What are four things buyers should know when investing in real estate in Costa Rica?
by Quatro Legal Real Estate Team | Nov 24, 2023 | Article, Real Estate
Costa Rica is a great place for real estate investment for a large number of foreigners and expats as it is a country characterized by a stable economy based on a strong touristic industry, a conservative tax system, political stability, natural beauty, and affordable cost of living. Therefore, below you will find four tips for all expats that see Costa Rica as a destination to retire, invest or start a real estate business, such as short terms rentals or development of a project.
Foreign nationals can legally own property in Costa Rica.
All foreign nationals have the right to invest and purchase real estate in Costa Rica as real estate laws do not create distinctions between Costa Rican and foreign investors. The only exception is when applying for a maritime land zone (coastal zone) concession, which requires a certain percentage to be owned by Costa Ricans. The maritime land zone concession will be addressed in another article.
Retain a reliable and reputable firm or attorney specialized in real estate legal services.
Whether you already have a property lined up to purchase or are just starting to look for one, you will need a public notary to assist you with closing the transaction. Choosing wisely the real estate attorney or law firm that will represent you is key to a profitable and safe investment; therefore, it is essential to retain a real estate lawyer or firm that has proven track records in the market. Under Costa Rican law, all purchases of titled land must be recorded in the Public Registry of Costa Rica (PRCR) to be enforceable against third parties. Therefore, you will need a public notary specialized in real estate law to do due diligence to confirm the property’s legal status, as well as to draft and register the final deed of sale. This is one of the most important decisions you can make to ensure a smooth transaction as good firms and real estate attorneys have the expertise and connections to make it easier and safer.
Invest in a thorough due diligence on the property.
The worst thing you can do is to rush through the property purchase process. One of the most important steps is to conduct thorough due diligence on the property you want to buy through you real estate attorney or firm. Due diligence on a property consists of a title search in the Public Registry of Costa Rica (PRCR) and other public entities to ensure the title, its origins, transfers, liens, encumbrances, annotations, and taxes do not contain any flaws or defects that may cause your title to be annulled or challenged. More sophisticated due diligence for development or construction projects encompasses certifications of soil use, water availability, maritime land zone studies, property site inspections to confirm boundaries, resolve disputes and remove squatters, analysis of technical reports, etc. Generally, due diligence also includes an evaluation of the owner. If it is a corporation, it will include an analysis of the bylaws, representatives, contingencies pending or against the entity and corporate tax records. This is an investment you should not omit to ensure you make an informed decision when buying property in Costa Rica.
Hire a professional real estate broker who is registered with SUGEF.
An important decision when buying property in Costa Rica is whether or not to hire a real estate agent or broker. In Costa Rica, real estate brokers are independent and work for a commission calculated over the purchase price at closing. There are no regulations in Costa Rica governing real estate brokers and their agencies and no license is required. This means that anyone can act as, or call him or herself, a real estate broker. For that reason, find a reputable professional who is registered with SUGEF and who has sufficient expertise, connections, trainings and actual property listings that justify him or her acting as an real estate agent.
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