|
Below you will find the exact procedure that our team at
Paradise Real Estate will take you through to ensure a smooth, legal and
enjoyable experience of buying real estate in Costa Rica. Please send us an
e-mail or call if you have any
questions or concerns about any of the details below.
Can Foreigners own Land in Costa Rica?
This seems to be the big question on everyone's mind and the
great news about Costa Rica, unlike most other Central American countries is
"yes you can". In Costa Rica,
property is transferred from seller to buyer by executing a transfer deed (escritura)
before a Notary Public. Unlike common law countries, such as the United States
and Canada, where the role of the notary is limited to authenticating
signatures, in Costa Rica the notary public has extensive powers to act on
behalf of the state. The notary public must be an attorney and she or he may
draft and interpret legal documents, as well as authenticate and certify the
authenticity of documents. In matters of land and
property ownership, foreigners and Costa Rican citizens have equal rights under
the law (unless the owner bought the land as part of a government program). In
these cases, the land can be traded or sold to foreigners only after the
original owner has held it for certain period of time. Foreigners do not have to
live in Costa Rica to own property here.
Research or Title
Insurance on Property in Costa Rica
Stewart Title says it all, a US
Corporation. When you invest in one of our lots or homes, we are able to
arrange for the research and examination of your properties title by Stewart Title
and through an attorney.
By law all properties must be registered with
the Registro Publico. Most properties have a title registration number called
the "Folio Real." Once you have this number you can search the database. The
Registro Publico's Report, called the "Informe Registral," contains information
such as the name of the title holder, boundary lines, tax appraisal, liens,
mortgages, recorded easements, and other records that could affect the title.
Costa Rica follows "first
in time, first in right" rule. Additions to a property title are prioritized
according to the date they were recorded. We make sure your Attorney searches
your title back to the beginning.
How can I ensure that I have clear title to the
property?
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.
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.
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.
Write a Transfer Deed
This is the document that transfers ownership
of the property. The transfer is made with the buyer and seller signing the
transfer deed (called an "escritura") in the presence of an attorney. The
attorney then drafts the transfer deed and registers the sale at the Registro
Publico.
Custom dictates that if the buyer pays in
cash, he selects the attorney to draft the transfer deed. If the purchase is
financed, then the transfer can be made in various other ways.
A. If a large percentage of the purchase
price is financed by the seller and a mortgage needs to be drafted to guarantee
payment, the seller's attorney may draft the transfer deed upon seller's
request.
B. If a property is purchased 50% cash and
50% financed, the buyer's attorney and seller's attorneys can draft the transfer
deed and mortgage in a single document. This process is called a co-notariado.
C. Buyer may have his
attorney write the transfer deed and let the seller's attorney draft a separate
mortgage instrument. Since the mortgage agreement is being drafted separately,
registration fees are higher.
Closing Costs
By custom, buyer and seller split the closing
costs, but the split may be adjusted up or down to fit the occasion.
You must buy Documentary Stamps – Agrarian, Hospital,
Municipal, Bar Association, National Archive and Fiscal – totaling 0.55% of
sale price. You must pay a Real Estate Transfer Tax at 3% of the sale price
and a Registration Fee of 0.5 % of sale price, plus Notary Fees of 1.5 % of
the first $5,000 (million colones) and 1.25 % of the balance and Mortgage Registration Fees.
Usually, the person
getting the financing pays for the costs of drafting and registering the
mortgage instrument. A mortgage may be issued at the time of the sale by adding
a mortgage clause to the transfer deed. A mortgage within a deed costs 0.25% in
registration fees and approximately 0.53% in documentary stamps. For drafting
the document, the notary receives between 0.5% and 1.25% of the amount of the
mortgage.
The good news
It is customary in Costa Rica to register a
property at a figure far less than its actual sale price. All transfer taxes and
fees discussed above are figured as a percentage of the reduced sale price --
with the exception of the notary. He or she drafted the documents. He or she
knows exactly how much money changed hands. He or she collects the full .5 to
1.25% of the mortgage.
Register The Transfer Deed
To register your transfer deed you or your
attorney must bring to the Registro Publico (Public Registry) the following
documents:
A. Proof of payment of all taxes and
registrations fees
B. Certifications issued by: a) Finance
Ministry, confirming that all seller's property taxes were paid; and, b) the
local Municipality, stating that buyer and seller areup to date on municipal
taxes.
C. Proof that all prior mortgages, liens and
judgments (if any) have been resolved
Once all fees are paid, make sure that the
attorney who drafted the transfer deed registered it in the Property Section of
Registro Publico. It should be registered by the Registro Publico 45 to 60
business day after presentation. Check with the notary to make sure the deed has
been properly filed.
|
