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An introductory Guide to buying property
in Costa Rica
First of all, as a foreigner
you have almost
the same rights as nationals
when buying
realty in Costa Rica. The only
exception
is buying property in the Terrestrial
Maritime
Zone. The Maritime Zone legislation
states
that all beaches are public property,
so
the first 50 meters (164 ft.)
above the mean
high tide line is public. With
some exceptions,
there are no private beaches
in Costa Rica.
The exceptions refer to landholdings
in port
areas and old land grants and
agreements
dating from before 1973. The
Maritime Zone
legislation further states that
the first
150 meters (492 ft.) after the
first 50 meters
(164 ft.) is called the Maritime
Zone. As
a foreigner you are required
to have a minimum
of five years of residency in
Costa Rica
in order to buy property of which
more than
49% is located in the Maritime
Zone.
Land Use
Costa Rica has regulations regarding
to the
use of land. This is a very important
aspect
to take into consideration before
buying
any property. Besides the land
use, regulations
might also demand investments
or development
of property. In order to find
out what regulations
apply to the property you are
interested
in you might want to consult
a real estate
broker or other professionals.
Of course,
you can also investigate matters
yourself.
The following authorities can
be consulted
regarding regulations that apply
on the land
use:
» Ministry of Agriculture and Cattle
(MAG)
» National Institute of Housing and
Development (INVU)
» Ministry of Health
» Ministry of Energy and Environment
» Ministry of Housing and Human Resources
(MIVAH)
» Water and Sewage Authority (AyA)
» Ministry of Public Works and Transportation
(MOPT)
» Institute of Farming Development
(IDA)
» The municipality the
property is
located.
Negotiating price
In Costa Rica it is common practice
to negotiate
on price.
The best way of getting an idea of what a
property is worth is to compare it with similar
properties in the area. Do not be afraid
to offer a lower price than the initial price
asked. Agreeing directly on an asking price
could even give the seller the impression
that he/she is selling too low. Make sure
to get an attorney involved before making
any down payments.
Required Documentation
The following documentation is
necessary
for the buying process:
- Identification.
A passport or proof of residency
has to be
presented at a notary public.
If you want
to buy property as a corporation,
the legal
representative of the company
has to be present.
- Municipal Clearance Form.
This document is issued by the
municipality
the property is located at. It
states if
the owner has paid all municipal
and property
taxes and if the buyer has any
outstanding
debts in the municipality.
- Plan of Survey.
This is an updated survey of
the property.
- Public Registry.
Roughly 99 percent of all property
in Costa
Rica is registered at the Public
Registry.
Properties are registered at
the Public Registry
by notary publics. Properties
have an identity
number called the Folio Real.
The data base
is accessible by internet at
www.registronacional.co.cr.
Registry reports include the
name of the
owner of property, the boundaries
of the
property, the declared value*
of the property,
as well as all other issues of
importance
to the property.
In Costa Rica the declared value
of property
is often lower than its actual
value. The
reason why people register the
value of their
property at a lower value is
to evade taxation.
Property taxes are calculated
as a percentage
of the declared value.
If one of the parties cannot
be present at
the transaction, it is possible
to authorise
another person with a power of
attorney.
Escritura
If the seller accepts the offer
made, the
property is withdrawn from the
market. The
next step is to sign the escritura
or transfer
deed. The escritura is signed
in the presence
of a notary public. The notary
public drafts
the escritura and registers the
propery under
the new owner’s name at the Registro
Nacional.
In order to register at the Registro
Nacional
the following documents need
to be presented:
» Proof of payment of taxes and registration
fees
Proof of payment of all property taxes, this
certificate is issued by the Finance »
Ministry
» Proof of payment of all municipal
taxes. This certificate is issued by the
local municipality
» Proof that there are
no outstanding
judicial or mortgage problems
Payment
Most common form of payment for
realty in
Costa Rica is cash. However,
if the payment
is financed the following option
arise:
- 50 – 50. In this situation half of the
payment takes place in cash and half is made
by financing. This is called a co-notario
and means that the attorneys of the buyer
and the seller draft the mortgage and the
escritura in a single document.
- Separate drafts. It is also possible that
the attorneys of the buyer and the seller
draft separate documents concerning the mortgage
and the escritura. Different documents mean
higher legal costs though.
- Mortgage. If the majority of the payment
is financed, a mortgage needs to be drafted.
It is customary in Costa Rica that the financing
party pays for the mortgage draft.
Closing Costs
Closing costs of the transaction
are normally
split between the buyer and seller.
However,
this is negotiable so make sure
it is clear
who is paying what. Closing costs
include:
Government transfer taxes and registration
fees.
The Impuesto de traspaso, or
transfer tax,
charged by the government is
1.5% of the
registered value of the property.
You must
have paid this tax in order to
register your
property at the Public Registry.
Documentary
stamps have to be added to the
transfer deed
as well. These stamps are Agricultural
Stamp
(timbre agrario), Fiscal Stamp
(especie fiscal),
National Archives Stamp (timbre
del archivo
nacional), and the Legal Bar
Association
Stamp (timbre del colegio de
abogados). The
Public Registry adds an additional
document
registration tax of 0.05%.
Notary Fees.
Notaries are entitled by law
to a minimum
fee but in agreement with their
clients may
charge more. The current fee
schedule is:
2% of the value of the transaction
for the
first 10 million Colone
1.5% of the next 5 million Colones
(from
10 till 15 million)
1.25% of the next 15 million
Colones (from
15 till 30 million)
1% on anything above 30 million
Colones.
Mortgage Costs. It is custom
use that the
person that receives financing
pays for the
drafting costs of the mortgage
and the registration.
Registration
After all payments are made, the escritura
should be registered the property section
at the Registro Nacional within 45 to 60
days. Make sure that the property is properly
registered to prevent future problems.
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