10 Steps to Purchasing Property in Costa Rica
Purchasing real estate in a foreign country can be an overwhelming daunting process. But once you’ve made the decision to purchase a bit of paradise in Costa Rica, here are ten steps to guide you through the process. For detailed information regarding the topic read our freshly published Guide to Buying a Property in Costa Rica! (updated 2018)
- Research
If your previous travel to Costa Rica has been limited or non-existent, book a flight and explore the country. Do you crave a complete escape from modern life or do you want to be in close proximity to selected amenities? Are you looking to be able to spend your time strolling on white sandy beaches, surfing, sports fishing or playing golf? Are you looking to hike the rainforests or engage in micro-farming? There are also big differences between the northern and southern zone and the weather in different regions. By traveling you will get a feel for the different territories, towns, what each one offers and which is best suited to you.
- Make a List
Brainstorming and getting down on paper what you need and want from a property will aid you in clearly defining your goals and purpose. Sit down and make a list. Get clear about your deal breakers and what you must have in a property. It will help you quickly narrow down your search, focus and clearly articulate what you need in a property.
- Define your objective
Are you looking to purchase something that you will use as a vacation property and rent out most of the year for income or are you looking to move permanently? Your reason for purchasing property will impact your decision-making process. Certain types of properties work better as rentals while others may be better suited for permanent type residences.
- Engage the services of a licensed Realtor
While it is not essential to purchase a property in Costa Rica through a licensed realtor, it will certainly make the process easier as a non-native purchasing a property in a foreign country. Having someone working on your behalf who knows the area, local culture, market and can help steer you in the right direction to meet your needs is helpful, especially when it comes to negotiating the terms of the purchase.
- Inspection
Have the property and home inspected by a third party. This includes checking the property boundaries, which can be vague in Costa Rica. Carefully review the deed to make sure the property lines are clear. You will also want to check the soil.
- Form a corporation
It’s standard practice to purchase property through a corporation in Costa Rica. It’s the preferred method and simplifies the process. It also protects your identity.
- Financing
Are you paying 100 percent cash? If not, you are among a minority of purchases. Bank loans can be difficult to attain here especially for foreigners. If you are looking to do any sort of financing arrangement then you want to find out upfront if the owner is willing to broker a deal with you. Your representative can assist you in finding a seller who is willing to finance a mortgage. Often you can get a better rate and faster approval using a first or second mortgage on a property you own in your home country. That cash can then be used for buying property in Costa Rica.
- Hiring an Attorney
Hiring an attorney is a vital step in purchasing a property and critical ensuring your interests are protected in the transaction. In order to transfer property, the buyer and the seller must select a closing attorney who also has to be a notary public. It’s an essential step.
- Title Transfer
Is the property owned by a corporation such as Sociedad Anonima (S.A.) or a Limitada (LTDA)? If the property is owned by a person then the title needs to be transferred to a person or a corporation. In most cases, it’s a title transfer from one corporation to another.
- Closing Costs
Closing costs in Costa Rica include Property Transfer Taxes, National Registry Stamp, Stamps and Duties, Notary Registration Fees. The fees vary depending on the price of the property. The government taxes and fees include: the real estate transfer tax 1.5%; registration fee .05% and the remaining stamps are approximately .55%. The notary fees vary depending on the price of the house and begin at 1.5%.
Following these ten steps will guide you through the process of successfully purchasing your dream home in Costa Rica. It’s a relatively straightforward process for foreign buyers, which is another advantage to purchasing property in Costa Rica compared to other countries.
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