Commonly asked Questions about Costa Rica Real Estate
Can I or other Foreigners Buy and Own Property in Costa Rica?
A: The good news is, yes! The great part about Costa Rica is that foreigners and locals have the same ownership rights when it comes to buying property. Foreigners can buy property on a tourist visa without ever needing to apply for residency or citizenship. Title Insurance companies make purchasing real estate in Costa Rica as risk free as in the United States or Canada
Is buying property in Costa Rica a good investment?
A: Many investment properties in Costa Rica can offer strong returns through rental income and appreciation. Additionally, there are significant tax benefits for those who purchase investment property in Costa Rica.
What are the pitfalls of buying property in Costa Rica?
A: The common pitfalls of buying property in Costa Rica include inadequate due diligence, relying solely on verbal agreements, not understanding local laws and regulations, and failing to hire experienced legal and real estate professionals. It is important to consider the unique property laws in Costa Rica. As your real estate agent I can assist you in avoiding these pitfalls.
Do I need to be a resident of Costa Rica to buy real estate In Costa Rica?
A: No. When you do buy real estate as a non resident, you have the same rights of ownership as a citizen or residents.
Does buying real estate in Costa Rica give me residency?
Does buying real estate in Costa Rica give me residency?
A: Real estate is one of the types of investments that qualifies you to apply to be a resident of Costa Rica. This means that by owning real estate in Costa Rica you’ll have the ability to apply for legal residency. Currently an individual requires 150,000 US to qualify for a residency based on investment.
Can people own ocean front property excluding 50 meters of the actual beach?
A: In 1976, all owners of ocean front land were asked to register the land with the local and national public registry offices and attained full title for the land to the 50 meter line. This is what is referred to as prime ocean front property. Only about 15% of the total coast line of Costa Rica was registered. Being aware of what the legal conditions of ocean front property are is crucial to not having unexpected surprises. Due to the rarity of titled ocean front property it can be very expensive in areas where people want to live and enjoy paradise.
Are there any other restrictions to owning ocean front property?
A: In the majority of the country, in most cases the next 150 meters land inward from the 50-meter coastal zone is owned by the municipality, and can only be leased in the form of a concession. For a foreigner to lease this land, a Costa Rican must own more than 50% of the company which has control of this lease. Within my team of experts we can guide you through the process if you are consider investing in concession property. Land use restrictions and/or zoning will likely affect this leased land. I am happy to research restrictions and guide you through the process of investing in these sometimes spectacular properties.
Does Costa Rica allow riparian rights along ocean beaches?
A: Typically 50 meters from the high tide line is public property. There are very limited exceptions that allow riparian rights in Costa Rica. Normally no permanent structure may be placed on this land. Temporary structures are permitted in some circumstances; for instance, landscaping in front of a hotel. Except in rare circumstances beach access is guaranteed to all beaches in Costa Rica.
What does the term concession property mean in Costa Rica?
A: When inquiring about some properties in Costa Rica you may come across the term “Concession Property”. Concession means the owner has a lease with the Costa Rica government for a specific period of time. The lease period is usually 20 years, and multiple lease terms can be acquired and or renewed.
Can I own beach front property in Costa Rica with Riparian rights?
A: As of this time there are very few Ocean Beachfront properties in Costa Rica with riparian rights.
Almost all “riparian beachfront property” in Costa Rica is public property. That being said, there are some fully titled land near the beach adjacent to the 50 meter public property easement.
Does Costa Rice have a process to Title Real Estate?
A: Almost 90%of the land in Costa Rica is titled. My office can check Property title on the National registry. Land that has not changed hands for many years may not be titled. There was a major change in land titles in 1976.
Are there types of properties that may be risky for me to purchase?
A: If title to the property is not registered, registration is difficult, complicated and expensive. The buyer may spend years in the court system sorting out other claims to the land. Purchasing land that is not titled puts your investment at risk and can lead to other expensive problems.
Are Properties in Costa Rica Registered with the government?
A: The Central Registry for land in Costa Rica is a computerized system similar to some places in North America and Australia. Costa Rica’s land registration system is not as sophisticated and does not have the same protections as the Torrens land registry system found in Western Canada.
Can I register a mortgage on a property as security for my loan?
A: Mortgages and liens can be registered against the title of real estate in the country of Costa Rica. This mechanism can provide security for real estate investments.
If a property is registered with the government can there still be problems?
A: If a piece of land is titled and registered for the first time (this includes a previous undivided interest registered as a separate parcel for the first time) claims may be made against the title for ten years.
Purchasing land or accepting as security land that has been registered for less than ten years can be problematic at best. Sometimes family members and other interested parties can come out of the wood work to come after a property they feel is theirs. Your best line of defence from being scammed is always use a top real estate professional.
Can I buy title insurance?
A: Title insurance can be acquired through a few different title companies in Costa Rica including Stewart Title or Latin American Title a division of Chicago Title. It is always best to check with your lawyer when buying title insurance.
Are Deposits Required when I buy Real Estate In Costa Rica?
A: Deposits are common in Costa Rica, and can be made into several different third party trust accounts. I strongly advise you use our approved escrow company and an approved law firm to handle the money used to buy real estate in Costa Rica. There have been serious issues in the past with unscrupulous parties handling money. Unsuspecting individuals buying real estate privately have been scammed out of large sums of money.
Are Options and Transfer contracts legal in Costa Rica?
A: Options and assignments to sell properties are legal, but cannot be registered at the Registry of Properties as a legitimate right affecting a property. It is, therefore, possible that even if you have an option, a disreputable person could sell the land to someone else, leaving only the courts as recourse to recover the deposit or other damages. Always use a Real Estate professional that is registered with SUGEF when trading in real estate in Costa Rica..
Who or What is SUGEF?
A: The law of Costa Rica requires that all real estate professionals be registered with SUGEF. SUGEF is the department of the Costa Rican government responsible for protecting Costa Rica from money laundering, tax evasion and serious financial crimes. Costa Rica is serious about protecting their country from serious criminal behaviour, which is what makes Costa Rica one of the safer countries in the world to live.
What Fees will I be subject to when I buy real estate in Costa Rica.
A: There is a tax of 1.5% of registered value for the transfer of property. Total government tax, registration and stamp fees will run about 3.5% of the registered value of the property. On top of this legal fees run about 2% for a total of about 5.5%
Can I negotiate who pays the fees when I buy real estate?
A: When a property is purchased, it is assumed the buyer will cover all purchase costs. In many cases, it can be negotiated so that the buyer and seller will split the cost of legal and transfer fees. If the purchase is cash, the purchaser has the right to choose the lawyer. If the vendor holds a mortgage on the property he has the right to choose the lawyer. This too can be negotiated. Legal fees and costs will be around 2% of the property-selling price bringing the total transfer cost to approximately 5.5% of the price. However, in many cases nowadays, properties are held in corporations this may have an effect on fees and taxes upon closing. Most major developments have the properties held in a corporation.
Are there Property Taxes on Real Estate in Costa Rica?
A: The municipality collects municipal government property tax. Currently this is 0.25% of the registered value of the property. The registered value with the government in many cases does not reflect the actual value. Values reported to the government are usually kept as low as possible so that property taxes stay as low as possible. Houses with a registered value of less than ¢6,147,000 are exempt. There is also a local community government charge. This is based on the frontage of the property and varies in each area, but is usually not over $10 per month per residence. There is also a new property tax for luxury homes, which is any property registered above $190,000.00. When buying check the registered value of the property. This will give you an idea of what the municipality will charge each year.
How do Leases and Rental of Property work in Costa Rica.
A: The courts favour renters rights in Costa Rica. When you use my services you have access to a tremendous real estate team to guide you through all of your real estate rental needs before during and after the sale. For instance, the lawyer I use is one of the best in Costa Rica. I have a couple excellent property management companies with years of experience and top professional practices.
If you decide to rent your property long term on your own here a couple of tips for you. Always have a written agreement. If a tenant begins to miss payments do not change the locks or cut off utilities because one could end up in a losing battle in court by doing so. There are restrictions on allowable rental increases and improper increases may not hold up in court. It is best to rent to people who hold some type of property that you can used as collateral and security. Improperly drafted agreements could make it difficult or impossible to increase rents, or remove tenants from a property. Regardless of the term specified on a rental or lease agreement, the terms and conditions will apply for a minimum of three years. If rental increases are not specified in the agreement it will not be possible to raise rents without the agreement of the tenant. Rental increases may be included in a lease agreement, and may take place a minimum of every six months.
Squatters... Who You Gonna Call?
A: With reasonable diligence, a top real estate professional, and a good lawyer your risk of squatter issues are minimized. That being said there are things to remember about Squatters rights. It is illegal for people to move onto a piece of property which they do not own without permission from the owner. Typically it takes 10 years for Squatters to establish rights to a property. Establishing squatters rights is very difficult. It may be possible for them to claim a legal right to live there, if they somehow acquire a “right of possession” sooner. Once acquired, this right of possession can be sold to others. An employee hired to guard a property cannot become a squatter. An employment agreement with the watchman is a good idea. Also, if anyone will be taking care of the property make sure to create a professional services contract with them and collect receipts that they have been paid by the true owner to take care of the property not that they have done it on their own.
When we work together to meet your real estate goals you become part of an amazing professional team.
Rest assured when you hire me as your “Realtor” I will be here to look after your real estate needs before, during, and after, the purchase &/or sale. My clients and customers have become and remain friends for my entire 30 year real estate career. We have always used a team approach, whether its family or business.