Can I get Financing?

If your credit rating is exceptional, you may be eligible for financing though institutions such as Banco Improsa, Banco Nacional de Costa Rica, Banco Costa Rica or one of the other banks here in Costa Rica. However, financing in Costa Rica with local banks is difficult. You will need to be prepared to show all of your financial information as you would in your home country. For example, if you are from the United States you will need copies of your W-2’s and tax returns. There are many private lenders who will make short term “hard” money loans to just about anyone. They will use the property as collateral and will generally only give 50 – 60% of the value of the property. Many sellers are willing to finance the sale of their properties.

Do I need a Costa Rican partner to own property?

You sure don’t! Foreigners in Costa Rica can own property in their own names just as you would in your home country. Purchasing property through a new or existing corporation (Sociedad Anonima or S.A.) is also very popular in Costa Rica. In fact, most buyers buy property through a corporation for many reasons. Special rules apply in maritime zones for concession property.

How do I know if a property is titled?

All property in Costa Rica should be registered in the Public Registry, whether the property is fee simple or concession. Well over 85% of property in Costa Rica is fee simple. Your attorney will be able to confirm that the seller has ownership of the property, and to determine if there are any restrictions, encumbrances or liens. Having a concession means the owner has a lease with the Costa Rican government for a specific period of time. The lease period is variable and can be continually be renovated as long as the annual ‘cannon’ is paid and the terms of the concession are completely respected. Concession properties will have zoning restrictions outlined in Regulatory Plans called a “Plano Regulador”.

How much are closing costs?

Closing costs are approximately 3.75% of the declared value of a property. About 2.5% goes to the goverment in the form of stamps and taxes. About 1.25% goes to your attorney. In private sales between an individual buyer and seller, closing costs may be split equally depending upon negotiations. If the buyer is sending money there will be minimal wire transfer fees. Furthermore, there will almost always be escrow fees and those fees vary depending on the company used but they are also minimal. Sellers will also have to consider that they may have commissions to pay out to brokers/realtors/commissionistas who may have helped them with obtaining a buyer. Typically, commissions hover from 6 to 10% depending on the size of the transaction.

How much are property taxes?

Property Taxes in Costa Rica are very low, only 0.25% of the registered property value. There is also a luxury tax that can increase the annual property tax from .1% to .25% depending on the size and features of the home. However, this is still a bargain compared to the inflated values in combination with the higher percentages in the “first world”.

Is there title insurance in Costa Rica?

Title insurance and escrow services are available through recognized companies. The fees for services are generally 1% or less. We can guide through the process using the best professionals in the area.

Should I be concerned about squatters?

Although Costa Rica has laws to protect locals who have lived and cared for a property for many years, also known as squatters rights, squatting is extremely rare in developed areas of the country. If you plan to purchase in a very remote area, it is advisable to have a caretaker check the property regulary to ensure that nobody unauthorized is living there.

Will I need a Lawyer or Notary?

Yes, without a doubt. The buyer in Costa Rica has the privilege of choosing the attorney for the closing transaction. The buyers attorney will handle all due diligence. Most sellers won’t require an attorney unless there are special clauses in the sales contract that will require them to have an attorney look over the document for their protection which would include a trust, owner financing, or private mortgage. The closing costs as noted above include the fees for your attorney.