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Costa Rica Real Estate Law

Laws Governing Real Estates in Costa Rica & Land Ownership Laws in Costa Rica

The Costa Rican government employs measures to protect the properties of its citizens and foreign investors. Its constitution provides laws on private tenure of land. Because of the country’s determined promotion of its estates for tourism and commercial purposes, the government minimizes ownership restrictions on private lands. This holds true for both Costa Ricans and foreign investors, who benefit from similar property rights and privileges of the locals. The state, however, imposes a firm decree on the details of land ownership prior to the purchase of foreigners who are not permanent residents of Costa Rica. The original title-holder must settle obligations on land that has been owned for particular time duration before they can put it on sale. Nonetheless, land ownership in Costa Rica neither requires citizenship, residency, nor attendance in the country during the period of sale.

Land Title Application for Properties in Costa Rica
The Costa Rican government entails the prompt registration of all land newly possessed or transferred ownership. Documents that prove support in the ownership details of a real estate property are checked in the Public Registry office’s property department as required by the Civil Code. Properties are numerically catalogued and land titles are kept in the Folio Rea database. This contains a complete record of land titles, which can be searched according to the title index or number. The database can be accessed via the internet, making it very convenient for foreign investors.

The informal registration report contains basic information on a land property, such as the name of the owner, the mortgage arrangements, appraisal of taxes, and other legal concerns affecting the land title. Also found in the report are topological details such as the total land area, and locations of property boundaries. This information is useful in keeping track of the country’s numerous properties being open to the market every year.
Costa Rica observes a first come, first served basis in recording land title information. In terms of property sales, it also follows a chronological basis, depending on the when the new owner finalizes title concerns with the Public Registry office. The office specifically requires checking the time and date of land transfer and other sales transactions in the recording process. Any other transaction that is not recorded within that period of time is then considered null and void.
The office of the Public registry issues a certification of the land title as the proof of the transfer of ownership of a land property. In this document, transactions that are not included within the date of its issuance are also considered invalid. The need for an insurance of property titles is therefore unnecessary lest it be wasted and considered unfounded.

Transactions recorded in the office differ according to the circumstance of the purchase. Some purchases involve more than one mortgage and other encumbrance agreements that the registry office is no longer able to cover. To settle this, the Costa Rican government recommends having a separate legal consultant, other than the one employed by the property seller. Investors can also opt to avail of the services of real estate firms to make their property search more convenient. This guarantees you of making the best deal.

Title Transfer Procedure of Land and Property Sales in Costa Rica
Land title transfer in Costa Rica observes a defined procedure, from acquiring the land title from the seller, to transferring the deed to the name of the buyer in the presence of a notary public. The Costa Rican government recognizes the notary public as an authority in real estate development, in contrast to the legal practice in Canada and the United States. As required, the notary public should be an attorney at law. He will be responsible in authenticating the original documents submitted by the seller, then draft and explain the legal papers supporting the transfer. The notary public will also be tasked in proceeding to the Public Registry office to draw up the said papers. The notary public is also in charge of examining the property records of the municipality, the verification of the of the status of the recent owner, and the history of tax payment.
Prior to making land purchases, buyers and investors are urged to seek expert advice in terms of researching on the details of a specific property, including the verification of its current ownership, whether they be local or foreign, as well as the property’s credit history.
Both the seller and the buyer of the property are tasked to settle on their notary public of choice. The common practice in Costa Rica is for the property buyer to choose the legal counsel who will take care of the transaction’s legal documents, given that the sale was cash-based.

For purchases Costa Rica Real Estate done through financing agencies, there are several choices available to the transaction parties.  In the case of a large financing requirement to cover majority of the purchase, the seller is required to have mortgage papers legally drafted. These documents are made as guarantee of the succeeding payment to be made. The seller then submits a request to transfer the land title through their lawyer.
Purchases made at fifty-fifty allocation of cash payment and outside financing require the involvement of both the buyer and the seller’s lawyers. These legal counsels draft a joint document on the transfer of ownership and mortgage agreements.

The last option is at the request of the buyer, who may contend that it is his lawyer who should process the transfer of ownership. The seller’s lawyer is then assigned to make the separate document specifying the mortgage instruments relating to the land purchase. The buyer saves on the registration charge that is imposed on mortgage documentations. After having the transaction recorded, both parties should secure their own copies of the transfer documents for future security purposes.

Registration Procedure for Title Transfers
Part of the responsibilities of the legal counsels is to make sure that the property title is taken care of after settling all the bills. It is the obligation of the specific notary public who made the transfer to present and register the deed to the Public Registry’s Property Department. As the selling or buying party, it is imperative for you to ask for updates on your property’s title transfer. The office of the Public Registry does not recognize deed transfers with unsettled or pending registration and tax bills. Among the other needed documents is a certified copy to be obtained from the Finance Ministry office after providing certifications of the seller’s current payments on property taxes. Supporting documents can be easily acquired from the local municipal office, where both parties are required to settle municipal tax requirements. As soon as the transfer is acknowledged for registration, the registry office will give back all original papers, complete with documentary stamps. Transfer papers must be registered with the office forty five to sixty days within its presentation.
 
Property Closing Expenses for Land Title Transfers
The sale of a land property includes spending on legal fees such as transfer charges and stamp tax, to name a few. This aspect of the sale covers about three to six percent of the total cost of sale. Charges involved in the transfer are paid for by the buyer. The amount of transfer taxes is based on the declared worth of the property as assessed by the realtor. Legal fees charged on the sales cost of the property also depends if the property is held by a local corporation, or a multi-national group of investors.

Purchasing a Beach Property in Costa Rica
Making an investment in Costa Rica’s lengthy coastline is governed by policies that are geared towards protecting sensitive maritime areas in the country. For example, Costa Rica’s Maritime Zone is subjected to more stringent laws on environmental protection. Investors who plan to purchase land within the Maritime and Concession zones are carefully assessed by respective agencies. The investor’s intent for the land use must also be established prior to the finalization of the purchase.
To avoid uncertainties on the recognized policies, the Costa Rican government has established in writing the property regulations. Proposals to challenge or amend any of these regulations must be posited to the national government.
Because of the county’s concern for the protection of its marine population, the government has prepared a fail-safe implementation of the laws. This extends to the price regulations even of the properties around the concession area. Each year, buyers are not guaranteed of a consistent price that is inside the range considered reasonable by the current market. The orientation of the government is that clients are merely paying for the lease of the property, and not technically purchasing it. The other advantage of this stern implementation is that the occurrence of squatters is lessened especially in luxurious areas in Costa Rica.
Land acquisition in Costa Rica is required by law to be within five to twenty years of concession arrangement. Land purchases must be set on construction and development projects that abide by the government’s meticulous dogmatic zoning plan that includes the location of the proposed construction, and the operation scheme to be implemented for the construction.

Maritime and Concession Zones Specifications
Costa Rica’s Maritime area is along a one thousand five hundred kilometer stretch. It is divided into an area devoted to the development of aquatic life forms such as mangroves, corals and fishes. Some parts serve as the exit of water from rivers and swamps. About a third of the entire stretch, measuring about five hundred ninety kilometers, is available for commercial development, given proper legal permission.
Choosing the location of the property to purchase should be evaluated against the investor’s purpose of acquiring the land. If the investor plans to establish a beach resort, it would be recommended for him to opt for a beachfront site along the concession area. If an investor has in mind a private or commercial luxury residential property, an area faintly remote of the maritime zone would fit to the requirement.
The maritime area has a considerably developed region. It is unfortunate though that majority of area has been modeled through illegal means. In Santa Cruz along the seaboard of Guanacaste, only a small portion of land is available for outside development as forty percent of its Maritime Zone has already been developed.
Nearly all of the areas along the coastline are presently being chartered at reasonable prices. In spite of these occasional temptations of purchasing properties at a low price, foreign investors must be warned against swindlers who purchase properties through corruption and bribery, and later resell these properties to foreigners who are made to believe that the land has legally attained transaction titles.
 Properties within the maritime zone area are classified according to their proximity to the protected area, or the public area. The properties along the Costa Rica’s coastal area are not all intended for beach resorts. Private properties can be applied for land titles. As long as you have researched the boundaries of the maritime area, you can purchase any property along the beach, or just a few minutes walk from the seaboard.

There is a huge difference between acquiring a property by the beach, and on the beach itself. Purchasing the latter will not benefit the buyer a title of the land. This is because most beach properties along Costa Rice are considered public zones for the locals and foreign tourists to enjoy. It is therefore important for potential buyers to be acquainted with the specific rules on specific beachfront locations before making any purchase.

Zoning Regulations on Maritime Beach Properties in Costa Rica
In the late 70s, the Costa Rican government has developed specific laws to govern the appropriate ownership of properties that fall within the country’s maritime area. The constitution basically divides the coast line into two separate zones, namely the Pacific and the Atlantic Costa Rican coast line. These areas are classified according the high tide levels measured from the interior of the islands. An important region of Costa Rica’s nautical locale is a constrained zone administered strictly by local municipality officials.
The general classifications of the area are divided with two hundred meters breadth from the coast line. The first division, the public zone, includes a fifty-meter belt that stretches from the high tide mark of the beach down to the outer limits of the restricted area. The public zone, as the name suggests, is disclosed to public use. It follows then that there are no private properties and private use of the land is limited to legal consents. It should be known, however, that the public property, in spite of its accessible pathways to private properties, is not allowed to serve as a passage way to private estates.
The restricted area of the Costa Rican coast line is a one hundred fifty meter shoreline that starts from the boundary of the public zone and extends to the sensitive maritime reserves. The government offers lease grants called concessions for investors who wish to occupy the area for a long-term range. These profitable areas are lucrative for business and private use. Building requirements in these areas are also regulated accordingly by the municipality officials.

While foreign property investment in Costa Rica is popular for its eased restrictions, the government requires basic residency conditions of at least five years. The purchase process can takes about thirty days with a cost of USD 150 to USD 500. In addition, lawyer and registration fees will also be charged to the buyer. A different scheme is employed by corporations in Costa Rica as local corporations are required to possess half of the total investments at the minimum.
There are exceptions to the specific rules on ownership of coastal properties in Costa Rica. All titles of coastal properties are transferable with the permission from the previous owner. All occupants must be verified as legal buyers to enjoy the property ownership rights that correspond to
The government also imposes restrictions to granting leases to prospective buyers. For example, it does not concede grants to foreign corporations that are not based in Costa Rica, or those based in the country but are exclusively composed of foreigners. Consequently, the government holds the right to withdraw concession grants wherein the buyer does not abide by the arranged payment rate and schemes, or when the buyer intentionally violates any of the maritime or general property regulations.

Newsflash

Property insurances in Costa Rica
Getting a house or property through mortgage credit may require you to pay other fees too. However, these fees will go to the insurance policy in order to protect your home especially when there are unavoidable occurrences such as sudden landslides or other disasters. Settling of the insurance policy payments is usually required once you buy a property in Costa Rica.
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