Buying Property in Costa Rica: A Guide

Costa Rica, with its natural beauty and pure lifestyle, is fast becoming one of the most sought-after destinations to own property. People who want to settle down after retirement and those who want to invest in a second home, are two of the categories who are most interested in investing in property in this beautiful country. There are various reasons for this growing interest in Costa Rica – it was recently voted as the happiest country in the world; it has one of the highest life expectancies; and it has the 7th most stable government in the world. These factors have contributed in making it the most popular destination to spend post-retirement days peacefully. There are many real estate products such as houses, time-shares, condominiums, farms, beachfront property and so on, in which you can invest in Costa Rica.

If you are thinking of investing in some property in this paradise, there are certain points you need to keep in mind. First and foremost, whenever you are purchasing property overseas, always do research on the destination, the property and the buying laws of the specific country - in this case Costa Rica. In this country, most of the properties are registered in Folio Real which is a computer system where you can search all the data of a particular property such as its area, location, ownership, mortgages etc. It is recommended that, before choosing any property, a search must be performed on this system. If the property that you are interested in buying is not registered in the folio, then you can search for the same in the public registry.

After you have found the property and are satisfied with all the information and details about it, then the next question you should ask yourself is whether you are getting:

• Ownership Rights – the property is registered and you are the owner of the land and are free to sell it, use it, improve it or lease it. This is also known as fee simple ownership and under this, you as a foreigner, has the same rights a citizen of Costa Rica.
• Occupational Rights – the property is not registered and you are merely dealing with the land. As the property is not registered, it can not be title-searched and you would have to go through a long process of getting it registered. These untitled properties are pretty risky to buy as the person selling to you has no proof of ownership.
• Concessions Rights – this is applicable mostly for beachfront properties and a large percentage of it comes under maritime zone. The first 200 horizontal metres from the line of high tide are known as the maritime zone. Out of these 200 metres, the first 50 metres are not available for any kind of ownership and the remaining 150 metres are free for concessions. Under concession rights, you can use the property for a stipulated period of time; generally for 20 years, but you can’t own the property... you can see it as a lease. To own concession property you have to get into a partnership with a citizen of the country as an outsider is not allowed to own property in the maritime zone.

There are many Different ways of Acquiring Properties in Costa Rica:

• You can acquire property directly in your own name.
• You can acquire property through a corporation. This is the most common method of purchasing property. You can set up a corporation – which is not very complicated - and then you can control your property anonymously. Also, if a corporation acquires the property of another corporation, then the new corporation doesn’t have to pay any taxes or stamps duties because technically, you just buy the shares in the existing property and no transfer is required. If you buy property from an existing corporation by forming a new corporation, the property would be transferred in your name and you would need to pay the transfer taxes and the stamps fee.

The next step is to get a public notary to prepare a document known as the transfer of conveyance deed. This deed details the information about the buyer and the seller as well as about the property. It also includes any special terms regarding the sale such as any mortgages on the property. This deed has to be recorded in the notary book of the attorney as well as in the public registry. When the notary presents the deed in the registry, it saves the property from being sold off to a third party. The registry then reviews the deed and when the registry clears it, the property is registered in the new owner’s name. As the system of “first in time, first in right” operates in Costa Rica, it is very important to prepare the deed and present it in the registry before anyone else does.

In addition to registering in the public registry, you also have to submit a property survey in the Cadastral Office in order to acquire or even transfer a property. So, the final approval of a property is only done when the three agencies, which are the public registry of properties, the Cadastral Office and the municipal authority of that area, see the deed and give it the go-ahead.

In Costa Rica, if you want to invest in some property, then finding out about their laws is the first thing you ought to do. And hiring an attorney that is well-versed in the Costa Rican property laws comes second. When buying property in foreign country, you have to go according to the laws of that country and the same applies for Costa Rica too… but once you have a better understanding of these laws, investing here is a piece of cake!