Costa Rica Property Purchase Process The purchase of Costa Rica real estate is relatively simple, straightforward and well regulated.? ? Anyone considering investing in Costa Rican properties will benefit from a newly developed title registration system as well.
However, an investor needs to be advised as to the specific laws and regulations that govern the Costa Rica investments in property.
The majority Costa Rica properties is technically available for legal sale to foreign investors and foreign investors have the same legal property rights in Costa Rica as Costa Ricans do except when it comes to concession property.
Many international investors who choose to buy Costa Rica land do so though a limited liability company structure, known locally as Sociedad Anonima or S.A. for short.? By incorporating a company in Costa Rica for the specific purposes of owning land or property an investor may find the whole purchase process and ongoing ownership of real estate in Costa Rica is simpler to manage.?
Also, it is common for property to already be owned by a limited company and for an investor to purchase that company rather than the property directly.? By doing this transfer tax and stamp duty can be avoided - however there is a risk involved because it is not possible for a real estate investor to ensure that the company he is buying is 100% free of debts of claims.
The first and most obvious step a property investor needs to take when buying Costa Rica property is to find Costa Rica land or property that meets their specific investment objectives.? Once property has been located it is essential that a title search is performed before an offer to buy is made.?
The majority of properties in Costa Rica are recorded in the Folio Real system in the Public Registry Offices in San Jose and these records are available to search via the internet.? Investors in Costa Rica real estate should inform his lawyer of his intention to make an offer and ask that title searches are performed to ensure everything is in order with the land or property, that the vendor has the right to sell, that there are no outstanding mortgages or claims against the property etc.
If a property is not listed in Folio Real it may be awaiting listing and then it can be searched for manually in the Public Register, alternatively it may have no title deed, be unlisted and despite the fact the vendor and his family may have inhabited the land or property for generations, legally they have no right to sell and an investor has no right to buy.?
It is therefore imperative that correct and complete title searches are carried out before a Costa Rica ? investment in real estate is made.
An investor may then make an offer on the Costa Rica property which, if accepted by the vendor will result in the investor making his intention to purchase official by signing an ?Offer to Purchase?.
A deposit is then due and the majority of transactions that take place in Costa Rica between local vendors and international purchasers are handled via an escrow account.? A deposit made will be held in this secure escrow while the Costa Rica land purchase process proceeds.?
If a title search has not yet been carried out, it will now be completed by the real estate investor?s lawyer and if no problems are found closing can take place.
Final contracts are signed, final monies exchange hands and the title deed transfer is executed.? All fees and taxes are due at this time.
Fees and taxes an investor should factor into the real estate purchase process in Costa Rica include but are not necessarily limited to the following: Transfer tax and stamp duty - circa 2.5%; Notary fees - circa 1.25% ; If a mortgage is being used to purchase the property the Costa Rican authorities ask for 0.6% of the total mortgage amount for registering the mortgage deeds on the property; Escrow fees; Survey costs; Independent lawyer?s fees; Limited liability company incorporation fees in the region of USD 1,000; and Insurance.
