Realty in Costa Rica's advice and tips for living and buying Real Estate in Costa Rica
Part #1
INTRODUCTION
Where we live in the world today makes a big difference in our lives.
People who are thinking of living in a place where there is a lower threat of terrorism, less crime, more privacy, less repression, lower overall living costs, and where it is just easier to live your life and do business, are realizing that foreign real estate could be one of the most important and exciting things in their lives.
To most who are thinking about their security, comfort, privacy, and more financial stability, the idea of investing in the coming offshore real estate boom is very inviting.
Many people in the western world are finding that for now and the next several years, investing in international real estate will be one of the best moves they can make.
It’s time to start planning to get there before the rest of the crowd.
It’s time to look into new, beautiful, and exciting places to live.
Costa Rica is a fantastically beautiful country, but it is not for everyone. Maybe not even for you. If you are seriously interested in looking at Costa Rica to invest in real estate, we recommend that you go ahead and do it. The very best way to do this is to come here and live for a while, look around and really get the feel of it. If it feels right, make your move.
OUR ADVICE TO BUYERS
If you are thinking about buying property in this beautiful place, you are in a unique and fortunate position. Buying a property in a new and different country may seem hard, but don't get frustrated.
You are not moving to this fantastic country and to live with these great people, to get stressed.
Most of this is just plain, common sense about parting yourself from your money. Be careful, but don’t let it all worry you that much. Personal experience has shown me that buying property in Costa Rica, isn’t that painful if you just take some time and do things the best you can, the first time.
Don’t let anyone tell you that things are the same in Costa Rica as they are at home. When they start to look that way, use caution. There are fundamental differences. Costa Rican ways, are in many things, the same as yours, but many times they do things quite differently. After living here for a few years, I am finding out that the ways, and reasons Ticos do the things the way they do, actually makes a lot of sense.
You must get good, reliable confirmation before you go ahead with anything. Relax, like Ticos do, try to do like the Ticos do, and it won’t be as hard as it seems.
Don’t let yourself be surprised by anything. This is due diligence. There is no finger pointing when you are buying a property in Costa Rica. If you find yourself surprised by something after you have made your final move, you can only blame yourself.
Costa Rican philosophy is strongly Laissez Faire. Consumers are expected to research the things that they buy and make their own decisions. If the consumer finds the product acceptable, they will buy, otherwise, they will not. The government does not enthusiastically protect business ignorance.
Don’t be in too much of a hurry. Do your research, ask questions, and rely on your own efforts, instead of taking the word of others.
Get into the habit of not looking at any property before you know the asking price first.
In addition to having your lawyer advice you about legal matters, pay a qualified person who will evaluate properties you have seen. You will be money ahead. Do this before you commit to buy.
There will always be property for sale. If you miss the opportunity on a property, no problem, it’s not the end of the world. Another will come along and, many times, even better.
CHOOSING A REAL ESTATE BROKER (CORREDOR INMOBILIARIO)
In Costa Rica, there is neither mandatory licensing of brokers and agents, nor requirements for being affiliated with any associations or groups.
How long the agent has been in business, is not a sure guarantee. There are good and bad brokers/agents who are both new and old in the business in Costa Rica. Experience is good, but there are many good agents without a lot of years in the business who give very good and reliable service.
Real estate brokers and agents should help you find the right property, not try to sell you something. That is not their job.
Having a good relationship, and working well with your agent will get you some good information, knowledge, experience, and contacts that you can work with to smooth some of the bumps, ease some of the stress, save time, and most importantly, he will probably save you money.
Choosing a good real estate agent here is not easy. It is best to find someone who specializes in the area you are interested in. He should be willing to work with other agents if he doesn't have what you are looking for.
Be honest with him. Give him your budget, let him know what you would like and not like, and an approximate time range for purchase. Give him your requirements and see how responsive he is to your needs.
Agents here, at times, have to deal with many flakey people, which can make many of them a bit cynical. Let them know that you are sincere about buying property, and are not using them as tour guides in a new country.
He should be readily available and work hard to help you find your property.
A good agent will try to lead you in the right direction and help you make some of the contacts you need, even though this is not part of his service. He usually doesn’t compare the real property with the recorded property. His fees do not cover doing any of this research for you.
He brings a buyer and a seller together, and he wants everyone to leave the table happy.
When you decide to buy, your real estate broker/agent is out of the picture. From here on out it is between you and the seller.
The seller almost always pays the broker’s commission.
When you work with a good helpful agent, do your homework, and have a good reputable attorney check everything out, you won’t get hurt buying property.
FINDING YOUR PROPERTY
Get a good real estate lawyer. Many sellers think that you will be lazy and not check everything out.
Move around as often as you need for as long as it takes to find a suitable region, town, or neighborhood before you consider buying.
Find out everything you can from the municipality and the neighbors.
Know about the property and what is planned around it. Spending enough time in the area should eventually reveal most of the negative aspects of any place you are considering buying.
If your primary goal is rapid appreciation you will want to consider high demand locations. The more isolated the property the more limited the demand. Don’t buy isolated property for appreciation unless you know you can create a demand.
Check with the municipality for all possible future happenings. Find out about new highways and roads, landfills, electric power lines above, sitting on gas mains and major piping systems underground, etc… This is up to you, not your attorney or agent.
If you are buying land to build on, get a soils test.
In Costa Rica many things are not considered part of the property. Get in writing a list of everything that will or will not be included. Some sellers will even take lighting and other fixtures with them.
Ask the seller for the Folio Real number and the Catastro number of the property.
If you want property near the water, understand the Maritime-Terrestrial Zone Law, or have a good attorney brief you. There are many good books explaining this.
Escrow is not a legal concept in Costa Rica. Payment of money to be held is not a business principle. Money should change hands only when the buyer receives something from the seller. If you give any money up front you risk losing it. If you feel you will lose your dream property if you don’t put some money down to hold it, make it a small amount, and have your attorney write into the contract that the money will be returned at purchase, and if not returned, that you will place a lien on the property until paid.
Rural land regulations are new here. If you are using your own resources you may be able to do almost whatever you want with your own property. If you are going to use and risk your own money, it’s ok, that’s only fair.
If you are going to subdivide your property, you will have to get permission from the local municipality and the government housing agency (INVU). Get a good topographer to plot any sites if you want to parcel your property.
Check for neighborhood zoning laws. In order to maintain local standards and property values, some locales set down strict rules for style and quality of construction.
You cannot build a house within 50 to 100 meters (164 feet to 328 feet) of a river.
In most locales, you must to leave space for a front yard and a sidewalk.
If you have a beautiful view from your property, think about buying the land around it.
PROPERTY PURCHASE CHECK LIST
Request the title number (Folio Real)
Request the survey map (Plano Catastrado)
Have a title search done (Estudio Registral)
Carefully walk the property boundaries with the survey map
Certify that all municipal property taxes and assessments are paid
Arrange for a property inspection to be done on the house
Be sure the property is not affected by future highway development or other projects such as waste land fills, etc…
If you purchase to build, consult municipal government for restrictions
If you purchase with a house, request a copy of the house plans and building permit
Have the seller list everything that is not included with the property
Be sure any domestic employees you keep have been paid off by the seller
PROPERTY INSPECTION
Inspect the property yourself
Have property checked by a competent consultant to verify that the property agrees with the catastro. Don’t take the word of the seller or his representatives.
When you inspect, have the seller, or someone who knows the boundaries, buildings, and improvements, go with you on your inspection tour.
Tour the boundary fence line entirely. Anything that seems out of place should be investigated thoroughly. Take the latest survey, a good topographic map, and a magnetic compass.
Note anything out of place between the survey and what you actually see
Note buildings and structures that are not shown on the detail map.
Find out what part of boundary fencing is your responsibility and which is your neighbor’s. Common boundary maintenance is shared. This is important unless you don’t mind taking care of all of it yourself.
Meet all of your adjoining neighbors and make sure they are the same in real life that is mentioned on the catastro.
Don’t get lazy on a large property. If you do, you will be doing what the seller expects you to do if he is trying to pull a fast one.
Inspect buildings for construction flaws and condition. If you’re not sure, get a professional opinion.
Block and reinforced construction can be poor, and after it is finished it is hard to see the flaws, expensive or cheap, good or bad. Poor construction will age quickly. Sometimes you can trust your feelings as much as a competent, professional opinion. Earthquakes will leave weakness in construction with cracks, but don’t panic at any crack you see. It may be nothing.
After you inspect it completely, and you have a resolution of your concerns, then buy at a price that makes you happy.
All of the above applies to all properties no matter what size. All properties must be verified as to area, shape, and location as the same property represented by the seller as the property you are actually buying.
If you buy the wrong property or don’t get what you thought you were going to, it is nobody’s fault but your own.
If building duplexes or rentals, build to condominium specifications just in case you want sell them later with little trouble.If you want any roads, plan on building and maintaining them yourself.
YOUR CONTRACT
Put everything in the contract.
List everything, in writing, that goes with the property and what doesn’t. Without a list, it is only your word against the sellers.
Land and anything attached to it is considered immovable (inmueble) and everything else is moveable (mueble).
Disclosure is not required in Costa Rica. Ask the seller a lot of questions and get everything in writing and in legal form. You can get your attorney to draft questions to ask the seller.
When you decide to buy, your real estate broker is out of the picture. From here on out it is between you and the seller.
The only one in Costa Rica who can write a legally binding real estate contract is the Public Notary (lawyer). Only notaries are permitted to transfer properties.
THE CLOSING
When you see a lawyer, he will be acting solely as a Notary Public for the purposes of transferring the property. This lawyer is not representing you, he represents both the buyer and the seller.
Be sure there are no blank spaces on the contract before you sign. Some lawyers will tell you that the blank spaces are not important, and that he will fill them in later.
Have a certified English translation of all Spanish documents requiring your signature and read them before you sign the Spanish original. The only legal documents in Costa Rica are in Spanish.
First, do a title search. Go to the Registro Publico and request a photocopy of the records of the property you are interested in buying. This will cost you about $1. Make sure you have the name and ID number of the owner of the property prior to your visit to the Registro Publico.
Study the official records carefully, checking for snags in the ownership of the property. Look for liens, mortgages, annotations, lawsuits against the property, public road restrictions, water easements, utilities restrictions or any other type of restriction.
Request the sellers to provide you with the latest version of the property map. This will give you measurements, boundaries and topographic details of the property. If they don't have an official map, you can get one at Catastro Nacional (National Catastro Office). Cost: about $2. Make sure the official description of the property is consistent with the property itself.
If no map exists, have a registered surveyor draw a property map and register it at the Catastro Nacional. The process can be completed in two to four weeks.
Make sure that the property is not included in a National Park or reserve. Search for National Park restrictions in the Ministerio de Recursos Naturales, Energia y Minas (energy, natural resource and mine department), in the Servicio Nacional de Parques (national park service). Also, check with the Direccion General Forestal (forestry department) to make sure you can use the property without breaking any forestry laws.
Make a close, personal inspection of the property, note the boundaries, the location and condition of fences and/or property markers. If you think it's necessary, bring in a surveyor to look things over.
Ask for information about your neighbors.
Study the conditions and amenities of the property, things such as topography, electricity, water drainage, telephone services, restrictions on land usage.
Check the property records at the Ministerio de Obras Publicas y Transportes (roads and transportation department) to make sure the county isn't planning to blast a freeway through the living room of your new home.
Look in at Ministerio de Salud (heath department), Instituto de Vivienda y Urbanismo (housing and urban development department) to review the master zoning plans. Check local municipality and forestry department plans for land usage restrictions.
PLAYING THE GAME
Try to live in Costa Rica for at least four months
Write a detailed plan
Avoid impulse buying
Use common sense
Retain a competent lawyer.
If you plan to invest in rental property be sure it is attractive to foreigners.
Be a tenant yourself until you decide what you want.
Get a copy of the registered land survey and deed from the seller.
Inspect the property thoroughly before making any commitment.
KNOW THE STATUS OF:
Property taxes
Title, leans, encumbrances, annotations
Anyone living on the property
Things attached to the property
Boundary fences and responsibility for them
Workers / guards / maids
Telephone / electricity / water
Get a written and signed statement of all verbal representations
Look beyond information a real-estate agent or seller volunteers
Avoid putting any money at risk until your lawyer reviews your choice
Look carefully
Proceed slowly
It’s a buyer’s market
Evaluate property realistically
Buy only registered property
Do due diligence
Make sure you agree to pay only half of the real estate transfer costs
SQUATTERS
Squatting – “To occupy without authorization”
Having and evicting squatters is trouble you don’t need. It usually happens in more unsettled areas, near the borders, and if it’s unfenced and unprotected, but it can happen anywhere.
If your land is titled, maintained and guarded, squatters won’t bother because they know they will be found out early, and legally evicted. Many of them connect with lawyers and know what’s happening. They know their rights and sometimes can be very belligerent.
When you find that there are squatters on your property you have to remove them immediately. At your expense. If you wait, it will be harder and more expensive. If they have made any kind of improvements, they must be paid for them, even if they cleared some of your land without your approval.
The best defense is to have a good lawyer, buy registered land, and show you have the legal right to the land. Then there is no question with the government and legalities.
You must hire a guard or caretaker for any property in Costa Rica. This would be recommended concerning almost any property in the world. This isn’t expensive in Costa Rica.
Unless you have an escritura (deed) to show to the police, there's not much they can do because it has to go through the municipal court to validate any leases or concessions. This can take time.
The basics: Squatting is permitted only on agricultural land that can reasonably believed to be abandoned. A judge won’t be convinced that a house could be mistaken for "agricultural property." Anyone entering your house without permission are simply "burglars" and not "squatters" and can be arrested immediately. If you buy an isolated farm, or a stretch of beach property that is of questionable ownership, you can and will have problems. Vacant farm land needs a trusted friend or employee to check it over at least once every 90 days. Residential property is safe.
If you file papers to have the squatters removed, you have to name them. Then after many months when it gets close, they rotate the squatters out and you have to start over with new names. This could go on forever. What makes it even worse is the person behind this and is financing this takeover attempt is probably a lawyer in San Jose.
Use your judgment. If you buy a place in a neighborhood or populated area, you might not have a problem. But anything that is the least bit remote is vulnerable unless it is constantly occupied or protected.
INVESTMENT PROPERTY
Before you begin your search for an investment property in Costa Rica, define your objectives, and have a good game plan. If you do this, you will avoid impulse buying and disappointment.
A good plan is very important when looking for property in Costa Rica. Don’t become fixed on the short-term and overlook the obvious like water, electricity, bad roads, and things that will effect your property in the future.
If income is your goal, define the return you’re looking for in relation to the amount you will spend. Decide on a realistic and acceptable return for the risk you take.
Will this venture call for a high level of personal commitment and preparation? This will require more time looking for a suitable property.
BEACHFRONT (CONSESSION)
If you are interested in beach front properties, make sure you read and fully understand the maritime-terrestrial zone law, or have a knowledgeable attorney brief you on it. 99% of all beachfront property is concession. and if you know what you are doing and have a good attorney it is not a risk.
No one can tell you what the property and good beachfront will cost, as each person's tastes are different. Beachfront property for as low as $22 per square meter in the central pacific area near Parrita but you may not like the area. If you look in areas that are "more popular" such as Samara, Tamarindo, Quepos, Playa Grande, Portrero you will find beachfront lots to be well over $100 per square meter. Take your time and look around .. and be careful.
Always remember that government can appropriate any property which serves the political agenda. All maritime laws are subject to overlapping jurisdiction and constantly changing restrictions.
BEACH SITES AND NEAR OCEAN:
Pay close attention to existing electrical and mechanical items, locks, and metal-work for corrosion. Ocean environments are very corrosive. Always inspect for the effects of salt-induced aging. If the construction is relatively new, take a look at similar older construction to get some idea of the level of the salt effect in the area.
You have to form your own opinion before you decide on the right property. You must do your own assessment. The more objective your information and evaluation is, the more reliable your opinion will be.
