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Mortgages
Real Estate Financing in Mexico,
Latin America and the Caribbean
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Buying Real Estate in Costa Rica
Legalities and OwnershipForeigners enjoy the same status as citizens of
Costa Rica with regard to purchasing real estate. However, in order to purchase
a property and get full legal rights, it is imperative that the laws are
followed precisely.
There are various types of properties that can be
purchased in Costa Rica:
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Fee Simple: This is most common type of property
ownership. Such ownership gives owners the right to materially own the property,
sell it and make modifications. |
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Concessions in Maritime Zone: These are the beachfront properties
where strict laws apply under the 1977 Maritime Zoning Law (Ley sobre la
Zona Marítimo-Terrestre - Ley Numero 6043) See below for details.
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Properties in a Condominium: Owning such a property gives the fee
simple ownership but within the provisions of the "Condominium Law". (See
below). |
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Untitled Properties: These are properties that have not been
registered at the Public Registry of Properties. Such properties can be
understood as properties with a title that is not clear. |
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Time-shares: The owner is permitted to use such properties for
certain weeks of the year. The ownership rights given for such a property is
similar to that granted under the condominium regulation.
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The process of buying real estate in Costa
Rica can be summed up in the following steps, which should always be undertaken
with the assistance of an attorney who is well versed in the laws.
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The first step is to sign a purchase agreement or
option. |
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Make an earnest money deposit of 10 to 20 percent of the purchase price into
an escrow account. |
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Thoroughly check the property by reconciling the two legal documents the
escritura (the title, which contains details of registration of the
property in the Registro Publico) and the catastro (a document
that delineates the boundaries of the property). |
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Ensure that the property is free from all liens and encumbrances. |
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Execute the transfer deed and disburse the funds in the presence of a
notary. |
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Register with the Public Registry. |
The
documents that are necessary for finalization of the transaction are:
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Impuesto territorial: A copy of the tax receipt
certifying that all taxes and registration fee have been paid as on the date of
purchase. |
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Constancia municipal: A certificate from the municipal
authority. |
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Proof of availability of sufficient funds to pay all the costs involved in
the purchase of the property |
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Evidence that the purchased property is free form all liens and
encumbrances. |
Financial MattersThe costs involved (as a percentage of the sale price)
in the process of procurement and registration of property in Costa Rica are:
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Documentary stamps: The total cost involved in purchasing the
various stamps such as: Agrarian, Hospital, Municipal, Bar Association, National
Archive, and fiscal comes to 0.55%. |
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Real Estate transfer tax equals 3% |
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Registration fee is 0.5 % |
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Mortgage registration fee is 0.25 % in registration fees and about 0.53% in
documentary stamps. The drafting of the document by the notary costs between
0.5% and 1.25% of the amount of the mortgage. |
Other Important IssuesOnce all the costs are met, it is essential that
the transfer deed is registered in the Property section of Registro
Publico within 45 to 60 working days. Some other noteworthy points:
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Real Estate in Costa Rica is customarily registered at a price
that is far less than that actual sale price. |
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The closing costs are generally shared evenly between the buyer and the
seller. |
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Transfer deeds are drafted by the attorney selected by the buyer or the
seller depending on the method of payment. For financed purchase the seller
attorney may draft the deed. If the payment modalities are equally split between
cash and finance, the transfer deed can be done by the process of co-notariado
(both the attorney of the buyer and the seller do the drafting in the same
document). |
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It is essential to hire a well-versed real estate broker licensed by the
Ministerio de Economia (Treasury Department of Costa Rica).
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Maritime Zone
Law
Beachfront properties - But before buying a beach
property, one should apprise themselves of the specific regulations (Maritime
Zone Law) governing Costa Rican beach property, though all beach property does
not fall under these restrictions. One can purchase property near the beach or
overlooking a beach without it being classified as Maritime Zone property.
However, all beaches in Costa Rica are considered public and hence, cannot be
privatized.
As per Maritime Zoning Law of 1977 (Ley sobre la Zona
Marítimo-Terrestre - Ley Numero 6043) the ownership and usage of beachfront
property in Costa Rica are divided in two zones with the national government
owning the "Maritime/Terrestrial" restricted zone and local governments
(municipalities) administering it.
1. Restricted Zone (Zona
Restringida): This zone is a 150-meter wide strip of beach from the limit
of the Public Zone inland. In this zone, the government can only grant leases
called concessions for the period of 5 to 20 years. People can rent land here
for any business or occupation.
2. The Public Zone (Zona
Publica): This zone is a 50-meter wide strip of beach between the high tide
line and the outer line of the Restricted Zone. This zone is open to the public
but private ownership or activity on this area is strictly prohibited.
The Costa Rican Government imposes some restrictions on leases or
concessions held by foreigners. For instance, foreigners must first have five
years of legal residence in Costa Rica before they can pursue activities in the
restricted zone.
Condominium Law (Ley de
Condominio)
In Costa Rica, there is a specific “Condominium
Law” that provides certain benefits to the developers of various types of
properties, including single family residence projects, finished lot projects,
condos, etc. This law allows a developer to restrict as well as regulate certain
aspects of the development. Ownership of property in condominium is fee simple
ownership, but typically carries few additional restrictions imposed by the
developer. It is advised that the owner of the property should give you a copy
of the by-laws to check for architectural guidelines, land use restrictions, and
other limitations that may be applicable on your property. Each Condominium
development has its own by-laws. Most often, developers use the condominium laws
to allow them to build private roads in a condo development and set
architectural guidelines. For the most part, condominium laws are designed to
protect the integrity of a development and maintenance of the projects for
benefit of the community of owners at large.
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