Frequently Asked Questions
How Is Titile Transferred?
In Costa Rica, Property is transferred from seller to buyer by executing a property transfer deed before a Notary Public. Unlike common law countries, such as the United States or Canada, where the roll of a Notary Public is limited to authenticating signatures, in Costa Rica the Notary Public has extensive powers to act on behalf of the State. The Notary Public must be an Attorney and may interpret legal documents, as well as authenticate and certify the authenticity of documents.
In order to close on a property, a Notary/Attorney will draft the transfer deed and register the sale in the centralized property registration office in the Capital of San Jose known as the Public Registry. All documents for the entire country are centralized and recorded at this location. The local accepted custom is that if the buyer is paying cash in full for their purchase, the buyer may select his/her own Notary/Attorney to draft the property transfer deed. However if any portion of the purchase is being financed by the seller, and a mortgage needs to be drafted to guarantee payment, then in this case the sellers Notary/Attorney will draft the transfer deed as well as the mortgage.
How Much Are Closing Costs?
In Costa Rica Closing Costs involve three items.
- Real Estate Transfer Tax and Documentary Stamps. Here the Government collects a property transfer tax which is equal to 1.5% of the registered value of the property. Once the transfer tax is paid the Government’s Documentary Stamps are affixed to the deed at a cost of about 1.2% of the registered value. The Public Registry Office will not record a Transfer Deed unless the transfer tax and documentary stamps have been paid.
- Notary/Attorney Legal Fees. The Notary/Attorney that drafted the contract for sale, carries out the real estate closing, prepares the title transfer and records the property transfer is entitled by law to a fee which is based on approximately 1.3% of the registered value of the property.
- Mortgage Costs. The person who is receiving the financing must pay for the costs of drafting and registering the mortgage instrument. This instrument must also be registered and also incurs document stamp fees.
Do I Have To Return To Costa Rica To Do The Closing?
No, when you are here initially and make your lot selection and activate the purchase agreement with your down payment, you will meet with the closing Attorney, Mr. Gerardo Calderon, to secure your Corporation. At that same time all the necessary documents and the power of attorney that will be used for closing will be presented to you. Once the presentation process is completed at the Attorneys office and all your official documents have been properly filed and recorded at the National Registry in the Capital of San Jose, your final, recorded documents will be sent to you via Fed-X. However, if you wish to return to Costa Rica to pick up your documents you most certainly can.
How is The Transfer Deed Registered?
Once all the required fees described above are paid at closing the property transfer is presented to The Registry for recording. After being recorded the Registry will return the original documents to the purchase with all the documentary stamps affixed to it and properly dated and authenticated with their official seal of registration within 30 to 60 days.
How Can I Be Sure That I Have Clear Title To The Property?
When the property was purchased by the current owner in February, 2002 a complete title search was preformed by Stewart Title Corporation of Huston, Texas, by their local Costa Rica office in San Jose. The property was deemed to have a clear title as evidenced by the Stewart Title Guaranty certificate number C-7502/1878. (See Legal Documents on the home page menu) To further evidence the fact of a clear and transferable title the Public Registry Report provides up to date detailed information on the property, including the name of the current title holder , boundary lines, tax appraisal, liens, mortgages, recorded easements, and any and all other recorded instruments that would affect the title. A current copy of this report describing the Lot purchased is given to the purchaser at the time of closing to insure clear title. If the purchaser would like to perform a second independent title search they may, at their own expense, hire, either Stewart Title Company or Chicago Title Company here in Costa Rica to perform that second search. This normally is not necessary since the Title Companies draw all their information from the same public records as your original report uses to make their findings, The Public Registry.
How Secure Is A Real Estate Transaction Completed As Described Above?
It is just as safe to buy titled land in Costa Rica as it would be in the United States, Canada or Europe. The guiding principals of, offer and acceptance, and the public registration of ownership, leans and encumbrances are no different in Costa Rica. Additionally, there are no restrictions on foreign ownership of real estate in Costa Rica as there are in other countries such as Mexico. So, a foreigner has the exact same rights and security on titled real estate as a Costa Rican has.
How Much Are The Property Taxes On Property In Costa Rica?
The taxes are based on the assessed value of the property which is declared every 5 years by the owner. Based on this stated value the tax rate is computed at 0.25% of this stated valve, not the appraised value, which is higher. A stated value of $20,000.00 would have a yearly tax of $50.00.
Who Will Maintain My Lot, Common Areas, Parks, Pools etc., and What Is The Association Fee? Also, Does The Neighborhood Association Provide Security Guard Services?
There is a ‘Neighborhood Association’ which is mandatory for all lot owners to participate in so as to maintain the security, integrity, appearance and value of the property. The monthly fee is $125.00 per month which covers all individual lot maintenance as well as all common areas including the river, roads, parks, pool, BBQ’s etc. This fee also provides the 24 hour, 7 day per week security guard service. These fees shall be added to the monthly mortgage amount if the property was financed. Afterwards, when the lot is paid off, or if the lot was initially purchased and paid for in full cash, the Association Fee will be billed annually for 12 months on January 1st. of each new annual period.
In What Name Is The Property Normally Purchased In?
Here in Costa Rica, as in other countries, you can title your land in an individual name, in a co-ownership with other individual persons, or in the name of a Corporation. It is common practice, and most advisable that you take title to the land in a corporation that you own. This allows you to treat this purchase as a separate entity and will always remain separate from any other assets you may have. It also makes it easy to sell the property owned by the corporation. Simply by transferring the corporation, you transfer the property that your corporation owns. The Notary/Attorney handling the closing can secure the corporation for you.
What Does It Cost To Form A Corporation, and Who Would Do It For Me?
Exclusively for property purchasers the Attorney that will be handling the closing will also secure your Costa Rican Corporation at a discount of 50% for a total cost of only $250.00. This fee will also include all the corporate books as well as the stock certificates.
I Want To Build, What Do I Do?
The process is quite simple and painless since the law requires that any application for a construction permit be presented by a licensed Architect or Engineer and they know how to proceed. Your main duties in working with them would to decide the type and design of home you would like to have built.
What Do Architect’s Charge and What Do They Do?
All Architects and Engineers must be licensed by the Costa Rican Association and are governed by the set of established fee schedules. Most Architects charge a 10% fee. However, through a special arrangement, if you choose to use our preferred, recommended Architect the design fee will be reduced to 5%. This 5% fee is based on the cost of the materials used to construct your home. Example” If you choose to construct a 3 bedroom, 2 bathroom home of 1800 square feet and the cost of the materials was $60,000.00, your design fee would be 5% of this amount or $3,000.00.
Do I Have To Build During any Given Timeframe?
No, there are no timeframe building restrictions and you may choose from a abundance of building contractors available to you. However, if you do choose to build your home within 3 years from your homesite purchase date while the recommended building contractor and his crew are on site, he will build your house for a labor cost of $37.20/ per square foot ($400.00 per M2) plus the cost of the materials which he has agreed to purchase at his discounted contractor pricing. By getting the contractor discount as well as purchasing the materials from his home town and not here in Jaco Beach, where materials are much more expensive, the homeowner can save at least 30% on the building material costs.
Does This Contractor Do Quality, Guaranteed Construction?
Yes, he sure does. The contractor just finished a $2,000,000/00 Spanish Mansion here in Jaco Beach which has received International acclaim and you may visit this home while you are here If you choose to. For pictures of the home see “Contractor Information” on the home page.
Who Would Oversee My Home Construction When I’m Not Here?
Once again, to help you and insure that your home construction goes as smooth and secure as possible, special arrangements have been made with a Project Manager living here in Jaco Beach that you could hire. They would visit your construction sight daily and perform the following duties for you; Initially help with design and floor plan decisions; Then; Complete project management from start to finish including; Attend all architectural meetings, Check permits for construction, Make sure that the Contractors insurance is up to date, Check invoices against materials delivered to construction site for accuracy, Email periodic pictures of construction progress to the homeowners, Supervise quality and selection of all windows, doors, roof materials, rain gutters, flooring, wall finishes, bathroom and kitchen fixtures, lighting, counter surfaces and cupboards. In all they will provide and be responsible for complete accountability to the homeowner.
Can I Rent My Home Out For Extra Income When I’m Not Using It?
Yes, we will put you in touch with a professional rental company here in Jaco that will take over the complete rental management of your home when it is not being occupied by you. They will be responsible for all advertisement expenses and will coordinate your utility payments and maid cleaning services to keep your home rented and in tip-top shape. The most they charge is a 25% commission, which may be reduced to 15% based on the total rental, with at least 75% going to the homeowner. Example a 3/2 home that rented for $1,500.00 per week would gross the homeowner $1,125.00 for that weeks rental. ($1,500.00 X 75% = $1,125.00)