About Costa Rica The natural beauty, pleasant climate, safe political environment, and friendly people of Costa Rica, are luring investors from around the globe. As a result, Land values in Costa Rica have been steadily rising over the past 10 years, and there is every reason to believe it has only just begun for this tropical destination. When comparing Costa Rica property prices on a global level, one finds top quality coastal properties in the best locations of Costa Rica to still be far cheaper than similar tropical destinations. Professional advice and assistance from a knowledgeable and professional Real Estate Broker, is the best assurance of a smart decision and a safe investment. A professional Real Estate broker can guide you through the process of selecting, purchasing, and developing property in Costa Rica. The information below is only a basic overview, and we cannot stress enough that each property must be looked at individually and realistically, and many have unique circumstances that should be examined. The property titling and registration system in Costa Rica is excellent, and when combined with the professional assistance of a knowledgeable broker, you can be assured of a smooth purchase/development process, and a solid investment.

Ownership of Land Costa Rica's laws and constitution, based on a well-developed tradition of Democratic government, include equal rights to foreigners and locals with regards to property ownership. In other words - you can own it in your name, and the Costa Rican Constitution guarantees you the same equal rights as a Costa Rican. These rights in property ownership are unique to Costa Rica, where neither citizenship, nor residency, nor even a presence in the country is required for land ownership. In fact, there are almost no restrictions to the ownership of land in Costa Rica, with the exception of direct beachfront (See Regulations for Beach front below). To a prospective off shore investor, the receptiveness of the host country to be invested in is an important consideration of the investment. This is especially true for Real Estate. Few countries in the world welcome foreigners so well, and have such magnanimous laws that allow for, and protect, the property rights of foreign investors the same as citizens. Costa Rica's combination of receptiveness to foreign investment, a stable political and economic system, and secure property rights, has made it a number one pick for foreign Real Estate investment.

Land Records Costa Rica boasts an excellent property registration system to protect buyers from hidden claims. Most property searches can now be made "on-line", but occasionally older properties may still need to be researched in person at the national registry. In many ways, the Costa Rican system of maintaining property records is superior to the United States, where title insurance is an actual necessity due to the possibility of a problem arising after the sale. In Costa Rica, when a titled property is transferred to a new owner, any claim not registered at the time of transfer cannot be placed on the new owner, giving purchasers the assurance that they will not find any problems after the sale. The property registration system includes a section for titles and a separate section for surveys. All documents are centered in the National Registry, where both the titles and surveys are recorded. The records are kept in a central computer system as well as on microfilm, and in original form, and most recently in the "on-line" database. Duplicates of all records are updated daily, and sent to two separate fireproof vaults in separate locations from the registry. Any change in the status of a title, or any claim that might affect it, must also be noted on the title registry page, thus making it easy to verify. Those who purchase land in Costa Rica should get professional advice from both a professional realtor and a qualified real estate attorney. Your attorney will perform a search of the title in the Registry, to confirm there are no liens or encumbrances on it, and to establish its proper ownership. He will also usually escrow funds for deposits and closing, and prepare the documents for the transfer. Once the deal is completed, the purchaser should receive documents to prove the sale was registered in the Registry.

Property Taxes The yearly taxes on properties in Costa Rica are very low. Yearly property taxes are one quarter of one percent (.0025%) of the declared value of the property.

Closing Costs Closing costs for a sale include a land transfer tax, a stamp tax, and attorney fees, all of which are based on the price of the property being transferred. Closing costs and transfer taxes and fees typically run approximately 4.2% of the sale price, including the attorney fees for the transaction and registration. Closing costs are customarily split 50/50 between the buyer and seller. Costs of obtaining and registering a mortgage are always the buyer's responsibility.

Financing Most property sales in Costa Rica are paid in full at closing. Bank financing has recently become available especially construction loans for homes, where banks are willing to loan 40-70% of the project's total value. Time frames for approval are lengthy, usually 2-3 months or more, and interest rates have been around prime plus 4-6 points. Short-term owner financing is more common and often the only realistic option. This typically requires at least half down with a 1-2 year note, which allows the purchaser time to finance through a bank, sell another asset, or find financing in their home country at a better rate.

Purchase Contracts Costa Rica's legal system is based on a "civil code" system, as opposed to a "common law" system like that of the United Stated. Under Costa Rica's civil code, there is less interpretation of the law by judges, because the civil code is more restrictive. For this reason, land contracts in Costa Rica are far less complicated, than the common law contacts most foreigners are used to. Under the civil code system, the contract covers only what is not regulated by law, and thus can be very simple. In Costa Rica a land purchase contract is often achieved through an "option to purchase". An option to purchase gives the buyer the right to purchase a described property in a set amount of time. Typically 10-20% of the purchase price is paid to the seller through a broker or attorney (after verifying the property can be legally transferred), for the purchase of the option. Most closings can take place in a matter of days if the property is already registered in the National Registry; however, most options are written for 30-90 days. A purchase agreement or option to purchase under civil code has far less components but should include: · The names and identification numbers of buyer and seller, whether held by a corporation or personally. · A description of the property, which includes boundaries and size (if known at time of sale), and all numbers identifying the property in the National Registry. Properties being subdivided from a larger property can be sold based on agreed upon boundaries, or based on the square meters of land to be divided off. · The price in either colones or dollars. · The dates for the option period. · Terms or mortgages to be recorded at closing, if any. · An agreement to the payment of closing costs, usually split 50/50 between the parties. · An agreement to provide for a registered survey, prior to closing, is usually the seller's responsibility. · Any other agreements, or clauses.

Title Insurance Title insurance is available but not necessary in Costa Rica due to the laws of civil code. The buyer's attorney should make a thorough title search prior to closing; after which, one can safely purchase the property. To pay a title company to perform the exact same task prior to closing is redundant and expensive. Additionally, when a property is transferred to a new owner in Costa Rica, all past claims that were not properly registered in the National Registry; cannot be placed on the new owner, thus eliminating the need to insure against past problems coming to light. Many properties are held by corporations (S.A), and in these cases, more thorough research is required by an attorney if one wants to assume the existing corporation, which can save money on closing costs. Escrows are usually held by one or both of the attorney's, to the sale.

After the Sale The purchaser should verify, through his broker or attorney, that the property was properly registered in the National Registry, and receive originals or copies of the documents showing all the proper stamps from the process.

Beachfront Regulations The most desirable and expensive land in Costa Rica is beachfront. The majority of coastal resorts are located on the beach in what is known as the "maritime zone" or "zona maritime". The maritime zone is a 200-meter wide strip of land running parallel to the coast, starting at the high tide line. This 200-meter strip is divided into a 50-meter strip closest to the shore ("inalienable zone") where no development can take place, and the remaining 150 meters, which can be leased from the local municipality, and developed, after the filing of a regulatory plan with the government. Most vacant beachfront land does not have a regulatory plan filed, as this is usually done just prior to development of the property. The regulatory plan is the most time consuming and costly phase of obtaining the land lease, know as a "concession", and is best accomplished through professionals. With proper planning, a concession can be obtained during the time that the proposed development is in its planning stages. For those interested in developing land within the maritime zone, professional assistance is a must. Always keep in mind that until a concession is actually granted, no legal development can take place. When a concession is promised to be coming "soon" it is a good idea to research the time frame for this realistically. With beachfront and maritime, each property must be examined individually and carefully, but with professional assistance and knowledge of the law, beachfront can be safely acquired and developed.