Costa Rican properties
are registered at the Registro de la Propiedad (Property Registry)
which keeps track of all the title registrations. It is a great
resource for verifying the status of a title or claim associated with
a property.
If you wish to buy land
in Costa Rica it is wise to either hire a lawyer or go yourself to the
Registro de la Propiedad to search the title and verify that there are
no liens against the property or the property owner(s).
Once you buy a
property, you need to make sure the sale is properly registered at the
Registro de la Propiedad, proof that you are the new legal owner.
There is no local
financing for property purchased by foreigners.
Zoning
Building and
subdivision plans must be:
A. Signed by a
registered local engineer
B. Approved by the
local Ministerio de Salud (Health Department)
C. Approved by the
Instituto de Vivienda y Urbanismo (INVU) (Housing and Urban
Development Department)
Real Estate Brokers
The Ministerio de
Economia (Treasury Department) issues real estates licenses on the
recommendation of the Chamber of Real Estate Brokers.
Taxes
Property taxes vary
from 0.5% to 1.5% of the declared value of the property. However,
Costa Ricans are a calm and resourceful people, so they customarily
undervalue their properties by at least 20% when they register it.
The closing costs of
a sale include a transfer land tax, a stamp tax, and legal fees.
Closing costs run about 5% or 6% of the sale price, an expense
divided evenly between buyer and seller. Transfer land tax and stamp
tax assessments are based on the declared value. Legal fees are
based on the selling price of the property.
Transactions may be
conducted in U.S. dollars.
Costa Rican lawmakers
have drawn up very strict rules governing the development of ocean
front property along both coasts.
First, according
Costa Rican law, the beaches belong to everybody and everybody has a
right to use them. The first 50 meters (164 ft.) above the mean high
tide line are public land. No one can restrict access to a beach or
claim a beach is privately owned, exceptions being landholdings in
port areas, old land grants or by some agreements made prior to
1973.
Second, along 80% to
85% of the coastline, the 150 meters (492 ft.) after the 50 first
meters (164 ft.) are called the Maritime Zone and are controlled by
the government. A foreigner must establish five years of residency
to own more than 49% of a lease in this zone. Foreigners can evade
the law by assigning the lease to a corporation that is wholly
foreign owned or by assigning 51% of the ownership of the land (on
paper) to a Costa Rican citizen. Take a careful look at the zoning
laws before you start development in any of these areas.
If there is no zoning
plan for land you want to develop, hold off on the celebration. If
nobody has gotten around to making a zoning plan, then it's up to
you to create one on your own and submit it to ICT (Tourist Board),
the INVU (Housing and Urban Development Department), and the local
municipality for approval.
The "zoning of land"
plan you submit must address questions regarding – among other
things – public use areas, roads, water and electricity.
If your development
dream is located on the 15% or 20% of the coast land not in a
Maritime Zone, then you may develop the property without filing a
regulating plan. However, developments geared to the tourist
industry must be approved by ICT (Tourist Board), anything else
requires building permits.
Purchase Contracts
Costa Rica’s legal
system is based on a "civil code" system, as opposed to a "common
law" system like that of the United States. Under Costa Rica’s
civil code, there is less interpretation of the law by
judges, because the civil code is more restrictive. For this
reason, land contracts in Costa Rica are far lass comprehensive,
than the common law contacts most foreigners are used to.
Under the civil code system, the contact covers only what is
not regulated by law, and thus can be very simple.
In Costa Rica a
land purchase contract is achieved through an "option to purchase".
An option to purchase gives the buyer the right to purchase a
described property in a set amount of time. Typically 10-20% of the
purchase price is paid to the seller through a broker or attorney
(after verifying the property can be legally transferred), for the
purchase of the option. Most closings can take place in a
matter of days if the property is already registered in the National
Registry.A purchase agreement or option to purchase under
civil code has far less components but should include:
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The names and identification numbers of the buyer
and seller, whether held by a corporation or personally.
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A description of the property, which includes
boundaries and size (if know at time of sale) and all numbers
identifying the property in the National Registry.
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The price in either colones or dollars.
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The dates for the option period.
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An agreement to the payment of closing costs;
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Title Insurance
Title insurance is
not necessary in Costa Rica due to the laws of the civil code.
The buyer’ attorney should make a thorough title search prior to
closing; after which, one can safely purchase the property. To pay a
title company to perform the exact same task prior to closing is
redundant and expensive. Additionally, when a property is transferred
to a new owner in Costa Rica, all past claim that were not properly
registered in the National Registry, can not be placed on the
new owner, thus eliminating the need to insure against past problems
coming to light. Many properties are held by corporations (S.A.).
After Sale
The purchaser should
verify, through his broker or attorney, that the property was properly
registered in the National Registry, and receive originals or copies
of the documents showing all the proper stamps from the process.
