Costa Rica Real Estate FAQ

1. Do I need to use a Real Estate Broker?

Very simply, YES! When buying property in Costa Rica , you should always use an agent who knows the area and actually lives there. Choosing the right agent can be invaluable, not only during your purchase but also after the sale is complete. Check around, talk to people who live there, ask questions and get recommendations then actually talk to the agents…It’s all about being comfortable with the agent you choose and that they have a good reputation in the area and knowledgeable. Be careful of the “Part Time” Realtors on the street who are ready to show you their latest great deal only to receive a commission.

2. Do I need an attorney?

Yes, most definitely and one who is reputable and knows CR Real Estate Law! PJL Properties will refer the services of a reputable attorney in the area who speaks your language and knows the specific needs of foreign property purchasers who wish to buy property in Costa Rica .

3. As a foreigner can I buy and own property in Costa Rica ?

Foreigners enjoy the same ownership rights as Costa Rican citizens guaranteed by the constitution regardless of whether the property is placed in the name of a corporation or in the name of an individual.

4. Do I need to establish residency to purchase property?

No, it is not necessary to have residency to purchase property in Costa Rica . However, living here as a foreigner you are required to leave the country for 72 hours once every 3 months in order to renew your legal status in Costa Rica.

5. How can I get a residency in Costa Rica ?

There are four basic categories, Pensionado, Rentista, Inversionista (requires a US$100,000 investment in a project in Costa Rica with Government approval and Entrepreneurial, (requires a Costa Rican Company, employing Costa Ricans).

The first two Costa Rica residency categories are very "mechanical" in their procedures, requiring minimal supporting documentation, including a birth certificate, police report, passport copy, and financial responsibility letter (US$600 per month U.S. for Pensionado and $1,000 per month U.S. for a minimum of five years for Rentista), all properly certified and authenticated, in the Country of origin.

A party in the 'Rentista' category or 'Pensionado' category, may not work as an employee in the country, but may manage their own business through a Costa Rican Corporation. Permanent Costa Rica Residency Status may be applied for by a party who has maintained any of the foregoing Residency Status, for a period of not less than five years. This status is unrestricted as to working, or any other matter, except voting.

The second two Costa Rica residency categories are much more complicated, requiring a lot of accounting support documentation, business plans, etc., and must be applied for by a party who is residing outside of the country. These latter two categories are much more risky to undertake, and much more discretionary in their approval.

6. What do I need to know about buying property in Costa Rica ?

First and most important, retain the services of an attorney to perform the title search in the Public Registry and discuss acquiring the property personally or through a legal entity of a Corporation. In order to perform the title search, the attorney requires the property number called the Folio Real or Plano Catastro number and/or the name of the owner. The Public Registry maintains an accurate database of registered properties and the title search will verify the identity of the owner, property size, and location and whether the title is free and clear of any encumbrances, such as liens, mortgages or pending legal actions. Ask to see an official Registry Survey of the property. If there are obligations promised by the seller requiring water or access etc. be sure to include these things in the written agreement. This is also the time to verify the property taxes are up to date. The process of buying property in Costa Rica requires due diligence and PJL Properties will work closely with the attorney to insure a smooth closing that will be completed to everybody's satisfaction.

7. Once I have found the property, then what?

Having selected your piece of paradise, your attorney will then start the due diligence of verifying the legalities of the property and start the purchasing process, particularly your rights in a foreign country. This is where PJL Properties will ensure that you have expert assistance and will guide you through each step of the buying process. The first step is to establish an earnest money deposit agreement together with a down payment. This is usually 10% of the purchase price. Within this agreement you accept the terms and conditions to purchase the property while removing the property off the mark et and reserve it until your attorney has completed the due diligence steps.

8. How is title transferred?

Title is transferred through a Public Deed and registered by your licensed Notary/Attorney in the Property Department of the Public Registry Office. Once the deed is accepted for registration, the Public Registry will return the original document with all the documentary stamps affixed to it and properly sealed. Assuming no defects in the transfer deed, it should be registered by the Public Registry within 45 to 60 days after presentation.

9. What if I found a property myself I want to purchase?

PJL Properties will be glad to assist you and offer professional service during the whole purchase process. We will be an intermediary between the seller and purchaser in order to help with the negotiation and purchase.

10. Is there financing available in Costa Rica ?

Financing has just recently become available to foreigners through a few banks but still not readily available and can be very complicated. Most of the deals in Real Estate are cash deals or financed by the seller, usually for a short term with high down payments. Most of the time a buyer can get better rates and faster approval taking a mortgage in their home country on property they have there to purchase property in Costa Rica .

11. How is title transferred in relation to financing?

If the seller is financing a large percentage and a mortgage needs to be drafted to guarantee payment, the seller can request that his attorney draft the transfer deed. If the property is purchased 50 percent cash and 50 percent financed, it is common for the buyer's attorney and seller's attorney to jointly draft the transfer deed and mortgage in a single document. The buyer may insist that his attorney draft the transfer deed and the seller's attorney draft a separate mortgage document. In this case, because the mortgage is being drafted separately, it carries a higher registration fee.

12. How much are closing costs?

In general, the buyer and seller share equally in the closing costs but can be modified depending on the transaction. Closing costs for notary fees are based on the real sales price of 1.5% from the first one million Colones, the local currency, and 1.25% on the balance. The transfer land tax, legal fees and registration fees are based on the registered declared value of the property in the National Registry which are about 2.5%.

13. How much are property taxes?

Property taxes in Costa Rica are very low compared to other countries. Property taxes are administered by the local Municipality and varies throughout the country. Paid quarterly, the type of property, location and other factors contribute to the calculation of this tax and are also based on the declared value of the property. This tax is applicable throughout the country regardless of the properties location and payable when transferring title, typically .0025% of the registered value.

14. Is there a capital gain tax?

A nice incentive for foreign investment is there is no capital gain tax. You would be obligated to pay taxes on any "declared" earnings being brought back to your country of citizenship.

15. Can I register title of the property in my own name?

The decision to have the property registered in your own personal name or in the name of a corporation is strictly up to the investor. If you should decide to register the property in the name of a corporation, it is very common and easy practice and can offer benefits of asset protection and anonymity for the purchaser. The cost depending on the attorney you use will usually run between $700 and $850.

16. How do I ensure clear title to the property?

It is important that your attorney follow through with the necessary steps to properly register the property, and more importantly, be assured that the property in question is free of all liens and encumbrances before buying the property. The National Property Registry located in San Jose , where all property documents are recorded, thus a title search at the Registry would confirm good title and proper ownership. In the event that adjustments were made to any given title, these alterations must be recorded at the Registry. The Public Registry report provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title.

17. What are the regulations for beachfront properties?

The Maritime Zone Law regulates the land within the 200 meter zone from the high tide of the ocean, which belongs to the government, with some exceptions where title was registered under Law No. 4558 that granted title within the 200 meter zone up to the 50 meter point. The first 50 meters from the high tide mark are considered public areas and can not legally be built on. The next 150 meters are subject to either titled, concession or leasehold rights granted by the local government with terms and conditions.

18. What is the meaning of "titled to the 50 meter line"?

An exception to the concession properties located inside the Maritime Zone is when the property was registered prior to 1973, in which case it has full title and can be transferred as such. This is a rare opportunity as less than 5% of Costa Rica’s beachfront is considered titled with 100% ownership like any other properties outside the Maritime zone. No concession property can be converted to titled property.

19. What is "concession property"?

Concession property is defined as the right to use and enjoy a specific parcel of beachfront land for a pre-determined period of time (usually 5 to 20 years) and a pre-determined use of that land through zoning or master plan known as a Plan Regulador. The Government grants this concession right by a private agreement between the buyer and the local municipality that is then recorded in the National Public Registry with an established yearly concession fee that is based on the appraisal performed by the government. At the moment of expiration, concessions can be renewed for a similar period of time. To legally lease concession property, foreigners applying for concession rights must have lived in Costa Rica for five years prior to applying. It is also required that you have a Costa Rican partner that owns at least 51% of the corporation until the lease-concession is granted by the government. Most importantly, keep in mind that when you buy concession property you do not actually acquire title to the land, but rather the right to utilize it for a specified period of time.

20. Should I Build or Buy an existing home?

This all depends on the client and preference. If you can be here during the construction phase then consider building, you will get more for your money and a home design you want. However, if you can not be here during the construction phase then I do not recommend building. You also need to take into consideration that things do not happen as quickly in CR as they do in North America so the old saying “Patience is a virtue” is definitely applicable here in CR. Once the buyer has purchased the property, you must hire an architect who then is responsible for drafting the plans, soil tests, survey for property boundaries and submitting to the 5 different Government agencies required for approval to obtain building permits.

21. What will it cost me to build my home?

The building costs are estimated between $70 to $85 per square foot (and up) for closed, good quality construction. This will include the walls, floors windows, doors, roof, electric and plumbing. Excluding furniture, appliances and landscaping. These costs also depend on the type and price of material you use, construction style, the contractor and your location.

22. How do I find a reputable builder or contractor?

Ask questions in the area of people who live there, interview different builders, ask for references and have them show you some of the projects they have actually completed.

23. Do I need to worry about “squatter” issues?

This is a good question! If you have not bought a property within a complex like a condominium or residential community with on site administration, I recommend that you hire a caretaker or property manager, especially in more remote areas. It is always better to be safe than sorry.


	Buying property in Costa Rica : Frequently asked Questions and Answers! 1. Do I need to use a Real Estate Broker? Very simply, YES! When buying property in Costa Rica , you should always use an agent who knows the area and actually lives there. Choosing the right agent can be invaluable, not only during your purchase but also after the sale is complete. Check around, talk to people who live there, ask questions and get recommendations then actually talk to the agents…It’s all about being comfortable with the agent you choose and that they have a good reputation in the area and knowledgeable. Be careful of the “Part Time” Realtors on the street who are ready to show you their latest great deal only to receive a commission. 2. Do I need an attorney? Yes, most definitely and one who is reputable and knows CR Real Estate Law! PJL Properties will refer the services of a reputable attorney in the area who speaks your language and knows the specific needs of foreign property purchasers who wish to buy property in Costa Rica . 3. As a foreigner can I buy and own property in Costa Rica ? Foreigners enjoy the same ownership rights as Costa Rican citizens guaranteed by the constitution regardless of whether the property is placed in the name of a corporation or in the name of an individual. 4. Do I need to establish residency to purchase property? No, it is not necessary to have residency to purchase property in Costa Rica . However, living here as a foreigner you are required to leave the country for 72 hours once every 3 months in order to renew your legal status in Costa Rica. 5. How can I get a residency in Costa Rica ? There are four basic categories, Pensionado, Rentista, Inversionista (requires a US$100,000 investment in a project in Costa Rica with Government approval and Entrepreneurial, (requires a Costa Rican Company, employing Costa Ricans). The first two Costa Rica residency categories are very "mechanical" in their procedures, requiring minimal supporting documentation, including a birth certificate, police report, passport copy, and financial responsibility letter (US$600 per month U.S. for Pensionado and $1,000 per month U.S. for a minimum of five years for Rentista), all properly certified and authenticated, in the Country of origin. A party in the 'Rentista' category or 'Pensionado' category, may not work as an employee in the country, but may manage their own business through a Costa Rican Corporation. Permanent Costa Rica Residency Status may be applied for by a party who has maintained any of the foregoing Residency Status, for a period of not less than five years. This status is unrestricted as to working, or any other matter, except voting. The second two Costa Rica residency categories are much more complicated, requiring a lot of accounting support documentation, business plans, etc., and must be applied for by a party who is residing outside of the country. These latter two categories are much more risky to undertake, and much more discretionary in their approval. 6. What do I need to know about buying property in Costa Rica ? First and most important, retain the services of an attorney to perform the title search in the Public Registry and discuss acquiring the property personally or through a legal entity of a Corporation. In order to perform the title search, the attorney requires the property number called the Folio Real or Plano Catastro number and/or the name of the owner. The Public Registry maintains an accurate database of registered properties and the title search will verify the identity of the owner, property size, and location and whether the title is free and clear of any encumbrances, such as liens, mortgages or pending legal actions. Ask to see an official Registry Survey of the property. If there are obligations promised by the seller requiring water or access etc. be sure to include these things in the written agreement. This is also the time to verify the property taxes are up to date. The process of buying property in Costa Rica requires due diligence and PJL Properties will work closely with the attorney to insure a smooth closing that will be completed to everybody's satisfaction. 7. Once I have found the property, then what? Having selected your piece of paradise, your attorney will then start the due diligence of verifying the legalities of the property and start the purchasing process, particularly your rights in a foreign country. This is where PJL Properties will ensure that you have expert assistance and will guide you through each step of the buying process. The first step is to establish an earnest money deposit agreement together with a down payment. This is usually 10% of the purchase price. Within this agreement you accept the terms and conditions to purchase the property while removing the property off the mark et and reserve it until your attorney has completed the due diligence steps. 8. How is title transferred? Title is transferred through a Public Deed and registered by your licensed Notary/Attorney in the Property Department of the Public Registry Office. Once the deed is accepted for registration, the Public Registry will return the original document with all the documentary stamps affixed to it and properly sealed. Assuming no defects in the transfer deed, it should be registered by the Public Registry within 45 to 60 days after presentation. 9. What if I found a property myself I want to purchase? PJL Properties will be glad to assist you and offer professional service during the whole purchase process. We will be an intermediary between the seller and purchaser in order to help with the negotiation and purchase. 10. Is there financing available in Costa Rica ? Financing has just recently become available to foreigners through a few banks but still not readily available and can be very complicated. Most of the deals in Real Estate are cash deals or financed by the seller, usually for a short term with high down payments. Most of the time a buyer can get better rates and faster approval taking a mortgage in their home country on property they have there to purchase property in Costa Rica . 11. How is title transferred in relation to financing? If the seller is financing a large percentage and a mortgage needs to be drafted to guarantee payment, the seller can request that his attorney draft the transfer deed. If the property is purchased 50 percent cash and 50 percent financed, it is common for the buyer's attorney and seller's attorney to jointly draft the transfer deed and mortgage in a single document. The buyer may insist that his attorney draft the transfer deed and the seller's attorney draft a separate mortgage document. In this case, because the mortgage is being drafted separately, it carries a higher registration fee. 12. How much are closing costs? In general, the buyer and seller share equally in the closing costs but can be modified depending on the transaction. Closing costs for notary fees are based on the real sales price of 1.5% from the first one million Colones, the local currency, and 1.25% on the balance. The transfer land tax, legal fees and registration fees are based on the registered declared value of the property in the National Registry which are about 2.5%. 13. How much are property taxes? Property taxes in Costa Rica are very low compared to other countries. Property taxes are administered by the local Municipality and varies throughout the country. Paid quarterly, the type of property, location and other factors contribute to the calculation of this tax and are also based on the declared value of the property. This tax is applicable throughout the country regardless of the properties location and payable when transferring title, typically .0025% of the registered value. 14. Is there a capital gain tax? A nice incentive for foreign investment is there is no capital gain tax. You would be obligated to pay taxes on any "declared" earnings being brought back to your country of citizenship. 15. Can I register title of the property in my own name? The decision to have the property registered in your own personal name or in the name of a corporation is strictly up to the investor. If you should decide to register the property in the name of a corporation, it is very common and easy practice and can offer benefits of asset protection and anonymity for the purchaser. The cost depending on the attorney you use will usually run between $700 and $850. 16. How do I ensure clear title to the property? It is important that your attorney follow through with the necessary steps to properly register the property, and more importantly, be assured that the property in question is free of all liens and encumbrances before buying the property. The National Property Registry located in San Jose , where all property documents are recorded, thus a title search at the Registry would confirm good title and proper ownership. In the event that adjustments were made to any given title, these alterations must be recorded at the Registry. The Public Registry report provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title. 17. What are the regulations for beachfront properties? The Maritime Zone Law regulates the land within the 200 meter zone from the high tide of the ocean, which belongs to the government, with some exceptions where title was registered under Law No. 4558 that granted title within the 200 meter zone up to the 50 meter point. The first 50 meters from the high tide mark are considered public areas and can not legally be built on. The next 150 meters are subject to either titled, concession or leasehold rights granted by the local government with terms and conditions. 18. What is the meaning of "titled to the 50 meter line"? An exception to the concession properties located inside the Maritime Zone is when the property was registered prior to 1973, in which case it has full title and can be transferred as such. This is a rare opportunity as less than 5% of Costa Rica’s beachfront is considered titled with 100% ownership like any other properties outside the Maritime zone. No concession property can be converted to titled property. 19. What is "concession property"? Concession property is defined as the right to use and enjoy a specific parcel of beachfront land for a pre-determined period of time (usually 5 to 20 years) and a pre-determined use of that land through zoning or master plan known as a Plan Regulador. The Government grants this concession right by a private agreement between the buyer and the local municipality that is then recorded in the National Public Registry with an established yearly concession fee that is based on the appraisal performed by the government. At the moment of expiration, concessions can be renewed for a similar period of time. To legally lease concession property, foreigners applying for concession rights must have lived in Costa Rica for five years prior to applying. It is also required that you have a Costa Rican partner that owns at least 51% of the corporation until the lease-concession is granted by the government. Most importantly, keep in mind that when you buy concession property you do not actually acquire title to the land, but rather the right to utilize it for a specified period of time. 20. Should I Build or Buy an existing home? This all depends on the client and preference. If you can be here during the construction phase then consider building, you will get more for your money and a home design you want. However, if you can not be here during the construction phase then I do not recommend building. You also need to take into consideration that things do not happen as quickly in CR as they do in North America so the old saying “Patience is a virtue” is definitely applicable here in CR. Once the buyer has purchased the property, you must hire an architect who then is responsible for drafting the plans, soil tests, survey for property boundaries and submitting to the 5 different Government agencies required for approval to obtain building permits. 21. What will it cost me to build my home? The building costs are estimated between $70 to $85 per square foot (and up) for closed, good quality construction. This will include the walls, floors windows, doors, roof, electric and plumbing. Excluding furniture, appliances and landscaping. These costs also depend on the type and price of material you use, construction style, the contractor and your location. 22. How do I find a reputable builder or contractor? Ask questions in the area of people who live there, interview different builders, ask for references and have them show you some of the projects they have actually completed. 23. Do I need to worry about “squatter” issues? This is a good question! If you have not bought a property within a complex like a condominium or residential community with on site administration, I recommend that you hire a caretaker or property manager, especially in more remote areas. It is always better to be safe than sorry.
		Member of Costa Rica Chamber of Realtors
penny@pjlproperties.com			site designer

Buying property in Costa Rica : Frequently asked Questions and Answers!