THE BUYING PROCESS FOR TITLED PROPERTY

When it comes to owning property in Costa Rica, Costa Rican citizens and foreigners have equal rights under the law. Titled property is owned in fee simple as it is in the United States and other foreign countries. Fee simple basically means that the owner of the property has the absolute right to materially own the property, use it, enjoy it etc. The only exception is if the owner bought the land as part of a government program or in case of Maritime Zone land and Concession Land.

Most foreigners are absentee owners in Costa Rica so you do not have to live in Costa Rica to own land.

Once you’ve made a decision to buy a property in Costa Rica, the following steps will take place:

1 - SIGN A “PROMESA RECIPROCAL DE COMPRA-VENTA” (RECIPROCAL PROMISE TO BUY AND SELL)

The purpose for signing a Reciprocal Promise to Buy and Sell with the seller is to make sure that nobody else purchases the property during the process of due diligence on the title. Under this agreement, basically, the seller agrees to sell and the buyer agrees to buy at a specified price and on an agreed upon date. A lawyer is present at the signing of this Agreement. This agreement will also delineate the agreed upon deposit amount (typically 10% but not always). At the signing of this agreement, the buyer will give to the seller the deposit which will be held in escrow until the closing date.

With an Option to Purchase Agreement, the Buyer is paying for the right to purchase the property at a predetermined price within a specified period of time. The owner has not renounced any ownership rights nor has any obligations been transferred with the signing of the Option to Purchase Agreement.

2 – DUE DILLIGENCE

After the signing of the Option to Purchase Agreement the property goes through the due diligence period or the “title search” as we are familiar with. All properties are registered with the “Registro Publico” (Public Registry). The attorney will research the property in the “Registro Publico” to make sure that the title is clean. Each property has a “Folio Real” (folio number) in which the properties can be searched in person or online to make sure that there are no “gravamenes” (liens or encumbrances) on the property. The attorney will search the title back to the beginning of the property to make sure that the property title is clean and there is proper ownership by the seller.

The Registry can provide an “Informe Registral” (Registry report) that provides information on who the owner is, the boundary lines of the property and liens or encumbrances that may be bestowed upon the property and any other recorded documents that affect the title of the property.

Title Insurance is not required to purchase property in Costa Rica. However, there are many reputable title companies such as Stewart Title and a few others that you may purchase title insurance if you wish to do so. Although title insurance is not necessary to purchase in Costa Rica, we always recommend that you do so.

Lastly, we recommend that the Buyer check with the municipality to make sure that all property taxes have been paid and are up to date. It is good to have the title searched just before closing to make sure that no “gravamens” have been added since the first search.

3 - CLOSING

Once the title has been searched and correct ownership determined and confirmed, and the property is free and clear of any liens or encumbrances, or anything that will affect the title, then you are ready for the closing.

At closing the Buyer and Seller will execute the “Escritura De Traspaso” (transfer deed) before a Notary Public which transfers ownership of the property from Buyer to Seller. In Costa Rica, in order to be a Notary Public, you must first be an attorney. It is much different than a Notary Public in the United States or other countries which have limited powers. Costa Rican Notaries are given powers to act on behalf of the state.

Once the Escritura De Traspaso has been executed, then it must be filed with the Registro Nacional. The Notary Public who handles the closing is responsible for filing the Escritura with the Registro Nacional. The registration process should take approximately 45-60 days. Once registered, the Registro Nacional will return the original deed with the approval signature. This means that the Registrar approved the document and logged the authorization with their security code in the computer records and the property when searched in the Registro Nacional will show up under your name or your corporate entity.

Pacific Tides Realty is not in the position to render legal advice. Please be advised that the information provided to you is provided to the consumer to help understand the buying process in Costa Rica. These laws are subject to change and therefore you should always consult a local attorney to verify that this information is correct and up to date.