Buying Property in Costa Rica - Buyers' Guide

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Buying Property in Costa Rica

Non Residents / foreigners enjoy the same rights as Costa Ricans in terms of property ownership. However, there are some restrictions..

• The Maritime Zone, 200 metres along the shoreline, is state-owned.
• The Public Zone, 50 m. from the shore, is protected from any development.

Purchasing property in Costa Rica

The general custom is for the buyer and seller to share equally all closing costs. The property is transferred from seller to buyer by executing a transfer deed (escritura) before a Notary Public, who drafts the transfer deed and register the sale in the Public Registry (Registro Nacional). Registro Nacional can be accessed online.

Having a clear title to the property

Costarican law requires that all documents relating to real property be registered in the property section of the Public Registry (Article 460 of the Civil Code). Most properties have a title registration number known as the folio real, and the records database can be searched with this number or by name index. Information available includes the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title.

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.

The importance of selecting the notary public

The local custom is that the buyer may select his or her notary/attorney to draft the transfer deed if paying cash for the property.

• If the purchase price is financed, there are generally three alternatives for selecting the notary/attorney.
• If a large percentage of the purchase price is being financed by the seller and a mortgage needs to be drafted to guarantee payment, then the seller may request that her or his notary/attorney will draft the transfer deed.
• If a property is purchased 50 percent cash and 50 percent financed, it is common for the buyer's attorney and seller's attorney to jointly draft the transfer deed and mortgage in a single document. This is known as co-notariado.

Finally, the buyer may insist that his or her notary/attorney draft the transfer deed and let the seller's notary/attorney draft a separate mortgage instrument. In this case, because the mortgage is being drafted separately, it carries a higher registration fee.

• Drafting of the mortgage requires additional notary fees of around 0.5% - 1.25% of the amount of the mortgage.
• The certification from the Registro Nacional must be acquired by the seller to present information about the titled property.
• After making sure that the property is cleared of taxes and charges, a Lawyer/Notary verifies the information on the property.
• When all taxes and fees are paid, the Lawyer/Notary files a “testimonio” (public deed) to Registro Nacional for reviewing.
• With no further corrections and problems, the “testimonio” is recorded and the buyer becomes the official owner of the property.

The need to evict squatters and tenants

It is advisable to have all tenants evicted before purchasing a property. If not, one may find oneself in court for a long time, without being able to use the purchased property other than leasing it to the tenant already there.

If you are an absentee owner, it is best to have someone oversee your property to prevent problems with squatters.

Basically, the law allows peaceful occupation of "untitled and unattended land" unless there is opposition by the existing owner. If your land is unattended and someone moves onto the land, they begin to establish certain rights after three months.