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Buying Real Estate

Buying Real Estate

Real estate is booming in Costa Rica, one of the America's most popular destinations. The country’s attraction goes beyond white-sand beaches, lush rainforests and great weather. With real estate markets in the U.S. topping out, Costa Rica’s stable democracy and comparatively low prices have attracted an increasing number of investors searching for their own slice of paradise. Another advantage to purchasing real estate here is that the constitution provides foreigners and Costa Ricans equal treatment under the law. Here are a few recommendations to get you started:

Locate a Reliable Attorney:

Ask someone you trust to recommend an attorney who is reliable and trustworthy. Your country's embassy or one of your consulates might have some suggestions to offer. The Costa Rican-American Chamber of Commerce is worth a call or check out our Commercial Directory.

Research the Property Information:

Ask your attorney to conduct a title search at the Registro Publico (Public Registry) for the property you want to buy.

By law all properties must be registered in Registro Publico. Most properties have a title registration number called the "Folio Real." Once you have this number you can search the database. The Registro Publico's Report, called the "Informe Registral," contains information such as the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other records that could affect the title.

Costa Rica follows "first in time, first in right" rule. Additions to a property title are prioritized according to the date they were recorded. So make sure your attorney searches your title back to the beginning title entry to esnure that you can hold clear title.

Write a Transfer Deed:

This is the document that transfers ownership of the property. The transfer is made with the buyer and seller signing the transfer deed (called an "escritura") in the presence of an attorney. The attorney then drafts the transfer deed and registers the sale at the Registro Publico.

Custom dictates that if the buyer pays in cash, he selects the attorney to draft the transfer deed. If the purchase is financed, then the transfer can be made in various other ways.

A. If a large percentage of the purchase price is financed by the seller and a mortgage needs to be drafted to guarantee payment, the seller's attorney may draft the transfer deed upon seller's request.

B. If a property is purchased 50% cash and 50% financed, the buyer's attorney and seller's attorneys can draft the transfer deed and mortgage in a single document. This process is called a co-notariado.

C. Buyer may have his attorney write the transfer deed and let the seller's attorney draft a separate mortgage instrument. Since the mortgage agreement is being drafted separately, registration fees are higher.

Closing Costs:

By custom, buyer and seller split the closing costs, but the split may be negotiated as part of the purchase contract. What they want are:


You must buy Documentary Stamps – Agrarian, Hospital, Municipal, Bar Association, National Archive and Fiscal – totaling 0.55% of sale price. You must pay a Real Estate Transfer Tax at 3% of the sale price and a Registration Fee of 0.5 % of sale price

Notary Fees:

1.5 % of the first $5,000 (one million colones) and 1.25 % of the balance. 

Mortgage Registration Fees:

Usually, the person getting the financing pays for the costs of drafting and registering the mortgage instrument. A mortgage may be issued at the time of the sale by adding a mortgage clause to the transfer deed. A mortgage within a deed costs 0.25% in registration fees and approximately 0.53% in documentary stamps. For drafting the document, the notary receives between 0.5% and 1.25% of the amount of the mortgage.

It is customary in Costa Rica to register a property at a figure far less than its actual sale price. All transfer taxes and fees discussed above are figured as a percentage of the reduced sale price -- with the exception of the notary. He or she drafted the documents. He or she knows exactly how much money changed hands. He or she collects the full .5 to 1.25% of the mortgage. Consult your attorney about further consequences of these practices.

Register The Transfer Deed:

To register your transfer deed, you or your attorney must bring to the Registro Publico (Public Registry) the following documents:

A. Proof of payment of all taxes and registrations fees

B. Certifications issued by: a) Finance Ministry, confirming that all seller's property taxes were paid; and, b) the local Municipality, stating that buyer and seller areup to date on municipal taxes.

C. Proof that all prior mortgages, liens and judgments (if any) have been resolved

Once all fees are paid, make sure that the attorney who drafted the transfer deed registered it in the Property Section of Registro Publico. It should be registered by the Registro Publico 45 to 60 business day after presentation. Check with the notary to make sure the deed has been properly filed.

Hint: Before you buy the house check conditions of the house during dry and rainy season; talk to the neighbors and ask them if they know of any problems in the house.

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