Acquisition costs |
Real estate agents (agentes) or brokers (corredores de bienes raices) receive a
commission from the seller, ranging between 5% and 10% of the purchase price when the sale closes.
After finding property, one will need an attorney. The attorney is
responsible for protecting one’s interests during the negotiations and
the closing. The attorney will also check the property’s registration
and inform the buyer of the legal status of the property.
Hisresponsibilities also include negotiating conditions and clauses in
the contract. It is best to agree on a fee at the beginning of the
relationship. The fee can be a fixed rate, percentage of purchase
price, hourly or any combination. One should have the agreement in
writing to avoid misunderstandings. Notarial fees must also be paid for
the notarization and registration of the closing. These fees have a
fixed rate and are established by executive degree. Other fees include
property taxes, stamp taxes and registry fees. All of these fees
together represent approximately 5% of the purchase price.
Acquisition Costs: (NAI Global 2005)
Transfer tax: 3.0%
Agents Fees : 5.0%
Legal Fees: 1.5% |
Property and ownership information |
All
information regarding titled property is registered in the Registro
Nacional, the property registry. This registry should show the legal
owners, all liens, encumbrances and related contracts affecting the
property. |
Transaction information |
Open listings for agents are: Information N/A.
Exclusive listings for agents are: Information N/A.
Information on the Registro Nacional does not make reference to a properties selling prices and terms. |
Real estate trade association |
There are two associations that allow membership to licensed real estate agents and brokers.
1. Costa Rican Chamber of Real Estate Agents (Costarricense de corredores de bienes Raices)
2. Costa Rican American Chamber of Commerce (AMCHAM) |
License requirements |
People
acting as real estate agents and brokers are not necessarily licensed.
There are rules and regulations as to the process and almost anyone can
act as an agent or broker. The agent or broker has no legal obligation
to the buyer other than helping one reach an agreement with the seller.
Most agents will act as intermediaries in the negotiation of price and
purchase conditions. Some agents may have studies made in the Registro
in reference to the property. One should check a prospective agents
reputation and whether or not he/she is an association member. |
Land description meters and bounds survey system |
The
Plat Registry (Catastro), which is part of the Registro Nacional,
should have a registered plat or map of the property. The map should
include: the owner, location, size, boundaries, reference to the
registration and, sometimes, information on surrounding properties. |
Rights and interests in land |
If
property taxes, transfer taxes or any other taxes are delayed in
payment, the property assessed will become security for that payment.
The government will then have the right to secure a tax lien against
the property. Article 45 of the Costa Rican Constitution provides
protection for private property. No person can be deprived of his
property unless a justified public interest is legally proven. If this
is the case, the person must be previously and justly compensated. In
the past, problems arose with foreigners over expropriations. New
Constitutional amendments have made it difficult for expropriations,
especially those without compensation In Costa Rica, if a property
owner dies and there are no heirs, the property will revert to the
government.Fee simple estates seem to be the common way to possess
property. There are two different kinds of leaseholds in Costa Rica, an
urban leasehold (contracto de inquilinato) and a common leasehold
(arrendamiento civil). In the urban leasehold, the tenant is protected
by a statute called the ley de inquilinato, this applies to urban
property leased for housing, office space, commercial or industrial
purposes. Under this type of leasehold, it is almost impossible to
evict a tenant. The second type of leasehold, the civil lease, is a
contractual lease in which the parties agree to their contractual
obligations. This type of lease is regulated by civil code, and is
restricted to what is said in the contract. This type of lease is
usually found in farms and other agricultural property. With
both lease types, registration is not required, but the leases can
affect the property. When purchasing property, one should physically
inspect the property and question the person that has possession.
Unregistered leases are common in Costa Rica. To avoid legal
issues, one should have tenants evicted prior to purchasing a property. |
Forms of ownership |
Property
can be owned individually, jointly, in trust, as household property, or
in the name of corporations, or any combination. One or more
individuals or companies can own at any time. For estate planning
purposes, the most common way to own property has been through
corporations. All of the stock in a corporation can be owned by one
individual. Joint property ownership can be a percentage of the
property or be physically localized on the property. |
Transfer of title |
A
property will be registered (Torrens System) when purchased, therefore
a deed is not necessary. To make sure that a property has been
registered, one should ask for a copy of the closing document
(testimonio) with seals showing property registration. One may also
obtain a certificate (certificacion) showing registry at the Registro
Publico. There are many cases of adverse possession in Costa Rica,
especially with unattended farm land. If squatters take possession of a
property, the owner must seek legal intervention to remove them. If the
squatters have been in possession for less than ten years, the owner
should be able to retain title and remove them. The procedure to
removing the squatters usually takes considerable time and effort, so
it is advisable to avoid purchasing unused land. |
Recordation and transfer of title |
:
In Costa Rica, all properties (fincas) are registered in the Property
Section of the Registro Publico under the Registro Nacional.
Condominiums are registered in a special section called Horizontal
Property (Propiedad Horizontal). Property subject to condominium laws
and regulations is registered under a general entry (mother
property-finca madre) and each individual unit is registered as a
sub-entry (finca filial). In the Registro under property entries, one
will find all entries that affect the title. From
these entries, one must refer to specific registries or sections
where liens, encumbrances, leases, and other entries are registered.
Title insurance is not currently available, it should not be
necessary if it is done by the Registro. Costa Rica’s property
registration system can be considered a form of the Torrens system. The
Registro Nacional should have the history of the property with all of
its encumbrances.
All property registered under Costa Rican Civil law is titled
property. Untitled property can not be registered. It is possible to
purchase the rights to untitled property, but there are substantial
risks and no way to be sure that the owner is the legal owner. |
Contracts |
Contracts
are not as comprehensive as in other countries. Due to the Costa Rican
civil law system, contracts only cover the items that the law does not
mandate. Some agents have contracts establishing their right to list
your property. This is not common practice. Contracts are prepared by
the notary who is also responsible for closing and recording the
transaction. |
Mortgages |
The
two most common types of mortgages are the normal mortgage (Hipoteca
Comun) and the bond mortgage (Cedula Hipotecaria). A normal mortgage is
security for the loan, with the property being sold to collect loan
costs if the loan is not paid. The mortgage can be assigned, but
transfer costs will be about the same as a new loan. A bond mortgage is
in the form of a document. The owner of the document has the right to
collect specified payments from the property owner. If payments are not
made, the document owner can sell the property through court
proceedings and keep the proceeds. The document owner has the right to
go after the property owner if proceeds from the sale are not enough to
cover the debt. |
Financing and lending practices |
One
can receive loans on single family homes, townhomes and condominiums,
apartment buildings, commercial projects and industrial projects. The
real estate mortgage bond market has really taken off with the Costa
Rican government passing laws allowing contracts to be conducted in the
US dollar and recognized in English. People are now able to borrow at
much better rates and in a stronger currency. Although private banks,
many sponsored by US banks, are becoming more prevalent in Costa Rica,
the three state banks are the only banks that are 100% insured. The
real estate bond market is international with a multitude of private
investors. |
Property taxes |
A
new law states that property owners must estimate the value of their
property and give it to the municipalities, which will then ask for a
payment equal to 0.6% of the estimated value after 1996. Many municipal
officials have criticized these self-made assessments as unrealistic.
Officials are urging that the implementation of the new law be delayed
until the public learns the new system. There is a transfer tax of 3% .
Information suggests that the transfer tax may have been changed to 1%. |
Closing and escrows |
Before
closing, the seller and the buyer must select a notary (notario). The
notary is responsible for drafting and registering all purchase
documents. Legally, the notary is working for both parties and should
look after both party’s interests. This obligation is not always
complied with since the notary is usually a trusted person of the party
selecting the notary. If the buyer is paying in full, he has the right
to select the notary. If the seller is financing, he has the right, and
if a bank is providing a loan, it has the right to select a notary.
Notaries have a far greater responsibility under civil law. They must
be attorneys
before being accepted to act as notaries.
Final registration of the property is not possible until all needed documents and all moneys have been given to the notary. |
Appraisal |
Independent
appraisals are available, although the appraised value is usually only
a reference and does not always reflect the actual value of the
property. |
Insurance |
All
insurance is purchased through a government corporation called the
Instituto Nacional de Seguros (INS) or National Insurance Institute.
Homeowner's insurance can be purchased to cover fire, natural
disasters, theft, and owner's liability. House contents may also be
insured. (http://www.costaricalandcorp.com/ownership.htm) |
Land use control |
During
the past few years, zoning laws have been enforced. These laws are not
registered against the property, so buyers should research them
separately. Since most easements are registered, one can determine if
any easements affect the property. Easements are either apparent (seen
on property) or non-apparent (more difficult to see). All mineral
rights in Costa Rica are government owned. Under the Costa Rican Mining
Code, the government has the power to authorize exploration and
exploitation of minerals on third party property. Property owner’s are
paid compensation for the government restricting the property’s use.
Most shoreline property is owned by the government and can only
be developed through a concession granted by the government. These
concessions are issued for five to twenty years. Yearly payments must
be made to the Concession Registry to keep it current. Foreigners have
restrictions on these concessions, they must have lived in Costa Rica
for five years as a legal resident. Also, if a corporation has title to
a concession, it is not allowed to have more than 50% foreign
ownership.
With deforestation problems, Costa Rica is making an effort to
preserve its natural forests. If one’s property is near a forestry
reserve or ecological buffer zone, one might find certain ecological
restrictions. Certain building restrictions may be imposed on new
construction or renovation. Also, builders should be careful in signing
waivers to obtain building permits. The waiver to collect
indemnification for improvements allows the government to purchase the
land without taking into account the value of improvements.
Condominium owners have their own set of regulations. These
regulations solve problems relating to commons areas. Many older
buildings are being renovated into condominiums and then subjected to
their regulations. |
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