ESTATE GENERAL INFORMATION
For most people looking
to purchase property in a foreign country the first and foremost
question to answer is “Can I as a foreigner own land in Costa Rica?”
One of the great aspects of property ownership for foreigners in Costa
Rica, and perhaps one of the most important of the mitigating factors
for the attractiveness of Costa Rica, is the security of land
Foreigners’ rights of
land ownership are documented
in the constitution of Costa Rica. The rights of a foreigner to land
ownership are equal to that of a Costa Rican.
The National Registry
All legally transferable
properties in Costa Rica are recorded in the National Registry. If the
property can not be found in the national registry then it is not a
legally registered property. The National Registry can be accessed via
the Internet. Anyone with a computer and an Internet connection can
enter the public registry and review details regarding property
ownership, fiscal value, size, boundaries, and any registered liens,
encumbrances (gravamines) or
annotations. You can quickly find out whether there is cause for
concern over the title to a property.
The security of land
ownership and the transparency of the National Registry are further
acknowledged by the fact that three US based title insurance companies
operate offices in Costa Rica and offer guarantees on title. The cost
varies from 0.4% to 1.0% depending on the property and the package of
services be utilized by the Title Company.
Costa Rican Companies
Most purchasers of Costa
Rican property take title of their property in the name of a Costa
Rican S.A. (Sociedad Anonimo) that they have created with the sole
purpose of owning the property. There are a few advantages to this
structuring, the primary advantage presently available is when one goes
to re-sell the property you are selling a company and not a property
and as such you avoid some significant taxes and government fees. The
cost of a company ranges from $350 to $750 depending on the lawyer used
to set up the company.
Maritime Zone -
Understanding Concession Property
Concession property in
Costa Rica is essentially all of the beachfront property. It is owned
by the government and is governed by the Maritime Zone Law and other
regulations imposed by municipalities and the Costa Rican Institute of
Tourism. A concession is defined as the right to use a property located
in the maritime zone for a pre-determined period of time, typically 20
years. The first 200 meters measured horizontally from the median tide
line defines the boundary of the maritime zone.
The first 50 meters from the median tide line is
considered public area and is not available for any type of ownership.
Because this area is public, all people have the right to use it.
Basically, there are no privately owned beaches in Costa Rica.
The next 150 meters is available for concessions to
be granted. A concession is essentially a lease on the property with a
20 year concession period. The concession owner may build on the
concession only what is permitted as per the zoning plan. All Maritime
Zone property will be governed by a “Plano Regulador”, a Zoning Plan.
New 20 year concession terms are granted so long as the Zoning Plan and
all of its requirements have been observed.
Unlike fee simple property, foreigners cannot be
majority owners of a concession property. However, if a foreigner
wishes to have a concession property this is easily and legally done
through the establishment of a Costa Rican S.A. and the appropriate
structuring of the on paper ownership of shares of the company.
Fee Simple Ownership
‘non-concession’ property in Costa Rica is basically the same as buying
property in the U.S., i.e., it is considered fee simple ownership. Fee
simple ownership conveys the absolute right to own the property, and or
sell the property, lease it, improve it, etc. Fee simple also means
that if the owner is obstructed from his or her rights to the property,
he or she has the right to be made whole, meaning to have the property
restored in its original condition. Fee simple title owners enjoy the
most rights under the law to use the property at their discretion.
Properties in Condominium
In the U.S.,
condominiums refer to residences in multi-tenant buildings. In Costa
Rica, the Condominium Law benefits developers responsible for building
many types of properties, including single-family homes, finished lot
projects and condos. The law allows developers to regulate the
development with By-Laws that can be registered in the National
Registry to the individual lot, home or condo. The By-Laws outline the
restrictions and benefits placed on individuals who purchase these
properties and as well possibly the property itself. This is still fee
simple ownership, but properties ‘in condominium’ come with additional
restrictions that are generally intended to protect the integrity of
the development’s physical ambiance. If you are considering purchasing
a property that is “En Condominium” read the by-laws before you buy or
have a professional do so for you.
Purchasing Property in Costa Rica
The first thing that you should consider is who you
should work with to help assist you in finding and purchasing your
property in Costa Rica. Like any other investment you make involving a
significant sum of your money the first thing you would do is look to
get the advice and assistance from an experienced professional in the
chosen field with a proven track record. You look for an expert that
you can trust to give you accurate information, as well as all the
information, so that you can make informed decisions. You should not
approach purchasing property in Costa Rica in any other way. Get the
results you want, work with proven professionals.
As we have been serving the local community since
1992, and having worked to assist more buyers in more transactions than
any other broker in our area, we feel Century 21 At The Beach has the
expertise to assist you. Not only that, we have developed a strong
reputation as buyers brokers. We are here to protect your interests.
Be aware that there is no licensing of realtors in
Costa Rica. Anyone and almost everyone is a “realtor” in some way shape
or form down here. This is where misinformation, as well as bad
information or advice can cause serious problems to a purchaser. As you
would anywhere else, work with the best. Work with an experienced
in the National Registry
Most Costa Rica
properties are registered in the National Registry with their own Folio
Real (registration number) in a centralized database at the offices of
the Public Registry in San Josť. The Folio Real is a unique number to
each property for identification. A title search in the National
Registry with the property’s Folio Real should be performed for any
property under consideration. A search will show you the property area,
ownership, boundaries, location, mortgages, liens, encumbrances and any
annotation. Some properties are not listed in the National Registry
yet. These properties would be “possesorial” properties that are not
yet registered. Proving ownership of or acquiring ownership of a
“possessorial” property will be more difficult. It is best to avoid
these properties if possible.
de Traspaso (Transfer of Deed)
The Escritura de
Traspaso contains all important information regarding the real estate
transfer, including information about the buyer and seller, the
property and any terms of sale, including contingencies, easements or
financing. A Public Notary (attorney) prepares this document and
records it at the Public Registry of Property and in his/her Notary
Book (Protocolo). After the deed is signed at the closing, the attorney
immediately records the deed at the Public Registry for annotation,
which protects the property against any third parties. Secondly, the
property is recorded under the name of the new owner.
Map (Survey Plan) for the Cadastral Office
The Cadastral Office
holds all Costa Rica property surveys, and it operates separately from
the Public Registry. Every property must show a survey recorded at the
Public Registry for successful ownership transfer. Because the
Cadastral Office often has outdated surveys on file, we recommend
obtaining a new independent survey plan and registering it with the
Cadastral Office before purchasing the property to eliminate potential
disputes about property boundary lines at closing time.
Options in Costa Rica
a Property Through Direct Transfer
This process occurs when
and individual or group of people acquire a property in their personal
a Property Through a Corporation
It is common practice to
purchase property in Costa Rica through a newly formed corporation or
by changing the ownership of an existing corporation. Establishing a
corporation in Costa Rica is not complicated, but does require the
advice of an experienced real estate agent and attorney who are
knowledgeable about Costa Rica incorporation protocols. The advantage
of buying property through a corporation is that it protects the
buyer’s identity so that the real estate asset is anonymous. The
benefits of incorporation as well as the additional obligations,
including annual tax declarations and other corporate responsibilities
can be explained by your real estate professional.
If a family or individual plans to live in Costa
Rica, or spend lots of time there, they will need to establish legal
residency. Most financially successful Americans will seek residency as
a rentista (a foreigner who has a guaranteed
income) or as an investor. If you wish to simply enjoy your property as
a vacation property you should seek advice as to whether you need legal
residency status in Costa Rica.
Rentista status has three requirements:
- The individual must
have outside investments that guarantee $1,000 income per month for
- The individual must change at least
$1,000 a month into colones
- The individual must live in Costa
Rica for at least six months out of the year
Mortgages are available to foreign buyers of
property in Costa Rica. Not all banks offer mortgages to non-residents
but a few do. The process is somewhat more cumbersome than that of the
US. Additionally the cost of initially setting up a mortgage is high
here in Costa Rica as are the annual rates if interest. Please contact
one of our professional real estate agents to discuss current costs and
rates. Costa Rican banks offer financing, but will only finance a
portion of the appraised value of the property.
United States banks will not carry a mortgage on a
property outside of the States.
most common means of getting the initial deposit and the balance of
the money into Costa Rica to purchase a property in Costa Rica is by
wire transfer. Typically, the Buyer through the advice of their real
estate professional will use the services of an Escrow Agent and Escrow
for Signing the Transfer Deed
There are three standard procedures for closing on a
property being purchased in Costa Rica.
Buyer and Seller are Physically Present
The most common
procedure for closing on a property is that both the Buyer and Seller
are in the country and have decided on an agreeable location to meet
and close. Typically, the Buyers lawyer will have prepared the transfer
deed and it will have been reviewed by the Sellers lawyer. The deed
will be read to and explained to the Buyer in their language of choice.
Both Buyer and Seller will sign the deed. The Buyer will make payment
via a “manager’s check” which is similar to a certified check. The
notary will then register the new deed in the National Registry.
Limited Power of Attorney
If one or both the
Buyer and Seller can not be in Costa Rica but have given a Power of
Attorney to someone to legally represent them, then the same process
noted above would take.
Out of Costa Rica
Though not a very common practice it is possible
to close on a Costa Rican property outside of Costa Rica. If either the
Buyer or Seller is unable to be in Costa Rica to close, and have not
left a Power of Attorney, they can have a Costa Rican notary come to
where they are and sign the transfer deed in the notary’s protocol book
in the presence of the notary. The cost to have the notary perform this
service is born 100% by the party that requires this service.
As briefly mentioned above the closing costs to
purchase a property in Costa Rica varies depending if you are
purchasing a property by way of purchasing a Costa Rican S.A. with the
property as an asset of the company, or a straight transfer of
ownership from the Seller to the Buyer as an individual.
Standard closing cost for the transfer of ownership
from the Seller to the Buyer as an individual will be 4.2% of the
actual purchase price of the property. This fee is a combination of
legal and notary service fees, as well as land transfer taxes and
government stamp fees.
The cost to close on a property that is held by
Costa Rican S.A. with the property being the asset of the corporation
is 1.5%. This is the legal fee to change the “junta directive” (the
board) of the company and the ownership of the shares of the company
and to register these changes in the national Registry.