7 Steps to buying real estate in Costa Rica
One of the 1st questions that should come to mind (after where would I hang my hammock?) is can a foreigner purchase Costa Rica real estate, and what are my rights over that property?
Costa Rica has worked hard for a very long time to create a tax, legal and political environment that is welcoming and conducive to foreign investment. This includes personal investments such as a retirement home, an investment home or full-time home for ex-pats.
As such it has granted all newcomers the same rights and protections as a citizen when it comes to buying, owning and securing personal property legally. That of course ranges from everything from a car all the way up to as much real estate as you can buy.
With a few exceptions, such as within the Maritime zone and other rare or very niche specific exceptions, most purchases of properties for sale in Costa Rica will be Fee Simple.
This is the most straightforward and all-encompassing form of ownership. This is the same type of ownership as when you purchase a home in the US. It is not a lease, it is non-revocable and your rights to hold that property are protected by the law of a country with no military and the most stable democracy in all of Latin America.
Just like in the US, there are some steps that need to be taken for due diligence and to ensure the proper transfer of ownership. If you’ve purchased a home before, the steps will all sound familiar as almost all the steps you will take to purchase your home in Costa Rica will be the same. This will give you a high level view of the simple process when buying properties in Costa Rica.
Step 1: Start your property search
Don’t get too far ahead of yourself. Before looking into lawyers, notary publics or other legalities to try to figure out if moving to Costa Rica or buying a property for sale in Costa Rica is possible, you should make sure that there is even a property out there that will fulfil your vision for what your life will be in Costa Rica, more specifically within your budget.
Nowadays you can browse for anything from shoelaces to cars online, real estate is no different. Of course, you may not want to buy a property online, or you can certainly narrow your search.
If you have not already requested our property map and price list, but think you are at the point of the process where you would like to seriously look at specific properties and price points, please let us know and we can both send you a document with that information and a link to be able to view it online.
Step 2: Go visit the properties
Again, don’t get too wrapped up in trying to narrow it down to THE property. Once you feel you have narrowed it down to 4 or 5 viable lots, it is time to start looking at your calendar and planning to come to Costa Rica.
This could be one of the more fun and exciting parts of the process. After all, who wouldn’t want to visit Costa Rica?
If you are at this stage, you should be looking at coming to Costa Rica within 3 to 5 weeks. In newer or smaller developments, the availability of that lot can change in one day. Some of the more reputable and solid real estate developments will offer you a goodwill gesture of holding that property for you with no money down for 2 weeks. Generally, to hold onto a property for longer than that they will require a gesture on your part, normally in the form of an earnest deposit.
If your intention is to make a serious offer on a property for sale once you are in Costa Rica, you should also speak with your banker prior to your trip to ensure you are able to make a wire transfer for the earnest money by phone. If you don’t, you will have to wait to conclude your offer until you are back home, in essence coming back home after a trip without making much solid progress.
Step 3: Hire a real estate attorney
Anybody looking to buy real estate for sale in Costa Rica. As safe as Samara is, even to buy properties for sale in Samara, you still should hire an attorney.
As they will be your go between for official government entities and other binding transaction, we recommend you hire a bilingual attorney. Also, it is fine to use attorneys recommended by the real estate development or their sales office to assist you purchasing real estate. However; to bind them legally to have your best interests in all dealing, you should officially hire or retain their services with you as the primary client.
As in the Us, there are attorney’s that specialize in real estate, so be sure to hire one who is. Any attorney that specializes in buying properties in Costa Rica should also be a notary public, as only a notary public can record a purchase in the National Registry.
Make sure the real estate lawyer you hire has a Financial Institution Superintendency, or SUGEF, approved escrow account, so earnest money can be safely held in escrow without any misunderstandings. You may also use a title company, but vetting your real estate lawyer correctly will make that unnecessary.
Step 4: Make an offer on a property
Some real estate in Costa Rica is so over-priced that there is a lot of room for negotiation. There are still tons of opportunities to buy land in Costa Rica at a great price. Knowing a good deal when you see it will help speed up the process of agreeing on a price. Once you have come to shake hands on a price, have your real estate lawyer pen a formal purchase/sale agreement. When you and the seller sign the agreement, it is customary to wire 10 percent of the sales price (unless agreed differently) into escrow with your lawyer. Keep in mind the purchase/sale agreement will not be legally binding until the deposit arrives in escrow.
Step 5: Funding your purchase
To the complete purchase, you have to have the full amount transferred into escrow before the closing date. This includes all legal fees. It is important to bear in mind that to comply with both US and Costa Rican illicit financial transactions laws, banks in Costa Rica may hold your funds for several days. There are financial disclosure forms your lawyer can supply you to proactively address any verifications your Costa Rican bank may require.
Step 6: The Closing
If you will not be in Costa Rica for the closing, you need to leave a SPECIAL power of attorney to your lawyer, your real estate agent or a person of trust that will permit them to purchase the property in the name that you specifically will stipulate in this power of attorney.
From there, your attorney/notary public will do all the leg work to get the register the title in your name.
Step 7: Utilities
After you (or your attorney/notary public) register the deed in the National Registry, you can get an “estudio de registro” stating you are the new owner of the property. With that and your residency ID, you can go to the utilities and transfer everything into your name. Residency is required to do this, but as most properties purchased by expats are done thru a corporation (your lawyer would take one extra step to create an S-corp or an LLC and put the property into the corporation’s name) you can have the lawyer’s clerk do all the utilities changes for you. If you want to learn more about the advantages of buying properties in Costa Rica through an S-Corp or an LLC, please contact us here.