Guide to purchase a property in Costa Rica
Costa Rica has a very solid legal system when it comes to properties titles and registration. Properties in Costa Rica are recorded in the Public Registry of Costa Rica, with its own property title that shows the location of the property, the boundaries, measurment, cadastral survey number, owner, day of purchase, amount of purchase and if there are any liens or annotations in the property.
In order to purchase a property in Costa Rica, these are the steps to follow.
1. Once the Buyer has decided on the property to purchase, the parties normally sign a purchase option agreement, to recorded the term of the negotiation such as property identification, due diligence period, purchase price, closing day and any other specific term of the negotiation. This contract should be written by an attorney, to properly record the terms of the negotiation in accordance with the Costarican law. In case there is a downpayment, we normally suggest our clients to deposit said amount in an escrow account so that the money gets release at closing day.
2. Buyer must conduct a Due Diligence study of the property to review that the property is duly recorded and free of any liens an annotations. Also, to review there are no other conditions or contigencies that could affect the title or use of the property. The Due Diligence study must be conduct by a responsible attorney that will indicate to the Purchaser the neccesary legal information that will be reviewed, and could recommend, if necccesary, other professionals such as engineers or topographers to review the property.
3. In case the due diligence shows that the property is clean and duly recorded, the parties can continue with the transfer at the closing day that was agreed.
4. At closing the parties will sign a public deed in front a Costarican Public Notary. In said deed, the Seller will transfer the property to the Purchaser, and the Purchaser will accept the transfer. The Purchase price is normally paid with the signature of this public deed. The property title can be recorded under the personal name of the Buyer or under the name of a Costarican corporation.
5. After the public deed is signed and the purchase price is paid, the Buyer becomes the new owner of the property.
6. The last step is for the Public Notary to record the public deed in the Public Registry of Costa Rica, so that the title shows the name of the owner. In order to record the public deed, there are transfer taxes, fiscal stamps and public notary fees that have to be paid and that are calculated based on the purchase price.
It is important that you ask you attorney for this specific amount of closing costs so you are aware of this payment, you attorney should be able to provide the exact number by knowing the purchase price. The payment of closing cost is done based on the negotiation of the parties, normally split 50%-50% between buyer and seller, or it can be paid also only by one of the parties.
There are certain scenarios where there could be other steps to follow, for example if the Buyer is purchasing the shares of a corporation as the way to purchase a property, or if the property is located within the maritime zone in coast places like Tamarindo Beach, Langosta Beach, Playa Grande Beach, Samara Beach, among others. Be sure to have proper legal advice during the purchase of a property.