A Guide to Real Estate Investments in Costa Rica
Costa Rica is a beautiful and peaceful place and you can enjoy a great vacation in Costa Rica at the beach or at the mountains; let yourself go with extraordinary ocean views, sunsets and beaches of white sand, as well as great weather. If you have the opportunity to come to Costa Rica and see what this paradise can offer you, then you will probably want to think further about buying real estate in Costa Rica; a little piece of heaven where you can feel at home. If that is the case, then this Costa Rica real estate guide will certainly be of benefit to you. It will help you understand a little better what it takes to invest in properties in Costa Rica, and will provide you with a guide to the steps you will need to follow in order to find the property that fits your needs and expectations in Costa Rica.
Can a foreigner own property in Costa Rica?
Unlike other countries, the law in Costa Rica makes no substantial differences between its citizens in Costa Rica and foreigners with regards to rights of ownership of any kind in Costa Rica. This means that it doesn’t matter where you come from. If you have a valid passport with you, you can purchase a car, a boat or a piece of land in Costa Rica just like any “Tico.” However, according to the law, there are a number of different designations/types of properties in Costa Rica for which some restrictions may apply and therefore, should be carefully considered.
What Kind of property is out there?
All properties in Costa Rica that have an owner, according to law, must be registered in the public institution in charge of all related matters (i.e. owners of land, cars, boats, intellectual property in Costa Rica, corporations, powers of attorneys in Costa Rica and more). This institution provides public access to these registries which help to make buying real estate in Costa Rica and business in general more secure. It is called the National Registry (Registro Nacional) and there you can find all the information you need to know about any Costa Rica property you are interested in, such as: who is the current owner, the survey plan, the size and boundaries of the land in Costa Rica, if there’s a mortgage on the Costa Rica property, land segregations, etcetera. Within the registered properties in Costa Rica, there is a special classification:
Property in Condominium.
Condos in Costa Rica are subject to some different regulations that come with certain advantages, like the potential to enjoy common facilities such as pools, tennis courts or gardens depending on the Condo in Costa Rica. There are also some restrictions set by law and others set by the Condominium’s specific Internal Rules and Regulations. These types of properties usually have regulations governing security, moral code, and a common maintenance items. These added amenities typically add cost to the initial purchase prices of such properties in Costa Rica.
Maritime Terrestrial Zone (Zona Marítimo Terrestre or ZMT)
The Maritime Terrestrial Zone encompasses a coastal area of 200 meters (646 feet) from the mean high tide line and has special laws governing its use. This area is divided in two:
- The Public Area, which extends from the mean high tide line up to 50 meters (164 ft) inland. This area is public and there is no possibility of ownership of any kind, neither for Costa Ricans nor foreigners, and only approved ports and marinas in Costa Rica can be built there.
That’s why there are no private beaches in Costa Rica and if you are looking for a beachfront property in Costa Rica you should be extra careful in your search, always seeking competent legal advice before committing to a purchase.
- The Restricted Area, extending from the end of the public area inland an extra 150 meters (492 ft). This is also known as the concession area. This area cannot be owned either, but the Government can allow you to build on this Costa Rica land for use and enjoyment for a specific term. This term, in most cases, can be renewed for equal periods (normally 20 years). If the “concession” is not renewed, the land and everything built on it reverts back to the Government. In order to obtain a concession in Costa Rica, an application must be presented to the local government. This process usually takes time and you must consider this in your plans. Maritime Zone properties in Costa Rica are one of those that come with limitations for foreign investors. By law, the concession cannot be granted to a foreigner alone; the concessionaire must be a Costa Rican or Costa Rican company that is controlled by Costa Ricans (at least 51% of the company’s shares). The exception to this rule is that a foreigner who has maintained permanent legal resident status for at least 5 years may also be granted a concession without the need for any Costa Rican participation.
Almost all the land in Costa Rica is registered in the Public Registry (Regisro Publico de Costa Rica). There are however, properties in Costa Rica that have not yet been registered or are in the process of registration. These are typically found in rural areas. It is not wise to purchase unregistered properties in Costa Rica as the rights of possession could be contested. In these matters it is also wise to seek competent legal advice.
There are some parcels of land in Costa Rica that belong to State institutions, Municipalities (local government), National Parks and reserves. These are public properties and are included under different special regulations. These public Costa Rica properties will remain public.
Time share or 4-Dimension Property
This is not strictly an ownership right, but is a figure that has become common in other countries as well as in Costa Rica. This is property in Costa Rica, usually with some sort of structure (a house in Costa Rica, a condos in Costa Rica or farms in Costa Rica), registered in the National Registry and owned by a company or a person. The owner sells the right of use of that land for a specific time period, usually one or several weeks per year. A person can buy a time share for particular time frame (i.e. week, weekend, specific days) for a limited number of years, and enjoy the property in Costa Rica while he/she has the right to do so, according to a contract. This kind of property is called 4 Dimension Property because you can enjoy the 3 Dimensions of the land (length, height and width) just for a limited time per year; “time” being the Fourth Dimension.
Time to make some decisions
The first thing you need to do if you want to invest in real estate in Costa Rica is to decide what kind of property you want. It might be a Costa Rica beach front property, ocean view property or the city.
Once you have figured that out, you will need to think about the type of climate you prefer: the Central and South Pacific is considered to be hotter than other parts of Costa Rica; if you like hot and dry weather you will probably prefer to be in Guanacaste and some areas of the Pacific like Playa Tambor, Montezuma, Mal Pais, Manzanillo, Coyote, or Costa de Oro; for cooler climes you would most likely seek refuge in San Jose or Escazu. Once you have decided where to invest in Costa Rica you must decide what to invest in. If you want to find a plot of land in Costa Rica on which to build your dream home in Costa Rica, be ready to be patient; it can take some time between the design phase, permitting and construction process.
There are many things you will need to consider, such as, but not limited to, finding good architects in Costa Rica or civil engineers who help you not only with the construction plans but also with the permits. In order to start a construction in Costa Rica be advised that you will need permits from several institutions and it always requires time and paperwork. This need not be too unpleasant when you have the proper assistance of a professional who can guide you and provide his/her expertise in helping you get the job done in the shortest time possible and complying with what you want. In some areas, there are additional requirements established by Environmental regulations.
If you are considering investing in rural areas with the intention of building, an Environmental Feasibility Study is highly recommended and/or required. If you decide to buy a condo in Costa Rica or a house already built, it will alleviate the worry of dealing with anything that has to do with permits, construction contracts and time issues. Nevertheless, you need to be aware that avoiding these little inconveniences will cost you some extra money.
Finding the place you dreamed of
Once you have decided either way, and you have chosen the area in Costa Rica where you would like to invest, you will need to narrow down your preferences to a specific kind of property or properties in Costa Rica. For this you can go two opposite ways: the first one is taking a ride around, basically windowshopping by yourself, answering ads in the paper or taking a car to see whatever you might find. This will end up being a very time consuming and exhausting experience and it will be very ineffective, since you probably won’t find the exact Costa Rica investment you are looking for. If you get extremely lucky you might find something that interests you, but since you may not have the chance to view a wide spectrum of the Costa Rica real estate market, that one perfect condo in Costa Rica could be waiting somewhere else without you even knowing about it!
The other way to go, which is highly recommended, is finding a competent Costa Rica real estate Broker. By enlisting the help of real estate brokers in Costa Rica who know the market, have all the information, the Costa Rica real estate listings and the necessary experience to guide you through the process of finding the perfect investments in Costa Rica in a smooth and efficient manner, you will spend less time searching and more time enjoying the benefits of that search. Equally as important, you will have been exposed to the widest selection of properties in Costa Rica available, which will hopefully result in locating exactly what you are looking for.
About Century 21
CENTURY 21 is the largest Real Estate Network Worldwide. It has presence in 48 countries. We specialize in the commercialization of real estate and other related services. Over the last years we have developed a very successful network of offices in Central America, applying the success CENTURY 21 has had in many countries such as the United States, Mexico and Canada. We started our presence in the region in 1998 and to the present day we have operations in Belize, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama.
CENTURY 21 is a “format franchise”, where we provide the necessary tools to successfully manage our real estate sales offices. The CENTURY 21 System allows you to use the world’s most recognized brand name in the real estate industry with more than 8,000 offices and 146,000 sales associates worldwide.
In the age of globalization the CENTURY 21 System and brand recognition will provide our clients with a full support system to better service their needs. Our brand, cutting edge technology, strategic marketing, permanent training programs for our associates and group synergies guarantee you the best and most reliable options for real estate in the region.
We know our business trust the most reliable real estate company worldwide for your Real Estate needs.
If you need further information, please contact us at (506) 2683-0332.
Or via e-mail at email@example.com
Don’t leave it to chance
Once you have pinpointed a property in Costa Rica, it’s time to get legal advice for your investment to be a success. The only way to avoid unpleasant and/or costly situations with regards to purchasing properties in Costa Rica is through proper and through DUE DILLIGENCE. Between your broker in Costa Rica and your attorney this process should uncover any/all issues with a property. Ideally, it will be completely free and clear of any liens, encumbrances, or annotations and all taxes should be paid up to date. It is also advisable to review the survey and property boundaries.
Finding the right legal counsel is as important as choosing the land in which you want to invest in Costa Rica. You will want to be certain that your legal professional will look after your best interests. It is best to seek the services of an expert team of real estate lawyers in Costa Rica; a Firm with the name and the right people ready to provide you the legal advice you require for your investment to be a complete success. Your Costa Rica real estate Lawyer will conduct a Due Diligence of the property in Costa Rica you are interested in.
This usually includes:
- A complete study of the land based on the National Registry information.
- A verification of the due title of the Seller to sell,
- Determination of any limitations with regards to the intended end use for the property. These may be environmental or other.
- Restrictions on the property such as public road restrictions, water easements, utilities restrictions, among others.
- Information about mortgages, liens and encumbrances.
- All types of annotations the property may have, advising you about its importance or potential for future repercussions.
- Costa Rica property taxes due to date, such as municipal taxes.
- Check if the survey plan refers to the exact property you intend to acquire.
Making sure your land won’t go away
Costa Rica is the place to be right now, and you are not the only person looking for a piece of property in Costa Rica. It is very important that once you have seen the place you want to invest in, and your lawyer has given you a green light to go for it, you sign a Purchase and Sale Agreement, or a Purchase Option. This is a contract by which the Seller will hold the property for you exclusively and will agree not to commit it to any other person for as long as the contract determines. Usually this contract has a thirty-day term, but can be more or less depending on how complex the transaction is and what you and the seller agree to. Most of the time, you are expected to give a “down payment” or “earnest money deposit” as a consideration for the agreement which is normally held until completion of the purchase. This can be refundable or not, depending on the terms of the agreement. The deposit amount varies but is customarily in the order of 10% of the purchase price. Usually, this deposit goes directly into the Seller’s pocket where he will “hold it” until the term of the contract and eventual closing of the deal. However, new regulations of the Costa Rican Government have stated that, depending on the type of negotiation held and the nature of the parties (e.g. if the Seller is a Construction Company), all warranties, good faith deposits and earnest money should be deposited in a third party escrow account. This is an independent account where both parties, you and the Seller, will give specific indications to this third party (the Escrow), regarding the way these funds will be disbursed, when and to whom this warranty will be given and under what conditions. Using an Escrow removes any potential for misunderstandings or mistrust. Both parties can proceed with confidence knowing that the funds are protected during the real estate negotiation and that at the end of it, they will be distributed according to the exact conditions previously established between parties.
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