Lawyers Corner

 In Costa Rica foreigners have the same rights as nationals when purchasing real estate and the Constitution guarantees protection of such property ownership rights as provided by Article 45 of the Constitution. As is true in the US and Canada, purchasing real estate in Costa Rica is fairly simple if some basic precautions are taken and certain steps are followed.

 First and foremost, it is necessary to verify the credentials of the seller and the title to the property. An agent or a real estate office in the transaction may represent the seller.

 There are very reputable real estate offices in Costa Rica, which offer a wide portfolio of properties throughout the country. Nevertheless, the buyer must be certain that the title being offered is exactly what has been bargained for. Consequently, the buyer should retain the services of a lawyer to perform a title search in the Public Registry, and to recommend whether to acquire the property personally or through a legal entity. In order to perform the title search, the lawyer requires the property number (Folio Real) and/or the name and identity number of the owner, whether it is a person or a company.

 Please note that a notary public is not the same in Costa Rica. All notary publics are lawyers but not all lawyers are notary publics. The law requires a notary public to register your purchase. For the purpose of this article, I will use the two interchangeably.

 It is also important to note that real estate representatives are not licensed in Costa Rica. Make sure your realtor is an active member of the Costa Rica Global Association of Realtors or a similar organization.

 The Public Registry under a ministry of Justice maintains a very accurate database of all registered properties in the country. This database is accessible on-line at Registro Nacional . The title search will verify the property type, identity of the owner(s), the property’s size, location and boundaries, the nature or use of the property, and whether the title is free and clear of any encumbrances, such as a mortgage or pending legal action. Zoning or other types of restrictions may affect the property. For example, if the property is part of a condominium, some construction restrictions may apply. If the property is in an environmentally sensitive area or includes a historical site, limitations of use may apply. The buyer’s lawyer should research if any restrictions exist and consult with the corresponding local government or government agency to determine the extent of such restrictions. The Maritime Zone Law regulates the land within 200 meters of the ocean, which belongs to the government, with some exceptions where title was registered before the law was enacted. The vast majority of the beaches in Costa Rica are now subject to this law. The first 50 meters from approximately the mid-tide mark are considered public areas with very restrictive uses. Except as noted above, the next 150 meters are subject to concession or leasehold rights granted by the local government with particular terms and conditions that must be carefully reviewed. These concessions can be transferred with the approval of the local government.

 Property taxes in Costa Rica are very low when compared to the rates in North America and Europe. Before closing the sale, the buyer should request from the seller a certificate issued by the local government assuring that there are no municipal and/or territorial taxes due. Municipal taxes cover certain public services such as street lighting and garbage collection services.

 Territorial taxes are established by law and are determined by the size, location and value of the property, among other issues. These taxes can be paid annually, quarterly, or by semester.

 The property must be acquired via a public deed (escritura publica) issued by a Notary Public who is responsible for registering the sale in the Public Registry. As a general rule, the buyer selects the Notary in cash transactions. However, if the property is to be financed or mortgaged, the seller selects the Notary. There are several types of mortgages available in Costa Rica, with associated pros and cons. There are several advantages to purchasing property that is held by a corporation by purchasing the corporation and its shares of the property, or purchasing as a corporation These include tax saving, anonymity and reduction of liability. Your attorney can advise you on the methods, choices and procedures.

 Closing costs are approximately 3 - 4% of the total purchase price. These costs include legal fees, property transfer taxes, stamp taxes and other common expenses. If the buyer wants additional assurances of the title being acquired, one can purchase a title guarantee from world- renowned companies with offices in Costa Rica.

 Purchasing property in Costa Rica can be a rewarding experience if you retain a reputable broker and an attorney to guide you through the purchase process.