What does CRGAR stand for?
CRGAR stands for Costa Rica Global Association of Realtors. Go to http://crgar.com/ for more information. Eric Rubin of Facts First Realty is a Certified Realtor and Member.
What does NAR stand for?
NAR stands for National Association of Realtors. Go to https://www.nar.realtor/about-nar for more information. Eric Rubin of Facts First Realty is a registered member.
Why should you use a Reputable Realtor in Costa Rica?
The first thing that you should consider is who you should work with to help assist you in finding and purchasing your property in Costa Rica. Like any other investment you make involving a significant sum of your money the first thing you would do is look to get the advice and assistance from an experienced professional in the chosen field with a proven track record. You look for an expert that you can trust to give you accurate information, as well as all the information, so that you can make informed decisions. You should not approach purchasing property in Costa Rica in any other way. Get the results you want, work with proven professionals, not street vendors or unethical agents.
A real estate agent can assist you in working through the complexity of the Costa Rican laws and regulations as they pertain to buying and selling property. It is absolutely helpful to have someone familiar with the process to deal with it. Other parts of the transaction will be happening quickly too — hiring inspectors, negotiating over who pays for needed repairs, keeping up good relations with the other parties agent and more. What's more, experienced real estate agents usually have contacts with good inspectors, mortgage loan brokers, lawyers, engineers, topographers, and others who can make your buying process easier.
How do agents in Costa Rica get paid?
An agent or broker will usually receive a commission from the sale of between 5% and 10% of the purchase price only if the sale has a successful closing. Most agents or brokers will have their own list of properties for sale. Such a list should not be confused with what you might know as listed properties. Some real estate agents or brokers have executed legal documents establishing their right to act as agents for the seller or buyer; most have not.
Real estate agents get paid through commission and usually do not receive a salary or any upfront fees. They receive their slice only after your home search is over, the contract negotiated, and the transaction complete. (In many cases, they end up doing a lot of work for nothing, perhaps because the buyers lost interest or can't close the deal.) Typically the commission to both the seller's agent and the buyer’s agent will come directly from the negotiated sales price through Escrow and be split equally between the two agents. In the cases of dual agency the broker or agent represents both the buyer and seller and receives the entirety of the commission, usually at a slightly lower rate. This is a very common and acceptable practice in Costa Rica so you should always clarify this with your broker or agent prior to making an offer on any property.
Can foreigners and/or non-residents own property in Costa Rica?
The great thing about Costa Rica is that regardless of your nationality or immigration status, you have most of the same property rights as native Costa Ricans. This is not true in all Latin American countries. Costa Rica's solid and egalitarian property rights are a big incentive to investing here in Costa Rica.
Do you need a lawyer/notary to purchase property in Costa Rica?
If you purchase Costa Rica real estate, you will need a Costa Rican lawyer. Costa Rica real estate law is very different from real estate law in other countries.
The notary will be responsible for drafting and registering the purchase documents. Legally, the notary is working for both parties and should look after both parties' interests. Typically, the buyer will choose the notary if paying in cash.
Notaries under Costa Rica's civil law system have much greater responsibilities than under common law. In Costa Rica, notaries must be attorneys before they are accepted by the Supreme Court to act as notaries. It is this Court that regulates notaries and their conduct.
A lawyer is essential to purchasing property in Costa Rica. Find a lawyer who speaks your language and answers questions promptly; this will ensure the smoothest transaction possible. Your attorney will help you through several steps of your purchase, including a title search, contingency releases, distribution of funds, title transfer, closing statements, and more. Lawyer and notary fees are assessed as percentages of the sale price, not to the declared property value. Attorney fees typically amount to 1.5% of the sale price that should include most documentation needed to process the transaction.
Notaries are responsible for studying the property in the Registry and seeing that it does not have liens or encumbrances, or any other limitation registered or in the process of being registered, of which the buyer does not have knowledge. The notary, in effect, makes the equivalent of a limited title search. Also, the notary will make sure the property you have selected is duly registered in the alleged owner's name and that such owner has the right to transfer title. If there are liens, encumbrances or any other restrictions registered, he must let you know so they are accepted in the closing contract.
Can you summarize the buying process?
- After you have found the right property with your Real Estate agent, have them submit an Offer to Purchase (also known as a Letter of Intent) to the Seller or Seller's listing agent in order to agree upon the sales price and basic terms of the deal.
- When you receive an accepted offer, it can be forwarded to a Costa Rica attorney/notary in order to put together a formal Purchase and Sale Agreement. This document is a legally binding document, and it clearly states all conditions necessary for the transfer of the deed.
- The period of Due Diligence, which is the complete legal research of the property to insure there are no liens, contingencies, legal issues, and that it has absolute fee simple title. Surveys, soil tests, home inspections, and other studies requiring professional services are included in this period. Any existing corporations with ownership rights should also be researched to clear any legal contingencies.
- The conveyance of the deed or corporate shares AKA The Closing will take place with a Costa Rican Notary, who will be responsible to register the property to the new corporation or buyer. Alternatively, if the property is being purchased with an existing company, then the shares of the company are transferred at this time by a Shares Transfer Agreement. In this case the Notary Public will make the corresponding changes to the company's ownership in the National Registry.
- Declaring the property before the corresponding Municipality for property tax purposes by filling out a simple form and presenting it along with some other documents either yourself or through your attorney.
Can I obtain financing in Costa Rica?
If you don’t have the cash on hand to buy a property there are a few options available to you.
Some people have the ability to take an equity line on their main residence back home which will typically be much lower interest rates.
Bank financing through a Costa Rican bank is possible only if you are a resident or citizen of Costa Rica. The interest rates are high, usually around 10-12%.
Many sellers are willing to offer partial financing, usually with a down payment of 40-50%. The typical term for this option is 3 to 5 years. The interest rates can be more favorable between 5% – 7% in most of the cases.
How much are closing costs?
- Typically, the buyer and seller share the closing costs 50/50.
- Transfer Tax: 1.5% of the purchase price.
- Registry Stamps: 1.3% of the purchase price.
- Legal Fees: 1.5% of the purchase price.
However, the Buyer is usually solely responsible for starting a new company, any contracts for Seller Financing (if needed) and registration of those contracts, and translations if the Seller is Spanish speaking.
How much are property taxes after purchase?
Property Tax: This yearly tax is 0.25% of the registered property value and is paid directly to the local Municipality. These taxes could be paid every 3 months or can be paid in full for the year in advance.
Luxury Tax: A tax levied against luxury homes valued at 129,000,000 CRC (~$224,000) or greater. The tax is based on a sliding scale between .25 - .55% which depends on the property value. We can provide you with a property specific estimate when appropriate but the scale is below. To qualify for this tax the construction value must reach the threshold above at which point the land value and other installations are added to some up with a total tax value.
- Up to ¢ 323,000,000.00 0.25%
- On the excess of ¢ 323,000,000.00 and up to ¢ 647,000,000.00 0.30%
- On the excess of ¢ 647,000,000.00 and up to ¢ 970,000,000.00 0.35%
- On the excess of ¢ 970,000,000.00 and up to ¢ 1,295,000,000.00 0.40%
- On the excess of ¢ 1,295,000,000.00 and up to ¢ 1,617,000,000.00 0.45%
- On the excess of ¢ 1,617,000,000.00 and up to ¢ 1,943,000,000.00 50%
- On the excess of ¢ 1,943,000,000.00 0.55%
Can I obtain financing in Costa Rica?
The Costa Rican government entails the prompt registration of all land newly possessed or transferred ownership. Documents that prove support in the ownership details of a real estate property are checked in the Public Registry office's property department as required by the Civil Code. Properties are numerically cataloged and land titles are kept in the Folio Real database. This contains a complete record of land titles, which can be searched according to the title index or number. The database can be accessed via the internet, making it very convenient for foreign investors.
The registration report contains basic information on a land property, such as the name of the owner, the mortgage arrangements, appraisal of taxes, and other legal concerns affecting the land title. Also found in the report are topological details such as the total land area and locations of property boundaries. This information is useful in keeping track of the country's numerous properties put on the market every year.
When you have signed the transfer document, you will need to pay the transfer taxes. Usually the notary will ask you for a specific amount of money, which should include the notary's fees and those taxes. It is the notary who will be in charge of paying all the necessary taxes and tax stamps, so always ask for a detailed receipt of what you are paying for. Another thing to keep in mind is that transferring a property is relatively simple. No unreasonable delays should take place.
Upon acceptance for registration, the Public Registry will return the original transfer deed with all the documentary stamps.. Assuming that there are no defects within the transfer deed, it should be registered between 45 to 60 days after presentation. It is vital to have the notary follow up to make sure the registration was completed.
Should I buy a property in my personal name or through a Costa Rican corporation?
Property can be owned individually, jointly, in trust, as household property, or in the name of corporations, or a combination of these. It can be owned and held either by one or more individuals or in the name of one or more companies. The best form of ownership will be dependant on the specific property which you choose to buy and we can go over the options when appropriate.
What is the Maritime Zone (ZMT) and/or Concession land?
The ZMT is the first 200 meters from the average high tide mark on all beaches throughout Costa Rica. This is divided into 2 sections, the first 50 meters is known as the Public Zone and the remaining 150 meters is known as the Restricted Zone. A concession or lease may be granted on the Restricted Zone for qualifying properties. This is a very detailed topic and one we can discuss personally when and if appropriate. Please refer to PROPERTY DESCRIPTION PAGE for more detailed information.
Is it better to buy something already built or build myself?
This will depend on many factors. If you find your dream property already built, chances are you can negotiate a great deal and it will be for the most part turn key. However, purchasing the perfect piece of land and building can also prove an amazing value and will allow you to customize it, so it really all depends on your preferences and needs. Building prices per square foot of construction including materials runs between approximately $80 to $120 depending on your quality and finishes. When appropriate we can discuss all the options with you, including local builder and construction management options.
Are squatters a real problem?
According to Costa Rican law, a squatter can acquire the rights to a property if the property owner allows that person to use or maintain possession of the property for more than a year. To guard against this possibility, it is advised to contractually hire a caretaker to live on the property, or hire a professional property manager. In most cases this will only become an issue on bare land that is not looked after in areas where it is easy for squatters to quickly put up a lean-to shelter and connect to the open electricity lines.
Can I hire household and/or property help?
Yes. Labor is fairly inexpensive in Costa Rica and many people are looking for employment. However, the labor laws in Costa Rica are very strict. Please read more in detail on LABOR PAGE
Can you tell me more about recent tax reform in Costa Rica?
Yes. There have been recent changes in Costa Rica regarding taxes. Please request the information here on the TAX REFORM Request
Should I hire a property manager if I am not going to be living in the country?
As mentioned previously, if you are not planning on living in the country you should either hire a caretaker or property manager to look after your property. You could also ask a friend to watch after your house for you. It really depends on the circumstances but hiring a property manager could be very advantageous. They can coordinate repairs and screen potential renters, they will book your rentals, do your check in/check outs, look after any kind of maintenance on the property, work on your accounting, and help keep your place free of potential squatters.
When is the best time of year to visit Costa Rica?
This is a personal preference. Most people come during the “high season” which is typically December through April. However anytime of year is nice to visit especially if you don't mind a little rain. The “rainy season” has its own beauty with everything being green and lush, less tourists and more wildlife abound.