Costa Rica Real Estate Lawyer


Why Costa Rica?

Costa Rica is fast becoming the preferred location for those looking for a stable investment option for more reasons than one. The scenic beauty is varied – beaches with golden sunsets and mountain ranges with valleys and rugged cliffs, you have it all in Costa Rica. This makes it ideal for those looking to develop real estate for commercial purposes like hotels or resorts, or even a quiet and sprawling bungalow for a home!

How stable is the governance and infrastructure backup in Costa Rica – how safe is my investment here?

The democratic government in Costa Rica is a very stable one, which encourages direct foreign investment. There are several provisions within the law to ensure maximum monetary gains while dealing with real estate properties. What's more, thanks to the appreciating economy, the real estate prices are on a steady climb – what more can buyers / sellers possibly ask for?!

How true are the stories of locals 'selling' property that they do not own?

Sad but true – yes, there have been a few instances of such fraudulent deals. However, there are precautions you can take to avoid situations of this sort, by taking the help of U.S. affiliated title / escrow companies to handle all matters related to title transfer and ownership.

What investment choices do I have in Costa Rica?

There are several options to choose from in Costa Rica: Real Estate (Raw) Land Existing House or Apartment Complex Commercial Building Hotels / Resorts Subdivision Lots Mortgages

Does zoning exist in Costa Rica?

Yes, contrary to popular belief and this is governed by the Urban Code. Zoning laws pertaining to ownership of beach front land is in particular, important; up to 200 meters from the shore line is off bounds for most investors.

Does the notary public I choose have to be an attorney?

Yes, this is mandatory. He or she has extensive powers in order to act on behalf of the state and also authenticate as well as certify the authenticity of legal documents.

Who bears the closing costs? How much does this amount to?

Usually this is borne jointly by the seller and the buyer. It is formed of various taxes and fees and this generally amounts to approximately 5% to 6% of the total sale price.

Can my IRA (Individual Retirement Account) be used to buy property in Costa Rica?

Yes! This is a fact that most people (including consultants) are not aware of. It is propagated by several leading banks and stock broker agencies that this is not possible; this is usually out of sheer ignorance or on purpose to keep their clients from wandering away – they lose valuable revenue that way! Fact however remains that the IRA savings can surely be used to buy real estate property of any sort in Costa Rica – and this is perfectly legal.

What limitations does using my IRA to buy property in Costa Rica have?

There are certain criteria that need to be adhered to as laid down by the Internal Revenue Service (IRS) regulations, which in the body that determines the rules that re to be followed by the IRA administration. As per these rules, any property purchased using the funds in your IRA are actually owned, for the benefit of your account, by your IRA fund administrator and not you personally. Later on, when the property is sold, the proceeds of the transaction including the profits are put back into your IRA. The idea is to ensure that neither you nor your immediate family must benefit from using the funds in your IRA.

What is the advantage of taking up the title in the name of a corporation?

By transferring ownership to a corporation, the property can be protected from liabilities that may be incurred by the owner. The other advantage is that title transfer in the name of a corporation is a legal way to avoid a transfer tax of 2.5% that is otherwise levied if the title is in an individual's name. It's needless to point out how this will help reduce closing costs and thereby increase profit.

Why must I invest in a title insurance cover?

Title insurance takes care of a large variety of possible problems ranging from defects in a title owing to fraud, or else due to the negligence of restrictive covenants that may prevent the use of the property. In the absence of title insurance, buyers need to be equipped to face worst-case scenarios like losing the money that was spent on the property, or even bearing the costly litigation charges in case of a property dispute. Having a policy will fetch the buyer up to the sum assured of the insurance policy if things go wrong.

How is the escrow service useful?

The primary function of the escrow agent is to provide the buyer and seller with financial management services which is a necessary precaution to prevent mishandling of funds prior to the closing of the deal. This system instills confidence in all the associated parties that funds are available and ready to be disbursed any time and hence speeds up the deal.

How easy is it for a foreign investor to procure a mortgage in Costa Rica?

Not very simple; there however are a few options like looking up owner financing or property developer financing. Also, a very limited number of banks do engage in this service after conducting background checks on the applicant.

How strict are taxation rules in Costa Rica?

Taxes are required to be paid regularly and promptly in order to facilitate a smooth property deal. These include property taxes, title transfer taxes, stamp taxes and incorporation taxes if necessary. Other fees are also involved in the title transfer process.