Buyer's Guide to
in Costa Rica.
The acquisition of real estate is one of the most
significant investments a person makes during his or her lifetime.
During the due diligence process care and patience must be used in order to
avoid common mistakes.
Here is a comprehensive guide with
the main things you need to know.
By: Mike Simons
Broker and owner of 3 Remax offices
buy properties in Costa Rica.
Language barriers, unfamiliarity with local laws and
procedures and lack of a ‘true Multiple Listing Service’ (MLS) are
among the reasons why you should get proper and trustworthy counsel
during your real estate transaction. This means you should deal with
both an experienced professional Realtor and a seasoned Real Estate
What are the property types in Costa Rica?1)
Titled Property: Is the most comprehensive form of property ownership in
Costa Rica. Fortunately for foreigners, ownership rights and
responsibilities are the same for Costa Rican nationals as they are for
foreigners. The concept of titled property is very similar to the
concept of fee simple title in the US. Basically, titled property gives
the owner of that property the absolute right to materially own the
property, use it, enjoy it, sell it, lease it, improve it, etc. subject
only to conditions outlined in the Costa Rican Laws.
under Condominium Regime: Property can be owned in either a horizontal
condominium (subdivision) or a vertical condominium (multi-family
housing). In Costa Rica, there is a specific law that in combination
with other legal dispositions regulates all conditions required in order
to set up a condominium. Each condominium development has its own
bylaws containing all of the restrictions, limitations and privileges
that can be enjoyed by individuals who purchase a property in such a
development. Ownership of property “in condominium” is fee simple
ownership but specifically restricted to secure the interest of the
condominium community set initially by the developer and later by the
Home Owners Association. It is advised that you require the owner of
the property to give you a copy of the by-laws to check for
architectural guidelines, land use and others.
Property in the Maritime Zone (ZMT):The first 200 meters inland from the high
tide line is considered the maritime zone. This zone also includes
islands, pinnacles of rock, mangroves, estuaries, small islands and any
small natural formation that overcome the level of the ocean.
Costa Rica, 95% of beachfront property is considered concession property
and is governed by the Maritime Zone Law and other specific regulations
including but not limited to special dispositions stated by
municipalities and the ICT (Costa Rican Institute of Tourism). These
legal dispositions set forth the conditions under which foreigners and
local residents can own concession property.
A concession in Costa
Rica is defined as the right to use and enjoy a specific property
located on the maritime zone for a pre-determined period of time. The
estate through the respective municipality grants this right.
Public Area: The first 50 meters inland from the mean high tide line.
This zone is not available for ownership of any kind. No kind of
development is allowed except for constructions approved by governmental
entities. It is considered the public portion of the beach.
The Maritime Zone (ZMT) is sub-divided into 2 areas:
Restricted/Concession Area: The next 150 meters. This area is available
for Concessions to be granted. A concession is in essence a “lease” on
the property granted to the lessee for a specific period of time,
normally 20 years. An owner of a concession may build on that
concession, subdivide the concession and perform other acts to the
property. However, appropriate permits from the local municipality must
The Sale/Purchase ProcessOnce the Buyer has
searched and identified the property they wish to purchase, it’s
important to understand what the process of acquiring the property may
entail. These are the basic steps that a purchaser must follow when
buying a property:
Once the Buyer has searched and identified the
property they wish to purchase, it’s important to understand what the
process of acquiring the property may entail.
These are the basic steps
that a purchaser should follow when buying a property:
1) Sign a
Purchase/Sale Contract with Seller. This is most likely negotiated with
the professional help of your Realtor. In some cases the parties
choose to go further and have their Attorney’s prepare the Purchase and
2) Engage the services of an Escrow Agent who will
hold all funds deposited by the Buyer and remit the proceeds of the Sale
to the Seller at the closing date in accordance with the Purchase and
Sale Agreement. All Costa Rican real estate transactions are required
to be handled through a government sanctioned Escrow agent.
Title search is performed as part of the due diligence process to ensure
all requirements of the Purchase and Sale Contract are fulfilled and
the property is received free and clear of defects, liens and
4) Closing - Execution of Transfer Deed or Endorsement of Shares.
5) Record new transfer deed with the Public Registry.
Costs associated with Real Estate purchasing process:-
Transfer taxes and stamps: In order to record the transfer of the
property a 1.5% shall be paid for transfer taxes and 0.84% for other
stamps at the Public Registry.
- Escrow Services: $400
- Notary Fees: 1.25% to draft the transfer deed.
- Anual Property Taxes: Property taxes in Costa Rica are a 0.25% of the
declared purchase price and must be paid quarterly or yearly at the
local Municipality. Property taxes should be paid in full and pro-rated
on the closing statement to the closing date.
- New Corporation set up: ± $500
Terminology in Costa Rica's property transactions.Not much different than anywhere else but there are a few key concepts you’ll need to become familiar with.
Real (The official property number): This is the property's identification number as recorded in the
Registro Nacional de Bienes Raíces (National Registry of Properties). The
number is comprised of three parts; the first part indicates the
province, the second is the number of the property itself and the last
group indicates how many owners the property has or had.
with Folio Real numbers are recorded at the Public Registry where the
chain of title from the properties inception to the current time is
-Plano Catastrado (Survey Plan):Each recorded and titled
property has a survey plan outlining the property and showing
boundaries, size and location in relation to known landmarks.
survey must be validated through an approval process at the Catastro
Office, as well as by the Municipality in order for it to be valid and
-Escritura de Traspaso (Transfer Deed): This is the legal
document that represents the transaction that transfers title of the
property. This document must be prepared by a Public Notary in the
official Notary Book and then submitted by the Notary to the Public
Registry to record the transfer of ownership of the property.
Structuring your property ownership.For the majority of Real Estate transactions in Costa Rica the ownership is structured in the following 2 ways:
Ownership in your personal name (and/or the name of your spouse or
partners): In Costa Rica you can own property in your own name or jointly
own property with one or more person in their own names. Each
individual will appear in the Public Registry of Properties as owners.
Ownership in a corporation: Many foreigners acquire property either
through the purchase of the shares of the corporation who owns the
property or by forming a new corporation and transferring the property
ownership into the new corporation at the time of closing.
real estate buying process in Costa Rica should be stress free, but be aware
that not everybody selling properties in this country will always be an
officially accredited realtor.
Only by insisting on working with prestigious professionals, you will have the
confidence to make a well-informed and safe investment that will give you years
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