An Overview of Property Buying in Costa Rica, Part 2

As mentioned in part 1 of this article, foreigners only face one restriction when purchasing property abroad in Costa Rica. And after only five years of residency that restriction can be overcome. After ensuring that you are not trying to purchase land in the Maritime Zone and checking that you do not have any restrictions or regulations on the property that you are interested in you should have gotten a lawyer. Once you have gotten a lawyer you were ready to being negotiating the price of the property with the seller. When you and the seller agree on a price you will be ready to move forward in the process of purchasing property in Costa Rica.

When you are ready to make your purchase of a new property there are some documentation items that you will need to complete the buying process. You will need to have some sort of identification. Typically what is used is a passport or a proof of residency. You will need to have this notarized for it to be considered valid. You are able to purchase property in the name of a business. If you choose to do that then you will need to have a legal representative of the company present for the buying process to complete.

You will also need to have what is called a municipal clearance form. You will get this item from the municipality that the property is located in. This document will show if the owner has paid in full all property and municipal taxes. It will also show if the buyer has any outstanding debt in the municipality. A plan of survey will be needed. This is simply an updated survey of the property in question.

The property will also need to be registered at the public registry. Notary publics take care of that process. Properties that are registered are given an ID number, which is called the folio real. Registry reports will show the name of the property owner, the land boundaries of the property, the declared value of the property and anything else of importance. Note that the declared value will be lower than the actual value. This is due to an attempt to evade taxes on the property as property tax is assessed based on the declared value of the property.

The transfer deed will need to be signed as well. The transfer deed is commonly referred to as the escritura and is signed in the presence of a notary. The notary then registers the property under the new owner's name at the Registro Nacional.

When it is time to pay for the property note that the most common method of payment in Costa Rica is cash. If you need to finance there are three options for that: fifty-fifty, separate drafts and mortgage. Fifty-fifty is when half is paid in cash and half is financed. Separate drafts are for different documents for the escritura and the mortgage, which usually mean higher costs. A mortgage is for when the majority of the cost is financed.

Closing costs in Costa Rica are usually split between the buyer and seller, but this is a negotiable item. Closing costs are made up of mortgage costs, notary fees, government transfer taxes and registration fees.