Thinking of Buying a Property in Costa Rica? Here Are a Few Things to Know

While your real estate attorney will review all relevant documents during the due diligence process, this guide is intended to give you an overview of the most important items to look out for as you embark on your property search.

Title

One of the first and most important questions to ask is whether the property is titled. Most property in Costa Rica is titled, meaning that it is registered and searchable in the Public Registry. However, there are important exceptions. Most properties located within the maritime zone (from 50 to 150 meters from the beach) are by concession from the municipality in the canton in which they are located. Concession properties have special rules and cannot be majority owned by a non-citizen. Also, some rural properties may not be titled because the original owners never went through the process of registering them in the Public Registry. Always inquire early in the process about the title status of any property you are interested in purchasing. Your attorney will make sure the title is clean and that the property is free of any liens prior to closing.

Water and Electricity

If you are interested in purchasing raw land, especially in rural areas, it’s very important to inquire about the availability and proximity of water and electricity. Depending on where the property is located, bringing new water and electric service to a piece of land can be a lengthy and expensive process.

Land Use/Setbacks

Also be aware of land use restrictions and setbacks. Whether a property is zoned as agricultural, residential, or commercial will impact the type of construction that is allowed and the amount of the property that can be built on.

Condominiums

If you plan to purchase a condominium, always inquire about the HOA fees and condominium regulations. As part of the due diligence process, your attorney will review the condominium documents and bylaws, but it’s best if you are aware of items like building limitations as early as possible to avoid surprises after you’re in contract.

Purchase Option Contract

Always hire a real estate attorney to help you iron out the details of the purchase option contract (sometimes called an offer letter or earnest money contract) before signing anything or depositing earnest money, which is customarily 10% of the purchase price. Your attorney will make sure that the contract contains due diligence contingencies and any other provisions necessary to protect you.

Escrow

Due to money laundering regulations, when transferring funds to any foreign account you’ll need to provide some documentation. Your real estate agent can usually recommend escrow companies that they’ve worked successfully with in the past. Make sure you allow enough time in the process to get all of the documentation required and transfer the funds for the deposit and the final balance due at closing.

If you have any questions about purchasing a property in Costa Rica, please contact us and we would be glad to help you.