We WORK for YOU !
As we mentioned in our website welcome, we do not publish real estate listings on our Site. Instead, "WE WORK for YOU"! You tell us exactly what your looking for and we will find it for you and send all pertinent information and photos to you as requested.
If the requests are not within our area of concentration (Alajuela Central) we will put you in touch with one of our trusted associates who will be glad to do the same for their represented areas of Costa Rica.
We specifically provide information pertaining the following:
• Lots and Vacant properties
• Residential Homes - For Sale or Rent
• Apartments - For Sale or Rent, Furnished and Unfurnished
• Sub-Divisons
• Gated Commmunites
• Luxury Estates
• Condominiums
• Hotels
Under the Topic of Other Services we Explain other things "We can DO FOR YOU" !
To assist you in your decisions "WE PROVIDE YOU" the Following Basic information regarding "Buying Property in Costa Rica.".
THE BASIC STEPS:
1. Planning to invest in Costa Rica
ABC’s to Incorporating, Buying Property and Becoming a Resident. Many clients have similar concerns when we first discuss their investment plans in Costa Rica. Almost everyone we have met wants to know about incorporating, buying property and obtaining residency.
We believe these three issues are the main components of what we would call the "typical investment package"; which, just by following some basic steps would make your Costa Rican venture a very successful one.
Incorporating in Costa Rica. The typical limited liability company (“Sociedad Anonima” or “S.A”.) must be incorporated by at least two people before a Costa Rican Notary Public. After such incorporation, the shares may be transferred and it is legally feasible to have a corporation in which one person is the owner of all shares. The incorporators must choose a name (which must not be similar to any existing corporate name); appoint a Board of Directors (which, by law, must have a minimum of three members, President, Treasurer and Secretary) and a Comptroller. Each one of these positions must be occupied by a different person; however, the initial incorporators may occupy them. Other crucial issues to be decided are the capital of the corporation (the higher the capital, the more registration taxes are to be paid); the number of shares composing such capital (a share cannot be divided according to Costa Rican Law -fractions of shares are not acceptable-; thus, it is advisable to have a number of shares that would permit future distributions of the participation in the company) and the representation of the newly formed company (there must be at least one representative of the company with powers of attorney to act on its behalf; however, at the time of incorporation, or later on, the powers of the company's representatives may be limited, for example, to specific actions or amounts).Costa Rica has what we like to call a "hybrid" corporate system. The incorporation deed, as well as all changes to the company’s By-Laws, are to be recorded in the Public Registry,where any person has access to them. However, all transfers of the company's shares are recorded in the Shareholders Registry Book, which is kept by the corporation and is only available to company's shareholders and officials; all other parties can only review it with a Court order.
When you are buying real estate, it is advisable to do it on a corporation's name. In this case, transfers could be made easier and the structure may be more flexible for other transactions and for organizational matters.
2. Buying Real Estate
Most properties in Costa Rica are registered in a computer system called "Folio Real". This system is centralized at the offices of the Public Registry in San Jose. Before buying land (or even before seriously considering an offer to buy land) a title search in Folio Real should be performed.such a title search will show all data on the property, including area, ownership, boundaries, location, mortgages and other liens.A few properties have not been incorporated to the "Folio Real" system yet. They are still registered in special books kept in the Public Register. Such properties may also be accurately title searched in the Public Registry. When considering buying land, the first question to be asked is if you are being offered ownership rights (derecho de propiedad) or occupation rights (“derechos de ocupacion”).
In the case of occupation, you would be dealing with land that has not been registered, cannot be title-searched and must go through a long process in order to be registered. Ownership rights, in the contrary, are registered and are equal to the concept of owning land in the United States or Canada. Another situation one may encounter regarding land, especially for beaches, is the concession. In this case, the government gives a private party the right to use the land for a specific period of time. In general terms, the concession may be considered as a lease. The concessions registration system is different than the one for regular land, and has particular requirements regarding zoning, terms, occupation, etc. In conclusion, before buying, before offering or even before seriously considering a piece of land, enquire about its status and perform a title search: these simple steps could save you a lot of money and effort, and will definitely make your Costa Rican investment worthwhile.
3. Purchasing Property in Costa Rica.
A Guide to Understanding the Real Estate System and Buying Process
Introduction
The acquisition of real estate is one of the most significant investments a person makes during his or her lifetime. It can also be one of the most stressful. In foreign countries such as Costa Rica, the normal stress of the purchasing process can be compounded with other risk factors, such as language barriers and unfamiliarity with local laws and procedures. That said, foreigners can and do legally and successfully purchase property In Costa Rica. In fact, Costa Rica offers potential buyers many types of real estate productsincluding houses, condominiums, time-shares, farms, finished lots and beachfront property.
The following guide is designed to help buyers navigate their way through the real estate buying process for all types of purchases.
The guide is divided into three main sections
covering:
I. Property Types and Property Rights
II. Purchase Process:
a. Legal vocabulary of property purchase
b. Methods of Purchase
c. Buying process step-by-step
d. Fees
III. Investment Protection: strategies and tools to protect property
investment
I. Property Ownership and other common forms of possession
Just like in the US, Canada, and Europe, there are different
types of property available to buyers. Understanding the various
types that are available for purchase is critical in the evaluation
process. This section highlights the property types that can be
purchased in Costa Rica and the implications of each type of
ownership for the buyer.
a. Fee Simple:
The most comprehensive form of property ownership in Costa
Rica is fee simple ownership. Fortunately for foreigners, the
conditions for this type of ownership are the same for Costa
Rican nationals as they are for foreigners. The concept of fee
simple ownership is the same in Costa Rica as in the US.
Basically, fee simple ownership gives the owner of the
property the absolute right to materially own the property,
use it, enjoy it (i.e. usufruct), sell it, lease it, improve it (i.e.
transformation), etc., subject only to conditions outlined in the
Costa Rican Laws. Fee simple also means that if the owner is
obstructed from enjoying any of his/her rights to the property,
he/she has the right to be made whole, in other words, have
the property restored in its original condition. Buyers who
purchase fee simple title have the most rights under to law to
enjoy and use the property as they see fit.
b. Concessions in the Maritime Zone:
Concession property is more commonly known as beachfront
property. In Costa Rica, 95% of beachfront property is
considered concession property and is governed by the
Maritime Zone Law and other specific regulations including
but not limited to special dispositions stated by
municipalities and the ICT (Costa Rican Institute of Tourism).
These legal dispositions set forth the conditions under which
foreigners and local residents can own concession property.
A concession in Costa Rica is defined as the right to use and
enjoy a specific property located on the maritime zone for a
pre-determined period of time. The state, through its
respective municipality, grants this right. Note that the
first 200 meters measured horizontally from the high tide line
defines the boundary of the maritime zone. This zone also
includes islands, pinnacles of rock, mangroves, estuaries,
small islands and any small natural formation that overcome
the level of the ocean. This 200 meter zone is divided into
two areas:
1. Public Area: The first 50 meters measured horizontally
from the high tide line. This zoneis not available for
ownership of any kind. No kind of development is allowed
except for constructions approved by governmental
entities. Further, this area is deemed a public area and
any individual wishing to utilize this area for enjoyment
has the right to do so. In other words, there are no truly
private beaches in the Maritime Zone.
2. Restricted/Concession Area: The next 150 meters. This
area is available for Concessions to be granted. A
concession is in essence a “lease” on the property
granted to the lessee for a specific period of time.
Normally the concession period is granted for 20
years. An owner of a concession may build on that
concession, subdivide the concession and perform other
acts to the property. However, appropriate permits from
the local municipality must be obtained.
3. Ownership Limitations: Unlike fee simple property,
foreigners do not have the same rights as citizens when it
comes to purchasing concession property. The law
establishes that foreigners cannot be majority owners of a
concession property. A foreigner can, however, enter into
a partnership with a Costa Rican citizen where the
ownership is divided 49% / 51% between the foreigner
and Costa Rican respectively. One exception is if a
foreigner has resided in Costa Rica for at least five years,
then they may be majority owners of a concession. Both
foreigners and Costa Ricans alike are required to
purchase all Maritime Zone property through concession.
c. Properties in Condominium:
When US citizens think of Condominiums, they normally
think of large apartments or townhouses. In Costa Rica,
however, there is a specific law called “Condominium Law”
that provides certain benefits to developers of many different
types of properties, including single family residence
projects, finished lot projects, condos, etc. This set of laws
allows a developer to restrict and regulate certain aspects of
the development. Each Condominium developments has its
own by-laws containing all of the restrictions, limitations
and privileges that can be enjoyed by individuals who
purchase a property in such a development. Ownership of
property “in condominium” is fee simple ownership, but
usually carries with it a few additional restrictions set
forth by the developer. It is advised that you require the
owner of the property to give you a copy of the by-laws to
check for architectural guidelines, land use restrictions, and
other limitations that may be placed on your property. Most
often, developers use the condominium laws to allow them
to build private roads in a development and set
architectural guidelines. For the most part, condominium
laws are designed to protect the integrity of a development
and maintain the “look and feel” of the project.
d. Untitled property
There are properties in Costa Rica that are not recorded at
the Public Registry of Properties. Families have inhabited
some properties of this type for generations while others
have never been occupied. In either case, it is possible that
someone claims that they “own” the property and may put it
up for sale. They may even have fence lines or other
boundary markers that separate “their” property from a
neighbor’s. Regardless of the time that an inhabitant has
lived on the property or to what extent they have
demonstrated ownership, unless that property is registered at
the Public Registry, there is no official owner. i.e. the title is
unclear. It is strongly recommended that this type of property
be avoided at all costs because there is no way to prove that
the “owner” has the right to transfer the property, or even
worse, what the dimensions of the property really are.
e. Time Share:
This option allows an owner the right to use a property for
certain weeks of the year. In most cases the time-share
ownership grants similar rights as implied in the
condominium regulation except that in the time-share it is
limited to certain weeks during the year. In this manner one
single unit is subdivided into parts and sold individually.
II. The Purchase Process
A. Basic Terminology
Feeling comfortable with the purchase process starts with
understanding the most common terminology. While the
purchase process may seem very simple, there are some keys
ideas with which a buyer should be familiar. The following
defines the most common vocabulary used in real estate
transactions in Costa Rica.
a) Folio Real: This is the “social security” number of
properties. It is the unique number assigned to each
property to identify it and distinguish it from other
properties. This number is comprised of three parts: the first
number indicates the province, the second group of six
numbers is the number of the property itself and the last
group of numbers indicates how many co-owners the
property has. All titled properties MUST have this number in
order for clear title to be obtained.
b) Transfer or Conveyance Deed: (escritura de traspaso): This
document contains all of the stipulations regarding the
transfer of real estate including basic information about the
buyer, seller, the property, and any special terms of sale,
such as easements or mortgages. An attorney who is also a
Public Notary must prepare this document and the deed
must be recorded in his/her Notary Book as well as at the
Public Registry of Property. Once the deed has been
prepared and signed at the close, it is the attorney’s
responsibility to record the deed immediately at the Public
Registry. The recording process consists of two phases. In
the first phase, the notary presents the deed to the public
registry for its annotation; from this moment the property is
protected against any third party interest. After the registry
verifies the deed is structurally correct, the second phase of
registration begins and the property is recorded in the
name of the new owner. Because Costa Rica operates on a
“first in time, first in right” system, registering the deed
immediately is critical to ensuring that the new buyer’s
rights to the property are ahead of any other claims by third
parties.
c) Public Registry of Properties
d) Notary Public: Attorney licensed by law to perform legal
acts with Public Faith. All transactions performed by a
Notary are recorded in his/her Notary Book. A public
notary is necessary in order to purchase a property. Most
attorneys in Costa Rica are also Public Notaries.
e) Power of Attorney: ( Poder )
(1) This document authorizes a person to act on behalf of
another to perform specific actions such as the purchase
of a property. This tool is especially useful for clients that
wish to close on their property without returning to Costa
Rica. It is best to sign the power of attorney before
leaving the country because the law requires that the
power of attorney be signed in the presence of a Costa
Rican notary. Thus, a visit to a Costa Rican consulate in
the US is necessary. One exception to this rule, however,
is if the property is being purchased through a
corporation. In this case, a signed proxy letter will
suffice and there is no need to visit a consulate.
(2) Powers of Attorney come in two forms, general and
special. General power of attorney allows a
representative to sign on behalf of an individual for
multiple transactions and must be recorded at the Public
Registry. A specific or special power of attorney allows
the representative to sign ONLY for the item specified
in the power of attorney contract and under the
conditions specified there. It is highly recommended that
only a specific power of attorney be granted for
property purchases to limit the rights of the
representative to sign only for the property in question
and nothing else. Additionally, The specific power of
attorney does not have to be recorded at the
Public Registry, however it should be granted before a
Notary Public.
f) Survey Plan (Cadastral Department): In addition to the
Public Registry of Properties, which holds all property
deeds, Costa Rica also has a Cadastral Office that holds
all of the property surveys. In order to transfer, mortgage or
acquire a property, a survey must be recorded at the Public
Registry. When dealing with property segregations, a
municipality authorization is also required on the survey.
The official drawing of the property is validated through an
approval process by the Public Registry of Properties as
well as by the municipality in which the property
is located. Because the Public Registry and Cadastral Office
are separate entities, it is not uncommon for old property
surveys to be on file at the Cadastral Office. If this is the
case, it is recommended that a new survey plan be
registered with the Cadastral Office so that there can be no
dispute over boundary lines.
B. Purchasing Methodologies
1. Acquiring Properties through direct transfer: A purchase
process whereby one or morephysical individuals acquire a
property in their personal name.
2. Acquiring Properties through corporations: A common
practice in Costa Rica is to acquire properties through a new
corporation or through an existing corporation that
currently owns the property of interest. The process of
setting up a corporation is not complicated, but does require
a knowledgeable attorney who understands the exact
protocols and procedures necessary to properly set up the
corporation. The advantage of this system is that it allows a
buyer to protect their asset anonymously. Further, if a
purchaser acquires a property through an existing
corporation that already owns the property, there are no
government transfer taxes and stamps to pay. The reason
is that transfer taxes and stamps must be paid anytime that
there is a change in the ownership of the property. If a
buyer acquires the shares of an existing corporation,
technically there is no change in the recorded owner of the
property (i.e. the corporation still owns the property).
However, if a property is acquired through forming a new
corporation to buy the property, the transfer taxes and
stamps must be paid because the name of the property
owner has changed. The risk for the buyer in acquiring an
existing corporation is that the corporation might have other
liabilities and there is no way to verify 100% that the
corporation is clean. When buying a Costa Rican
corporation, it is important to keep in mind that there are
other obligations and responsibilities that must be
addressed. Examples include yearly tax declarations (even
if the corporation is inactive), payment of income taxes if
any, and keeping the legal books of the corporation up to
date and in order.
C. Step-by-Step through the purchase process:
1. Once a buyer has seen a property of interest, the next step
is to understand what the process of acquiring the property
may entail. The following are the basic steps that a
purchaser follows when buying a property.
Step 1: Sign an Option to Purchase/Sale with seller.
Step 2: Deposit funds into escrow (if available).
Step 3: Title research performed by the Notary Public /
Lawyer (review if property is free and clear of
defects)
Step 4: Closing – Execution of Transfer Deed, Endorsement
of Shares and/or Mortgage Deed and disburse funds
Step 5: Register new owner with Public Registry
D. Fee Structure
1. Transfer taxes, stamps and other charges: In order to record
the transfer of the property, the government charges 1.5% of
the purchase price and an additional 1% is
charged for other stamps at the Public Registry.
2. Notary Fees: Notaries are required by law to charge 1.25% as
their legal fees.
3. Survey fees: If you require or demand a new survey for your
property, there are qualified surveyors available to perform
this function. Pricing depends on the location and size of the
property.
4. Mortgage registration fees: The government charges 0.6% of
the mortgage value to register the mortgage deed on the
property.
5. Escrow Fees: Fees are dependant on the escrow provider.
6. Incorporation: Fees for purchasing a corporation typically
run between $500-$1000 or +.
III. Protecting the real estate investment:
One of the greatest concerns of foreigners purchasing real estate in a foreign country is to ensure that the transaction will be executed legally and if the system can ensure a lifetime of enjoyment of the property. The Costa Rican legal system, if followed correctly, does give+ ample protection to investors, but if the transaction is not executed properly, loss can and does occur. To guarantee the security of any real estate investment, there are three tools that should be present in any real estate transaction.
a. Adequate legal representation and experienced Notary - While
a notary’s primary duty is to provide Public Faith to a
transaction, his/her job is also to act as the legal
representative of the buyer, providing legal advice and
representation throughout theprocess.
b. Escrow - Most buyers from the US understand Escrow service to
include not only the managing of funds for a property
purchase, but all of the administrative work required to
execute a closing. In fact, in states where an attorney is not
required for a real estate purchase, the escrow agent becomes
the central party responsible for ensuring that all
documentation is in order before the close. In Costa Rica, the
escrow agent performs many of the same duties. The primary
function is the financial service to prevent manipulation or
mishandling of funds prior to closing. The escrow agent is a
neutral third party with responsibility for issuing checks and
executing payments. This system gives confidence to all
interested parties (e.g. attorneys, brokers, seller, buyer) that
funds are protected during the buying process and that
all funds will be disbursed appropriately to all parties
at closing.
c. Title Guaranty: Why Title Guaranty?
When you decide to buy a property, you must be certain that
after the sale has been completed you will be the true owner
of the property. You need to be confident that no liens,
encumbrances or other impediments will prevent your free use
and enjoyment of the property.
Guaranty for the property owner
The same way you purchase life insurance to protect your
interests, a Title Guaranty shoul be purchased to protect your
property title interests. Your real estate investment will
probably be the biggest investment you will ever make and
loss of this investment can be financially devastating. You
need to be certain that you are financially protected from
potential losses.
What does a title guaranty provide?
Protection against monetary losses, brought about by hidden
ownership claims that may be made against the property title;
Payment of legal expenses if the company must defend your
property title against a claim covered by the Title Guaranty in
the local courts; Payment of valid claims against your
property title, up to the amount of the Title Guaranty.
Some of the risks covered by a Title Guaranty
Invalid documents executed under expired or no existent
power
False assumption of identity of legitimate property
owner Falsification of documents, legal power, and other
papers related to the transfer of property title.
Liens or other financial burdens charged to the previous
property owner.
Non-registered property easements
Hidden heirs of previous property owners
Documents executed by minors of age
Invalid Documents delivered after death of previous owner
Peace of mind
Once acquired, a Title Guaranty remains in place as long as you
own the property, giving you a lifetime of security and peace of
mind backed not by a promise but by a company financial
stability. Because only one payment is required a Title Guaranty
is a cost effective method of protecting your real estate
investment and enhancing the value of your property. |
Conclusion:
The real estate buying process in Costa Rica need not be intimidating or confusing. By understanding the steps in the process and pitfalls to avoid, a buyer can confidently invest in and enjoy their property for years to come.
"WE WORK FOR YOU"
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