| Buying or Building Real Estate in Costa Rica? Here is What You Need To
Know? Part I
Once you are in a foreign
country, the prospect of buying property can be very daunting. This is
especially true when abroad you are all the less conversant with the laws and
ethics attached to the procedure. It is exactly because of this that anyone
wanting to invest in property in a relatively unknown place must educate
himself about the attached norms so that his investment does not go to waste. In this respect, Costa Rica is
the best place to buy or build your property in. It is one of those rare
property markets that has something to offer both to the buyer and seller. A
licensing body has been established especially to protect the interests of
architects and engineers because in many cases they do not get their dues. The
property market is easier to handle in Costa Rica but there are certain things
that every buyer and seller should know about the Costa Rican property
market.
What is required if I
want to purchase property in Costa Rica?
After you have got hold of a
suitable piece of real estate either through an agent or through personal
searches, you need to negotiate the sale price. Just as the seller accepts your
offer, legal procedures relating to the transfer of the ownership title begin.
How is the title
transferred?
Execution of a transfer deed
or ‘escritura’ in Spanish, is all that is needed if the
property is to be transferred from the seller to the buyer in Costa Rica. The
notary has extensive roles to play in Costa Rica, a situation that is much
different from the rest of America where the power of the notary is limited to
authentication of signatures. In Costa Rica they even has the power to act on
behalf of the state.
Apart from the
authentication of documents, the notary public in Costa Rica has the power to
draft and interpret legal documents. The singular requirement is that the
notary public needs to be an attorney.
In order to close on the
property, the buyer and seller must select a notary/attorney who will draft the
transfer deed and register the sale in the Public Registry or ‘Registro
Nacional’.
There are three ways in
which the selection of the attorney may be made:
- The seller can request his attorney to conduct the
transfer of deed.
- The buyer and seller’s attorneys can jointly conduct
the process. This is known as ‘co-notariado’.
- The buyer may suggest that only his attorney be
responsible for the transfer.
How you would want to buy property in
Costa Rica is left to you solely because the property can be in an individual’s
name, can be a joint acquisition and can even belong to a corporation.
How can I ensure that I have clear title to the property?
Costa Rican law requires that all documents relating to an
interest and/or title to real property be registered in the property section of
the Public Registry (Article 460 of the Civil Code).
Most properties have a titled registration number known as
the ‘folio real’,
and the records database can be searched with this number or by name index. The
Public Registry report, ‘informe registral’, provides detailed information on the property,
including the name of the title holder, boundary lines, tax appraisal etc. The
property database can be accessed via the Internet web page of the National
Registry.
Since Costa Rica
follows the doctrine of first in time, first in right, recorded instruments
presented to the Public Registry are given priority according to the date and
time in which they are recorded.
Obviously, every
situation differs and in some cases a review of the Public Registry record will
not be enough to uncover all encumbrances.
It is also good to verify with the Municipal government where the property is located to
verify any zoning use or restrictions and to ensure that the property is current
with all property taxes.
Depending on the property and the intended use due diligence
may be required before other governmental agencies such as Environmental
Department, Public Works, National Parks, Electrical and Water Departments
etc..
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