Buying Property in Costa Rica: Buying Property in a foreign country can be a scary undertaking–yet–the climate is so inviting especially during our freezing winter season.
Fortunately, it has been possible to buy property in Costa Rica with a higher degree of assurance that other foreign countries but now with Solutions Realty as your Realtor–it is almost like buying property right here at home!
Your Realtor, whomever you select, should be able to help you locate property matching your criteria of selection and educate you about Costa Rica in general. He should also inform you about property values and other factors in your area of choice. Lastly, but not least, he should assist you in negotiating a fair price and right financing as well.
You should also use a lawyer with a good reputation or Certified Notary Public, who can handle the financial aspects of the transaction and ensure you will have legal title to your property.
Title Insurance is available from well known North American companies such as Stewart Title.
Property Inspection: Just like at home, we highly recommend the services of a qualified property inspector, and we usually enter a Property Home Inspection Condition on our Offers. At Solutions Realty have a “No Surprise” policy for all our Buyer Clients perhaps this is why we get so many referrals!
Ownership of Costa Rican Property: You can purchase real estate as you usually would at home–in your name. Quite often, it makes more sense to purchase through an existing or new corporate entity, and this is very common in Costa Rica as there are numerous benefits associated with this. It is not a complicated or expensive procedure but does require the expertise of a lawyer.
The Public Registry of Properties: All property should be registered in the Public Registry of Properties, whether the property is fee simple or concession. Your lawyer will be able to confirm that the seller does own the property you intend to purchase and will determine if there are any restrictions on this property. He should then, after verification of these matters, be in a position to provide you with a “clear and marketable” title to your chosen property
Folio Real Numbers and Cadastral: Each property has a unique number, and this number is comprised of three parts. The first number segment denotes the province; the second segment is the number of the property itself, and the third is the number of owners the property currently has. Any property that does not have these Folio Real Numbers should be suspect.
Each registered property also has a survey plan and to transfer, mortgage or acquire a property this plan must be registered at the Public Registry of Properties.
Property Taxes: Property taxes in Costa Rica are meager. They are 1/4 of 1% of the registered property value. Thus for a property whose, recorded value is USD 100,000, the tax would be $250.00 per year.
Closing Costs: these costs are fairly standard and are usually split between Buyer and Seller. They include: (1) Real Estate Transfer Tax, which is 1.5% of the registered value of the property as stated on the deed; (2) Documentary Stamps, which total approximately 1.25% of the registered value; and lastly (3) The Notary Fee, which is 1.5% of the first million colones and 1.25 % on the balance of the property sales price.
For example: at today’s (August 2004) conversion rate property with a stated value of USD 100,000, closing costs would be in the vicinity of USD 3,000 and yearly taxes $250.
Financing: If you require funding, some banks such as Scotiabank in Costa Rica will finance 40-50% of the Purchase Price or Appraised Value (whichever is less). Interest rates shall be 9-14% (as of August 2004). This presupposes that the applicant has an impeccable credit rating. From this, we can easily see that it is usually much more advantageous and simpler to arrange your mortgaging at home where interest rates are generally lower!
There are, however, individual projects and private sellers that may offer some financing. Your realtor should be able to inform you of such projects.