What To Know About Buying Real Estate In Costa Rica
1. Background Information to Know Before Buying Property in Costa Rica
Why Buy Property in Costa Rica?
Legal Rights When Purchasing Property In Costa Rica as a Foreigner
- The 50-Meter Zone: The first 50 meters measuring from high tide to inland is public property that can be neither bought nor sold. This law protects the coastline from over-development and destruction.
- The 150-Meter Zone: After the first 50 meters, the next 150 meters is commonly municipal property. Some municipalities lease this premium land for terms of 20 years (with possible renewal). In addition, foreigners who wish to lease must split half the ownership with a Costa Rican citizen. Notable exceptions to this Tamarindo and Potrero Beach. Foreigners can typically purchase beachfront properties in this area of Costa Rica starting directly after the 50-meter mark.
Property Titles for Real Estate in Costa Rica
2. How to Find Your Dream Property in Costa Rica
- Do you need quick access to modern amenities such as the most up-to-date schools, hospitals, stores, and public transportation? Or can you sacrifice a few modern conveniences to live in a remote location for quicker access to activities like hiking and exploring rugged natural beauty?
- Do you prefer the bustling pace of a larger city, or would you prefer to wake up to the sound of peaceful waves on your very own beachfront property?
- Would you prefer to live the high life of surfing and snorkeling, or does your dream day consist of relaxing in a hammock in your private garden?
- Do need the sense of community that comes from living close to a community of fellow expats, or did you always envision living and retiring in a more isolated part of this Caribbean country?
Buying a Home in Costa Rica as a Foreigner
Pros and Cons of Buying a House in Costa Rica as a Foreigner
- Strong market of ready-to-inhabit homes; a straightforward process
- Increased privacy and security
- Generally more spacious than other living options
- Ability to start enjoying Costa Rica immediately
- Architecture usually integrates seamlessly with surrounding infrastructure
- Responsible for all upfront costs
- May have higher maintenance costs from older construction
- Architecture and design may not match your exact taste
- May require compromises in location and amenities
Buying a Condo in Costa Rica as a Foreigner
Pros and Cons of Buying a Condo in Costa Rica as a Foreigner
- Security and sense of community with other vacationers or expats
- Shared cost of upkeep and management makes it economical
- Easy to move in and typically features up-to-date amenities
- Often include modern conveniences like pools, seating areas, and access to public transportation
- Restrictive in terms of rules, policies, and decor
- Shared spaces may impact sense of freedom
- Less privacy than other living options
Buying Land in Costa Rica as a Foreigner
- Build your dream home in a tropical paradise
- Increase property ownership as part of a personal portfolio
- Foreigner-friendly land ownership on which to build home or business for potential profit
- Ideal for retirement or holiday homes
- Requires assistance for legal compliance as well as location-scouting for purchase
- Initiating a building project means more risk and may require on-location supervision
- Potential budget overruns and unforeseen costs from architects, contractors, and suppliers
- Possible delays in construction from weather conditions
- Ownership and maintenance of building, land, and surrounding property can be stressful
Reasons to Invest in Costa Rica
- Foreigner-Friendly: Foreign investors enjoy the same legal rights as citizens. Be sure to contact the local municipality to preclude any exceptions.
- Potential Year-Round Income: The Caribbean climate increase the likelihood of year-round income. Although Costa Rica has a conventional high season and a low season, the sheer biodiversity attracts visitors for various reasons during every month of the year.
- Economic and Political Stability: Costa Rica is a republic that is friendly with richer nations and has long enjoyed economic and political stability. It is a much safer bet for investment than other Central American countries.
- Diverse Opportunities: Costa Rica is flexible enough that you can buy land, existing beachfront property, a house, or a condo and then rent for profit.
- Expanding Infrastructure: Expanding infrastructure that includes railways, bridges, and new highways means that you can now reach remote locations easier than ever before. This expansion also makes living further out safer since you have more direct access to hospitals and other amenities as well.
- Idyllic Surroundings: One cannot say enough on how many regions in Costa Rica resemble a real-life paradise. Investing in this region can feel more like a sure-bet due to the guaranteed flow of vacationers, adventurers, and tourists. This can translate into income flow that you can use to calculate plans for your future. You can also take advantage of your property by using it as your own getaway between rentals or during renovations
3. The Major Steps to Purchasing Property in Costa Rica
How to Find the Right Costa Rica Real Estate Broker
1. Make an Offer
- 1. Make an Offer: The first step is to make an offer in order to demonstrate interest in the property and put yourself ahead of competitors. Most offers are generally lower than “asking price.” An offer should be high enough to ensure likelihood of closing the sell, but low enough that you are not paying more than the property is worth. Check the worth of a property by conducting research on surrounding sales and getting a second opinion from an assessor.
2. Finance Your Property
- 2. Finance Your Property: As with most countries, it is unlikely to receive local financing as a foreigner. Most financiers require that applicants are legal residents of the country. It is possible to receive grants or loans as a major developer, but the most common ways to finance your property in Costa Rica include home equity loans (on your existing properties), direct savings, or retirement funds
3. Consult an Attorney
- 3. Consult an Attorney: Experienced brokers can recommend a local attorney to process what is known as a “due diligence report.” The law in Costa Rica requires you to produce a due diligence report as proper documentation that you are making a legal purchase. This report usually includes verifying registration of the title for sale, knowledge of any existing mortgages or liens on the property, and proof that any back taxes have been paid in full. The lawyer should also create and append the official contract of sale.
4. Sign the Deed
- 4. Sign the Deed: Costa Rica law requires that a local Notary Public confirms and formalizes your purchase transaction. You must sign the deed and record the transaction with the Public Registrar to ensure a legal purchase. Fortunately, you do not necessarily need to be present in the country to complete this step. Simply sign the documents remotely or authorize your lawyer to employ the power of attorney.
5. Pay Required Closing Fees
- 5. Pay Required Closing Fees: You should anticipate any required closing fees to reduce unexpected surprises down the road. It is customary that the buyer and seller each pay half of the total closing costs, but since this is not always the case, you should verify this early in the process. Closing fees can include deed transfer taxes of around 2.3-percent and attorney association (Colegio de Abogados de Costa Rica) fees of approximately 1.5-percent of the sale price. Total closing fees can cost up to 3.8-percent of the declared value of the property.
4. Understanding Property Management When Purchasing Property in Costa Rica
Property Management and Ongoing Costs
- Property taxes (0.25-percent)
- Homeowner Association (HOA) fees
- Landscaping and exterior maintenance
- Cable and WiFi
- Standard security
- Potential maid or pool services
- Luxury taxes for hotels, villas, or beachfront rental properties
5. Pitfalls to Avoid When Purchasing Property in Costa Rica as a Foreigner
- Making Assumptions About the Process. Since the culture of Costa Rica is laid-back and welcoming, some buyers make the mistake of assuming that the process is overly simplistic. It is important to have written documentation of the real estate market and municipal laws to avoid legal pitfalls. For example, a property for sale needs to be fully registered and titled to avoid any claims against the property after you have already handed over your money.
- Trusting the Wrong Individuals. Verified realtors who are members of CRGAR are safer to work with than individuals with unverifiable credentials. Ask friends, colleagues, or fellow expats for recommendations on the best real estate brokers and bilingual attorneys before buying a property.
- Rushing the Process. While you may feel eager to officially own your own corner of paradise, rushing the process can lead to greater expense and legal trouble down the line. Make sure to complete all required paperwork and register with the required governing bodies so that you do not encounter problems in the future.
- Failing to Visit the Property. Ideally, you should visit the property multiple times at various points of the year to know exactly what you are getting. You can also hire an surveyor to fully evaluate the property and surroundings.
6. Purchasing a Property to Permanently Relocate to Costa Rica
- Spectacular views and landscape
- Pleasant climate
- Vibrant local culture
- Low crime
- Sense of community with fellow expats
- Strong and stable real estate market
- Decent amenities and infrastructure
- Great foreigner rights
- Low overall costs
If you need help purchasing property, homes, condos, businesses, or anything real estate in Costa Rica, please feel free to give our office a call.
We also offer Costa Rica tours here.