Costa Rica Real Estate - Legal Information

Coldwell Banker is built on a century of solid, trustworthy service. We provide clients who are interested in Costa Rica real estate with the resources they need to assist them with all legal requirements, to ensure the process runs as smooth as it would in their home country. We are backed by an excellent legal department, and can direct you to experienced bilingual lawyers endorsed by the U.S. Embassy or American Chamber of Commerce in Costa Rica. Our 10 years of local experience also helps you avoid properties that could represent any legal problems.

All Coldwell Banker professional diligence and ethics apply, including the company's unique 22-point Buyer and Seller Services Guarantees that puts our service commitment to you in writing, including features such as competitive market analyses for sellers and Coldwell Banker Homebuyer Guidebooks for buyers. We will deal only with legitimate documents. Your legal counsel will conduct a full search of the property through public records. This ensures clear and free title or disclosure of obstacles that may affect the purchase. Most property ownership in Costa Rica involves fee-simple titles; it mirrors the US fee simple concept.

You can expect to pay a deposit of 10% to hold the property once a purchase price has been accepted, which is typically held in escrow. Coldwell Banker is committed to full transparency; we will see to it that everything will be included in the sale documents.

The property transfer deed, is typically drawn up by the buyer's legal representative unless purchasing within a development or under special conditions.

All transfer taxes, legal fees and stamps are typically split in equal portions between the buyer and seller (see chart below).

Costa Rica Real Estate - Financial Information

Closing Costs Coldwell Banker takes pride in its honest approach to all its Costa Rica real estate services. Our fees are upfront and completely transparent.

Transfer Tax. The government collects a property transfer tax which is equal to 2.44% of the real value of the property, including the documentary stamps listed below. The Public Registry will not record a transfer deed unless the transfer taxes and documentary stamps have been paid.

Documentary Stamps. The government also requires that documentary stamps be affixed to the deed, as listed in the table.

Notary Fees. The Notary that drafted the contract for sale and carried out the closing is entitled by law (Decree 2307-J) to a fee equal to 1.5% of the first one million colones of the actual sales price and 1.25% on the balance.

Mortgages. Recently, financing Costa Rica real estate has become more accessible to foreigners. Stewart Mortgage Brokerage (of Stewart Title) services offer U.S.-style financing to qualified U.S. residents, and partner with institutions such as Banex, Scotiabank, and Banco Cuscatlan. They also provide up to 70% financing to non-residents. The Tico Times (www.ticotimes.net) publishes an excellent updated chart with mortgage information from the country's major banks in its October Real Estate supplement.

Bank financing for residents is similar to that offered in the United States. Mortgages are usually available in dollars or colones, and banks generally finance up to about 80% of their appraised value of the property.

Because of the controlled devaluation of the colón (approximately 10% per year), annual interest rates for local-currency real-estate loans for terms of 15-20 years are currently around 19% to 22%. Dollar loan rates are up to 50% lower, often calculated by the 3- or 6-month LIBOR rate plus 3%-6%.

It is customary for the person who is receiving financing to pay the costs of drafting and registering the mortgage instrument. A mortgage can be created simultaneously at the time of sale by adding a mortgage clause in the transfer deed. Or, a separate mortgage instrument can be drafted. Mortgage costs can run to up to 8% of the loan, including registration fees, documentary stamps and Notary Public charges.

Some clients have had success asking the seller to carry the mortgage on the property, although with more financing options available to foreigners, it is no longer the best option in most cases.

Coldwell Banker realtor will offer advice to help you negotiate through the various financing options of your Costa Rica real estate purchase.

Property Taxes

Under Costa Rican tax law, you must declare the value of your home to the Costa Rican Municipal Government every five years. An annual flat rate of 0.25% is charged, calculated on the combined declared land and construction value. Owners of homes within the Maritime Zone or on concessions near national parks pay property tax only on the value of the house, not the land itself.

Beachfront Properties

In most cases, beachfront properties are untitled because the ownership and possession of the shoreline is governed by the Maritime Zone Law (Ley Sobre la Zona Maritima Terrestre) which restricts the possession and ownership of beachfront properties. By law the first 200 meters of beachfront starting at the high-tide markers is owned by the government. Of the 200 meters, the first 50 are deemed public zones and nobody may possess or control that area. On the remaining 150 meters the government, through the local municipal government, will lease the land by way of concessions to private individuals. Coldwell Banker's expert associates will help you maximize the options open to you in all aspects of Costa Rica real estate.