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Real Estate Regulations
Costa Rica boasts of a safe form of title registration to protect buyers from hidden claims. It is centered in the Registro de la Propiedad (Property Registry), where both title documents and survey palted for every property are recorded. Any change in the status of a title or any claim that might affect the property also be noted on the title registry page, making it easy to verify.
Those persons who want to buy or sell a preoperty in Costa Rica should get professional help, which include a search of the title in the Registry, so as to confirm there are not liens on it, and to establish its proper ownership. Once the deal is completed, you should also secure documents from a lawyer to prove that the sale was registered, for your own safety and to prevent to somebody else.
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.
Costa Rican law requires that all documents relating to an interest and/or title to real property be registered in the property section of the Public Registry (Article 460 of the Civil Code). Most properties have a titled registration number known as the folio real, and the records database can be searched with this number or by name index, you also can search in the internet at www.registronacional.go.cr. The Public Registry report (informe registral) provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title, and some historical changes on the porperty.
Since Costa Rica follows the doctrine of first in time, first in right, recorded instruments presented to the Public Registry are given priority according to the date and time in which they are recorded. Obviously, every situation differs and in some cases a review of the Public Registry record will not be enough to uncover all encumbrances. That is why it is important that the buyer have her or his own attorney conduct an independent title search and investigation rather than rely on the seller's attorney. Zoning regulations in Costa Rica are reasonable and logical, although far less stringent that in countries such as United States. A registered local engineer must sign all building and subdivision plans and they also require approval by the local municipality, the Ministry of Health, and the government Housing Department.
The Ministerio de Economia (Treasury Department) issues real estates licenses on the recommendation of the Chamber of Real Estate Brokers.
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, costaricans undervalue their properties by at least 20% it causes that the closing costs of sale gonna be chippest 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 in the Registro Nacional. Legal fees are based on the selling price of the property.
Transactions may be conducted in U.S. dollars or in Colones.
Closing costs for a sale include a transfer land tax, a stamp tax, and legal fees. Closing costs typically run 5% to 6% of sales price and are usually split 50/50 between buyer and seller. The transfer and land taxes are assessed based on the declared value in the Registro Nacional, while legal fees are charged based on SALES PRICE of the property.
All the Costa Rica’s coastline is all public. By law, the first 50 meters above the mean high tide line are public, define by what is known as the 50-meter line. No one can restrict access or have a totally private beach.
On 80% to 85% of the coast, the next 150 meters are government owned lease and also known as the maritime-terrestrial zone (or just maritime zone). Restrictions on maritime zone land for foreigners are that one must establish five years residency to own more than 49% of the rights to a lease. Two loopholes include holding the lease with a corporation that is wholly owned by a foreigner, or by having a Costa Rican hold 51% of the lease in name only. Development of the maritime zone does not discriminate against foreigners. A regulation plan must exist for area where the land is or just for the parcel itself.
If one does not exist the developer must make one, then have it approved by ICT (the Tourist Board), INVU (the Urbanization Institute), and local municipality. Such a regulation plan will call for "zoning of land" includes public use areas, road, water, electricity and more.
The other 15% to 20% of the coast is land that is title to the 50 meters line.
Costa Rica laws and Constitution protect private ownership of land and foreigners enjoy the same rights as citizens. There are almost no restrictions to ownership of private land, except that given or sold to Costa Rican citizens as part of government programs, which can be freely trade or acquired by foreigners only after the original owner has held it for certain period of time.
Condominiums are very practical for someone who plans to spend only part of the year in Costa Rica or for someone booking to be an absentee owner of income producing property. On site security protects the property and its contents. Most condominium projects will also offer to rent units, with the owners consent, during the time they are vacant.
Condominium law in Costa Rica grants this type of property special status. A special Horizontal Property Section of the Public Registry exists for registering condos. Just as in the case of any type of property, condominiums must be title searched for any liens or encumbrances. The buyer should also become thoroughly familiar with the condominium regulations, which are in the deed. These regulations set forth the rules of condominium management and procedures for handling relations between the unit owners. They also set forth any restrictions to which the units, thus the owners, are subject to. There will also be a maintenance fee, usually monthly, as well as a procedure for increasing the fee. Since unpaid fees are collateralized by the unit itself, a buyer must be sure that all such fees are paid prior to purchase.
1 - Real Estate Transfer Tax - The government collects a property transfer tax (Impuesto de Traspaso) which is equal to 1.5% of the registered value of the property. The Public Registry will not record a transfer deed unless the transfer taxes and documentary stamps have been paid. (The transfer tax was reduced from 3% to 1.5%
2- Documentary Stamps (Timbres)- The government also requires that documentary stamps be affixed to the deed. These stamps include the following: Municipal Stamp: (Timbre Municipal), Legal Bar Association Stamp (Timbre del Colegio de Abogados), Agricultural Stamp (Timbre Agrario); National Archives Stamp (Timbre del Archivo Nacional); Fiscal Stamp:(Especie Fiscal). The Public Registry also imposes its own tax of .05% on documents presented for recordation to the Public Registry. (Derechos de Registro). A Lawyer can help you.
The Notary that drafted the contract for sale and carried out the closing is entitled by law (Decree 2307-J) to a fee equal to 1.5% of the first one million Colones of the actual sales price and 1.25% on the balance.
It is customary for the person who is receiving financing to pay the costs of drafting and registering the mortgage instrument. A mortgage can be created simultaneously at the time of sale by adding a mortgage clause in the transfer deed. Or, a separate mortgage instrument can be drafted. A mortgage document paysregistration fees of 1.00 Colon for every 1,000 Colones. The mortgage document also pays documentary stamps. The Notary Public will also charge for drafting the mortgage instrument and that fee can range from approximately 0.625 percent to 1.25 percent of the amount of the mortgage, depending on the circumstances involved.
The buyer should be aware that Costa Rican real estate transactions commonly operate on a two-tiered system. since Costa Rican properties have a low property tax appraisal base in relation to market value, it is a customary practice to run property sales through at the registered value, which may be substantially less than the actual sales price of the property. In such a case, all transfer taxes and fees discussed above would apply to the registered value as opposed to its sales price, with the exception of the notary fee. Buyers should consult their attorney about the potential risks of this practice.
In order to build in Costa Rica, you will likely face a bureaucratic maze of governmental regulations. The law requires that any application for a construction permit be presented by a licensed architect or engineer (Article 83, Law of Constructions, Article II.2 Construction Regulations). It is therefore advisable to contact a reputable, licensed architect or civil engineer to guide you through the construction process. |
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