Buying real estate in Costa Rica is the start of an exciting new adventure.
You, like many, have visited Costa Rica and fallen in love with the weather, the geography, the people, and especially the peaceful vibe that lends to Costa Rica’s fame as “the happiest place on earth.”
You’ve decided to buy a Costa Rica property, either for your perfect vacation home or to live here full time. The good news for you is that, despite its popularity, there are still some excellent real estate opportunities in Costa Rica.
Whether you long for the tranquility of the surrounding rainforest, the endless ocean views, or both, there are plenty of great options for buying land and building or purchasing a turnkey home.
For some, the thought of buying a property in Costa Rica might feel a bit overwhelming. Maybe you don’t speak Spanish fluently, or you just aren’t familiar with the real estate laws here.
While Costa Rica does have different requirements and processes than what you may be accustomed to, it’s not a difficult process.
With local experts from Palms Realty, you’ll never be in over your head.
We’ll help you find the perfect property, a notary, and a real estate attorney. With our proven track record, you’ll know you’re in good hands.
Now for the legal ins and outs of buying real estate in Costa Rica
Unlike other countries, in Costa Rica, the notary has extensive powers. For a start, the notary is an attorney who can draft and interpret legal documents. The notary also authenticates and certifies documents for authenticity. Your attorney may be a notary or may recommend a separate notary.
If you prefer, you can check ex-pat sites or the U.S. Embassy to find a reputable law firm. Palms Realty has a list of reliable, bilingual real estate attorneys.
To close on the property, the buyer and seller choose a notary to draft the transfer deed. The notary will also register the sale in the Public Registry.
For a cash sale, the usual practice is for the buyer to choose the notary to draft the transfer deed.
If you’re financing your new land or home, there are three scenarios for handling the transfer deed and the fees.
Suppose the seller finances a majority percentage of the purchase price. In that case, the seller can request his notary draft the mortgage and the transfer deed.
When the sale is 50% cash and 50% financed, both parties’ attorneys can jointly draft the transfer deed and mortgage as a single document. Your attorney may call it co-notariado.
The buyer can choose to have his notary draft the transfer deed while the seller’s notary drafts the mortgage document. In this case, registration fees will be higher because there are separate documents.
Clear title to the property
Costa Rican law requires registration of all documents related to an interest in, or title to, real estate property. Property documents are registered in the property section of the Public Registry (Registro Nacional).
Your attorney or notary can search the database by a title’s registration number (folio real) or by name. The report (informe registral) gives the title holder’s name and information about boundary lines, tax appraisals, liens, mortgages, recorded easements, and other recorded documents that affect the title.
Your attorney should conduct an independent title search. We don’t recommend that you rely on the seller’s attorney because the Public Registry may not include all encumbrances on the property.
What about closing costs in Costa Rica?
Typically, the buyer and seller split the closing costs. Still, you may be able to make a different agreement, depending on your transaction. Closing costs include the government’s taxes and fees, the notary’s fee, and any mortgage costs.
Government taxes and fees include a 3% real estate transfer tax, a 0.5% registration fee, and several document charges (about 0.55%) for the bar association, national archive, agricultural, hospital, municipal, and fiscal stamps.
The law sets the fees for the notary drafting the transfer deed at 1.5% of the sale price’s first million colones and 1.25% of the remainder.
The usual practice is for the mortgagee to pay to draft and register the mortgage (hipoteca). Mortgages are handled in a couple of ways.
- As a clause added to the transfer deed (0.25% registration fee and roughly 0.53% in stamp duty)
- As a separate instrument, in which case the notary will charge from 0.525% to 1.25% of the mortgage amount
It’s important that, as a buyer, you understand the usual practice is to process a property sale at the registered value- sometimes this is less than the sale price. The taxes and fees wouldn’t be based on the property’s sale price; instead, they’d be calculated on the registered value. Consult with your attorney about this practice.
Once the fees and taxes have been paid, the notary who drafted the transfer deed is responsible for presenting the deed (anotado). The notary is responsible for inscribing or registering the transfer deed (inscrito) in the Public Registry’s property section.
You’ll want to follow up with the notary to be sure the transfer deed has been registered.
Deed presentation is an important step that gives your transfer deed priority, but it doesn’t guarantee automatic registration.
The Public Registry won’t register a transfer deed unless all taxes and registration fees are paid. That includes the seller’s property tax, plus the buyer’s and seller’s municipal taxes and encumbrances on the property (mortgages, liens, or judgments, and the like).
As long as there are no defects in the transfer deed, the Public Registry will seal the transfer deed and affix all stamps. That should take 45 – 60 days after the deed is presented.
When you buy property in Costa Rica with a guide like Palms Realty by your side, you’ll know that all your legal Is are dotted and Ts are crossed; you can rest easy and just enjoy the excitement of owning property in beautiful Costa Rica.