Should Foreigners buy Real Estate in Costa Rica?
Should foreigners buy Real Estate in Costa Rica?
Costa Rica abounds in protected areas for natural habitat and other maritime zones. So, buying real estate there, especially for foreigners can be a little tricky right?
Well, today we will discuss the points which a foreigner must keep in mind while buying real estate in Costa Rica. Basically, there are two key points:
- A foreigner cannot own 100% of property in a maritime zone.
- A foreigner cannot own IDA property, in which land is donated to the poor farmers.
Also, there are a tiny fraction of land terms that one needs to be aware of to avoid any legal confusion while buying a property there.
- 50-meter zone: A land within 50 meters inland from the high tide line is unconstructive and is public property.
- 150-meter zone: This zone is owned by the respective municipalities. These are known as Maritime Zones. These lands were originally donated to the farmers who could not sell them before 15 years of inheritance.
Apart from these technicalities, a foreigner willing to buy a property there should ask himself a few questions to make sure that he/she buys the exact property of his choice.
These questions should be arising from his needs as to whether he/she wants a location close to a school, or a luxurious property close to a beach, whether they want to enjoy surfing on the ovens in the evening, or whether they want to live in the busy and crowded part of Costa Rica.
After choosing their perfect needs they may search for properties that can cater to their needs and wants.
Another thing to keep in mind is that basically there are three types of properties which a foreigner can buy:
- Purchasing a home
- Purchasing a Condominium
- Purchasing a land
Purchasing a home can offer more benefits than purchasing a Condo, which actually means restrictions in additional free space.
A home purchased in Costa Rica offers more space for a person to enjoy and expand their property while paying for the additional charges for maintenance of extended property which might not be suitable for some.
A Condominium purchased in Costa Rica includes the restrictions and inability to change the nature of the building according to the comfort of the buyer, due to lack of additional space, and even decorating to their tastes will cost them extra.
Land purchased in Costa Rica includes an investment of time and energy in addition to money as one has to be present in-person to witness the construction of their dream Mansion. However, these offer higher benefits, as after construction, the property can be rented as well, thereby providing profits to the owner.
At this point, a foreigner must be convinced enough to buy a property and might have decided exactly what he/she requires.
The next step is to actually know the legal procedure required to legally buy a property there.
The first step is to find a secure broker. Once they have secured a broker, then these key steps to purchasing a property in Costa Rica will help guide them through the rest of the process.
- Making an offer
This is the first step before buying a property which ensures that one is not paying more than the actual price of the property and also ensures that the property is secured in their name.
2. Financing Property in Costa Rica
The next step comes to finance the purchase which is a little easier for the legal residents of Costa Rica.
But since we are discussing the buying process for foreigners, let us discuss that.
As a foreigner, one should have spoken to their banks earlier regarding the purchase of a property before visiting Costa Rica. At the place of purchase, they can simply call up their respective banks and request a wire transfer in the name of the seller of the property. But most banks do not allow wire transfer over a distant call which can lead to a delay in buying property.
3. Speak to an attorney
Once financing is over the broker may recommend hiring an attorney. An attorney is responsible for looking after all the legal procedures and will be responsible for providing the necessary documentation before purchase.
It is to be noted that the hired attorney should have a SUGEF (Financial Institution Superintendency) approved escrow account or he uses a title company so that earnest money can be held in escrow without any legal problems. It is the responsibility of the attorney to note that all taxes and fees are paid in full.
4. Signing the deeds
All the deeds are required to be signed and recorded at the Public Register to ensure further progress in the process of buying. This is the last step to legal procedures before actually closing the deal and purchasing the property.
However, there is an advantage that needs to be noted here. One can leave a SPECIAL power of attorney for their lawyer’s assistant, or a real estate agent or anybody whom they trust, that will allow that person to purchase the property in the name (personal or corporate) that the buyer approves of this power of attorney ONLY.
5. Pay any closing fees
All dues and pay are ensured by the attorney and the lawyer. Usually, the closing fee is shared 50/50 between the buyer and the seller. The closing fee usually amounts to transfer taxes of 2.3% plus the Colegio de Abogados de Costa Rica fees of 1.25% to 1.5% of the declared value for a total of 3.55 to 3.8%.
Property Management Costs:
After all these procedures, that is from a choice of land to all the legal procedures, the keys of the property are finally handed to the buyer.
All that remains is the property management costs which are discussed as:
Living in Costa Rica has certain advantages as one can rent a property as a holiday home when he or she is not living there. This will result in additional profits for the buyer.
Plus, a resident there will also find a group of like-minded people who share similar outlook and goals, a wealth of exciting recreational activities including surfing and scuba diving among countless other water sports, plenty of great golf courses dotted throughout the stunning landscape, plus a lively arts scene supported by artisanal markets and entertainment venues.
The key benefits being:
- Great climate
- Fantastic Landscape
- Safe, Secure, and Peaceful
- Sense of Community
- Wealth of Resources
- Low Cost of Living
All these add to Costa Rica as a good choice for buying a Real Estate for the Foreigners as there is no use difference between the residents and the foreigners, except few, which have been discussed in the entire article.