Real Estate Costa Rica

Is not neccesary to be a resident to invest in property in Costa Rica. Except for buying property located in the maritime-terrestrial zone, Costa Rica´s constitution and laws afford foreign investors the same property ownership rights as nationals.

• FORMS OF OWNERSHIP

Title to real property interesting in Costa Rica can be held by an individual, several individuals or a corporation. The latter provides greater flexibility in estate and tax planning, limiting liability and overall management. Even if the corporatio in not active, the legal books must be kept out to date,and yearly accounting and reporting procedures are requried.

Is it better to purchase the shares of the corporation that currently owns the property rather that transferring title to a new corporation? The main advantage of transferring shares is that the parties do not have to pay taxes., money is saved excersised. However, when you acquire the shares of a corporation you not only acquire assets but liabilities as well. Proper research, the manner in which the corporation acquired the property, and protective documentation may reduce this risk.

• THE PURCHASE PROCESS AND HOW PROPERTY IS REGISTERED

Properties are transferred from seller toby a transfer or conveyance deed signed before a Notary Public soverseeing the signing recording. The deeds are recorded in their notary book. After the registry reviews the deed and any potential defect is corrected in the new owner´s name.

Depending upon a notary´s professionalism and the clarity and security he provides, the process may range from merely appearing at their office, quickly signing documents and exchanging money, to a much more sophisticated process involving clear and concise purchase agreements, professional escrow services, extensive title searches and reports, owner´s and surveyor´s affidavits, trusts agreements, prompt recording of documents, certified money transfers and title insurance.

Title land in Costa Rica is registered in the public land records of the National Registry. The Registry assigns a permanent identification number to each property which has been officially recorded.

The Public Registry Report will provide detailed information about the property, such as the title holder´s name, the previous owner´s name, the property´s location, boundary lines, survey number, mortgages or liens, declared property value, encumbraces (right of ways or easements), and any recorded documents that may affect the title.

The property report will normally show an existing regsitered survey of the property, although sine properties lack surveys. Currently, property cannot be transferred if there is no registered land survey, and the survey must be referenced un the transfer deed.

In addition to a title search, when the property to be transferred is owned by a corporate entity, a corporate search in the Commercial Section of the Public Register is essential. This search will verify that the entity transferring the property is in good standing and that the proposed transfer deed signatory is sufficiently emporwered to sign.

• ACQUISION COST

The Public Registry will not record a transfer deed without full payment of transfer taxes, documentary stamps, notary feeds and property taxes. These taxes have to be paid when the parties are transferring property instead of corporate shares.

Transfers taxes are set to 1.5% of the declared property value. Doccumentary stamps are assessed at an additional 1%, aproximately. By law, the notarie´s legal fees are set at 1.25% of the purchase price. If the transaction includes a mortgage, the government charges a registration fee of 0.625% of the mortgage value.

• HOW TO PROTECT YOUR REAL ESTATE INVESTMENT

The legal system in Costa Rica provides adequate assurances and protections for foreigners to legally and confidently invest and hold title to property, and to enjoy. However, if the law is not fully followed and the transaction is not property executed, losses can ocur. Therefore, tone must not only be familiar with a legal and transactions process, but also take the following precautions:

1. Insist on experienced legal and notary representation in real estate transaction.
2. Insist on the services of reputable escrow agent to act as an intermediary liaison for the purchase funds disbursement.
3. Insist of guaranteeing your title with title insurance. Title insurance provides protection through an indemnity contract against losses from title defects.

PRIME Costa Rica S.R.L. is a professional and licensed Real Estate consulting firm successfully marketing homes, lots, farms and businesses throughout Costa Rica since 1984.  We are proud to offer our invaluable "Personalized Customer Service Program"  to help our clients accomplish their property purchasing, project development and investment goals