGAL, INVESTMENT OR TAX ADVICE. EACH PROSPECTIVE BUYER SHOULD CONSULT HIS PERSONAL LEGAL COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO THE LEGAL, TAX; ECONOMIC AND RELATED ASPECTS OF PURCHASING REAL ESTATE. EACH PROSPECTIVE BUYER IS RESPONSIBIE FOR THE FEES OF SUCH COUNSEL, ACCOUNTANTS AND OTHER ADVISORS.

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Century21 Beach Area Properties
Costa Rica Real Estate and Investments
Los Delfines Golf & Country Club, Tambor Costa Rica
E-mail: info@bapcr.com
Phone: (506) 2683-0332