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SO you’ve found your piece of paradise
in Costa Rica and you’re ready to buy. What do you
need to know and what steps need to betaken? Properties are
transferred from the seller to the buyer by the execution
of a transfer or conveyance deed (escritura de traspaso)
before a notary public.
Notaries in Costa Rica must be attorneys and are responsible
for preparing and supervising the execution and recording
of all publicly registered documents. Depending upon a notary’s
professionalism (and the clarity and security he or she provides),
the process may range from merely appearing at the office
and quickly signing documents and exchanging money to a much
more sophisticated process involving clear and concise purchase
agreements, professional escrow services, extensive title
searches and reports, owner’s and surveyor’s
affidavits, trust agreements, prompt registry of documents,
certified money transfers and title guarantees.
All titled land in Costa Rica is registered in the public
land records of the National Registry. The registry assigns
a folio real (matricula), a permanent identification number,
to each property that has been officially recorded.
The search of the public records (estudio), will provide
detailed information about the property such as the name
of the person or entity holding the title, the name of the
previous owner, the location of the property, boundary lines,
survey number, mortgages or liens, declared value of the
property, encumbrances (right of ways or easements) and any
other recorded documents that may affect the title.
The property report will normally show an existing registered
survey of the property, though in some cases a survey does
not exist. Property can not be transferred if the land does
not have a registered survey and the survey must be referenced
in the deed of transfer.
When the property to be transferred is owned by a corporation,
it is essential to perform a corporate search in the Commercial
Section of the registry to verify that the corporation is
in good standing and that the proposed signatory has the
capacity to sign on behalf of the corporation.
The transfer deed is signed by the buyer and the seller
(as well as the notary public). The deed is recorded in the
notary’s record book and a copy is presented to the
Registro for annotation and registration. After the National
Registry reviews the deed and any potential defect is corrected,
the property is registered in the name of the new owner.
Make sure that the transfer deed is indeed recorded, not
just presented to the registry. The registry will not record
a transfer deed without the full payment of transfer taxes,
documentary stamps, notary fees and property taxes. Transfer
taxes and documentary stamps are approximately 2.5% of the
purchase price and notary fees are set by law at 1.25% of
the purchase price.
You can hold title to property in the name of an individual,
the names of several individuals or in the name of a corporation.
Holding title in the name of a registered corporation provides
greater flexibility in estate and tax planning, liability
and overall general management.
Some will suggest that you purchase the shares of the corporation
that currently owns the property rather than transferring
title to a new corporation to avoid the transfer taxes. However,
while you will acquire the assets of the corporation, you
will also acquire any liabilities of the corporation, disclosed
or not disclosed.
The legal system in Costa Rica provides adequate assurances
and protections for foreigners to legally and confidently
invest and hold title to property. However, if the law is
not fully followed and the transaction is not properly executed,
losses can occur. Insist on experienced legal and notary
representation in real estate transactions and the services
of a reputable escrow agent to act as an intermediary liaison
for the disbursement of the funds relating to the purchase.
Protect yourself from possible loss resulting from title
defects by purchasing a title guarantee. Marco Ureña
Pérez is an attorney and notary at First Costa Rican
Title & Trust. He can be reached at 225-0501 or e-mail
marco@firstcr.com.
If you want more information about the best real
estate affordable, please contact Costa
Rica real estate and retirement properties or call toll
free 1 888 581 1786. |
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