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"To leave satisfied you must arrive prepared."
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Acquisition costs | Real estate agents (agentes) or brokers (corredores de bienes raices) receive a
commission from the seller, ranging between 5% and 10% of the purchase price when the sale closes.
After finding property, one will need an attorney. The attorney is responsible for protecting one’s interests during the negotiations and the closing. The attorney will also check the property’s registration and inform the buyer of the legal status of the property. Hisresponsibilities also include negotiating conditions and clauses in the contract. It is best to agree on a fee at the beginning of the relationship. The fee can be a fixed rate, percentage of purchase price, hourly or any combination. One should have the agreement in writing to avoid misunderstandings. Notarial fees must also be paid for the notarization and registration of the closing. These fees have a fixed rate and are established by executive degree. Other fees include property taxes, stamp taxes and registry fees. All of these fees together represent approximately 5% of the purchase price.
Acquisition Costs: (NAI Global 2005)
Transfer tax: 3.0%
Agents Fees : 5.0%
Legal Fees: 1.5% | Property and ownership information | All information regarding titled property is registered in the Registro Nacional, the property registry. This registry should show the legal owners, all liens, encumbrances and related contracts affecting the property. | Transaction information | Open listings for agents are: Information N/A.
Exclusive listings for agents are: Information N/A.
Information on the Registro Nacional does not make reference to a properties selling prices and terms. | Real estate trade association | There are two associations that allow membership to licensed real estate agents and brokers.
1. Costa Rican Chamber of Real Estate Agents (Costarricense de corredores de bienes Raices)
2. Costa Rican American Chamber of Commerce (AMCHAM) | License requirements | People acting as real estate agents and brokers are not necessarily licensed. There are rules and regulations as to the process and almost anyone can act as an agent or broker. The agent or broker has no legal obligation to the buyer other than helping one reach an agreement with the seller. Most agents will act as intermediaries in the negotiation of price and purchase conditions. Some agents may have studies made in the Registro in reference to the property. One should check a prospective agents reputation and whether or not he/she is an association member. | Land description meters and bounds survey system | The Plat Registry (Catastro), which is part of the Registro Nacional, should have a registered plat or map of the property. The map should include: the owner, location, size, boundaries, reference to the registration and, sometimes, information on surrounding properties. | Rights and interests in land | If property taxes, transfer taxes or any other taxes are delayed in payment, the property assessed will become security for that payment. The government will then have the right to secure a tax lien against the property. Article 45 of the Costa Rican Constitution provides protection for private property. No person can be deprived of his property unless a justified public interest is legally proven. If this is the case, the person must be previously and justly compensated. In the past, problems arose with foreigners over expropriations. New Constitutional amendments have made it difficult for expropriations, especially those without compensation In Costa Rica, if a property owner dies and there are no heirs, the property will revert to the government.Fee simple estates seem to be the common way to possess property. There are two different kinds of leaseholds in Costa Rica, an urban leasehold (contracto de inquilinato) and a common leasehold (arrendamiento civil). In the urban leasehold, the tenant is protected by a statute called the ley de inquilinato, this applies to urban property leased for housing, office space, commercial or industrial purposes. Under this type of leasehold, it is almost impossible to evict a tenant. The second type of leasehold, the civil lease, is a contractual lease in which the parties agree to their contractual obligations. This type of lease is regulated by civil code, and is restricted to what is said in the contract. This type of lease is usually found in farms and other agricultural property. With
both lease types, registration is not required, but the leases can affect the property. When purchasing property, one should physically inspect the property and question the person that has possession.
Unregistered leases are common in Costa Rica. To avoid legal issues, one should have tenants evicted prior to purchasing a property. | Forms of ownership | Property can be owned individually, jointly, in trust, as household property, or in the name of corporations, or any combination. One or more individuals or companies can own at any time. For estate planning purposes, the most common way to own property has been through corporations. All of the stock in a corporation can be owned by one individual. Joint property ownership can be a percentage of the property or be physically localized on the property. | Transfer of title | A property will be registered (Torrens System) when purchased, therefore a deed is not necessary. To make sure that a property has been registered, one should ask for a copy of the closing document (testimonio) with seals showing property registration. One may also obtain a certificate (certificacion) showing registry at the Registro Publico. There are many cases of adverse possession in Costa Rica, especially with unattended farm land. If squatters take possession of a property, the owner must seek legal intervention to remove them. If the squatters have been in possession for less than ten years, the owner should be able to retain title and remove them. The procedure to removing the squatters usually takes considerable time and effort, so it is advisable to avoid purchasing unused land. | Recordation and transfer of title | : In Costa Rica, all properties (fincas) are registered in the Property Section of the Registro Publico under the Registro Nacional. Condominiums are registered in a special section called Horizontal Property (Propiedad Horizontal). Property subject to condominium laws and regulations is registered under a general entry (mother property-finca madre) and each individual unit is registered as a sub-entry (finca filial). In the Registro under property entries, one will find all entries that affect the title. From
these entries, one must refer to specific registries or sections where liens, encumbrances, leases, and other entries are registered.
Title insurance is not currently available, it should not be necessary if it is done by the Registro. Costa Rica’s property registration system can be considered a form of the Torrens system. The Registro Nacional should have the history of the property with all of its encumbrances.
All property registered under Costa Rican Civil law is titled property. Untitled property can not be registered. It is possible to purchase the rights to untitled property, but there are substantial risks and no way to be sure that the owner is the legal owner. | Contracts | Contracts are not as comprehensive as in other countries. Due to the Costa Rican civil law system, contracts only cover the items that the law does not mandate. Some agents have contracts establishing their right to list your property. This is not common practice. Contracts are prepared by the notary who is also responsible for closing and recording the transaction. | Mortgages | The two most common types of mortgages are the normal mortgage (Hipoteca Comun) and the bond mortgage (Cedula Hipotecaria). A normal mortgage is security for the loan, with the property being sold to collect loan costs if the loan is not paid. The mortgage can be assigned, but transfer costs will be about the same as a new loan. A bond mortgage is in the form of a document. The owner of the document has the right to collect specified payments from the property owner. If payments are not made, the document owner can sell the property through court proceedings and keep the proceeds. The document owner has the right to go after the property owner if proceeds from the sale are not enough to cover the debt. | Financing and lending practices | One can receive loans on single family homes, townhomes and condominiums, apartment buildings, commercial projects and industrial projects. The real estate mortgage bond market has really taken off with the Costa Rican government passing laws allowing contracts to be conducted in the US dollar and recognized in English. People are now able to borrow at much better rates and in a stronger currency. Although private banks, many sponsored by US banks, are becoming more prevalent in Costa Rica, the three state banks are the only banks that are 100% insured. The real estate bond market is international with a multitude of private investors. | Property taxes | A new law states that property owners must estimate the value of their property and give it to the municipalities, which will then ask for a payment equal to 0.6% of the estimated value after 1996. Many municipal officials have criticized these self-made assessments as unrealistic. Officials are urging that the implementation of the new law be delayed until the public learns the new system. There is a transfer tax of 3% . Information suggests that the transfer tax may have been changed to 1%. | Closing and escrows | Before closing, the seller and the buyer must select a notary (notario). The notary is responsible for drafting and registering all purchase documents. Legally, the notary is working for both parties and should look after both party’s interests. This obligation is not always complied with since the notary is usually a trusted person of the party selecting the notary. If the buyer is paying in full, he has the right to select the notary. If the seller is financing, he has the right, and if a bank is providing a loan, it has the right to select a notary. Notaries have a far greater responsibility under civil law. They must be attorneys
before being accepted to act as notaries.
Final registration of the property is not possible until all needed documents and all moneys have been given to the notary. | Appraisal | Independent appraisals are available, although the appraised value is usually only a reference and does not always reflect the actual value of the property. | Insurance | All insurance is purchased through a government corporation called the Instituto Nacional de Seguros (INS) or National Insurance Institute. Homeowner's insurance can be purchased to cover fire, natural disasters, theft, and owner's liability. House contents may also be insured. (http://www.costaricalandcorp.com/ownership.htm) | Land use control | During the past few years, zoning laws have been enforced. These laws are not registered against the property, so buyers should research them separately. Since most easements are registered, one can determine if any easements affect the property. Easements are either apparent (seen on property) or non-apparent (more difficult to see). All mineral rights in Costa Rica are government owned. Under the Costa Rican Mining Code, the government has the power to authorize exploration and exploitation of minerals on third party property. Property owner’s are paid compensation for the government restricting the property’s use.
Most shoreline property is owned by the government and can only be developed through a concession granted by the government. These concessions are issued for five to twenty years. Yearly payments must be made to the Concession Registry to keep it current. Foreigners have restrictions on these concessions, they must have lived in Costa Rica for five years as a legal resident. Also, if a corporation has title to a concession, it is not allowed to have more than 50% foreign ownership.
With deforestation problems, Costa Rica is making an effort to preserve its natural forests. If one’s property is near a forestry reserve or ecological buffer zone, one might find certain ecological restrictions. Certain building restrictions may be imposed on new construction or renovation. Also, builders should be careful in signing waivers to obtain building permits. The waiver to collect indemnification for improvements allows the government to purchase the land without taking into account the value of improvements.
Condominium owners have their own set of regulations. These regulations solve problems relating to commons areas. Many older buildings are being renovated into condominiums and then subjected to their regulations. |
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