Great guide to buying Real Estate in Costa Rica.

This was provided by my good friend Lenny Feinzaig who is a well respected international attorney based in Costa Rica. This is a must read for anyone looking to buy Real Estate in Costa Rica.

Real Estate in Costa Rica
Legal aspects of purchasing properties in Costa Rica


I. Step by step through the purchase procedure of titled property in Costa Rica

1. Due diligence on property: Prior to purchasing the property, it is necessary to perform a title research in order to acquire all information regarding the current and legal status of the property. The due diligence report must include a complete description of the property, its owner, its liens, encumbrances and possible restrictions.

2. Escrow service: All funds related to the transaction must be deposited into escrow.

3. Acquisition of a corporation: A common practice in Costa Rica is to acquire properties through a new corporation. This tool is especially useful if Buyer wishes to close on their property without visiting Costa Rica. In this case, the corporation may grant a special power of attorney to a third party in order to purchase the property on its behalf.

4. Public transfer deed: Once the Buyer has a clear view and understanding of the property status, a public deed must be executed. This document contains all of the stipulations regarding the transfer of real estate including basic information about the Buyer, Seller, the property and any other terms and conditions of the sale. An attorney who is also a Public Notary must prepare this document and the deed must be recorded in his/her Notary Book as well as at the Costa Rican Public Registry.

5. Recording process: Once the deed has been prepared and executed by Buyer and
Seller, it is the Notary’s responsibility to record the deed immediately at the Public Registry. The recording process consists of two phases. In the first phase, the Notary files the deed at the Public Registry for its annotation; from this moment the property is protected against any third party interest. Although presentation guarantees the priority of the deed, it does not automatically guarantee registration. The Public Registry must first approve the purchase agreement and verify that all taxes and expenses are included. At this moment the second phase of registration begins and the property is recorded in the name of the new owner. Please be advised that since Costa Rica operates on a “first in time, first in right” system, recorded documents filed before the Public Registry are given priority according to the date and time in which they are recorded, therefore registering the deed immediately is essential to ensuring that the new Buyer’s rights to the property are ahead of any other claims by third parties.
If the public deed complies with all legal requirements, it should be registered within 15 to 30 days after it was filed.

Costa Rica Real Estate


ll. Step by step through the purchase procedure of beachfront property in Costa Rica.

When purchasing a beachfront property, you are acquiring the concession rights over the property, not ownership rights. In order to achieve successful closing transactions, the following steps and requirements must be fulfilled:

1. Due diligence on property: Since there is no registered property title, it is necessary to assure that the concession rights of Seller have been exercised in compliance with all applicable statutes, laws, rules and regulations of all Governmental Authorities; that there are no liens, attachments, restrictions, encumbrances, or limitations that affect the concession rights; and that Seller has all concession fees, municipal and property taxes up to date and duly paid for.

2. Escrow service: all funds related to the transaction must be deposited into escrow.

3. Purchase option: Prior to purchasing the concession rights, Buyer and Seller may
execute a Purchase Option over the concession rights. During the term of the Option,
Buyer shall have the right to execute a due diligence investigation on the property.

4. Acquisition of a corporation: The concession rights shall be purchased on a corporation’s name. Buyer may suggest a company name and designate the directors
of the company (personal information is required: full legal names, domicile, passport numbers, marital status and profession).

5. Purchasing the property: When purchasing the property, Buyer may execute a
Purchase Agreement through a new corporation or a Stock Purchase Agreement.
If Buyer executes a Stock Purchase Agreement, 100% of the capital stock of the corporation that holds the concession rights over the property must be transferred to Buyer. The parties must also execute a Spanish Agreement “Renuncia a los derechos
de concesión y a los trámites de concesión”stating that Seller resigns and waives anyright, term or condition of such party in regards to the concession rights and property during and after the concession process.

6. Trust Agreement: Upon closing, the stock must be transferred into a Trust for nationality compliance, since at least 51% of the stock of a corporation that applies for a concession request must be owned by a Costa Rican citizen or corporation.

7. Concession request: Upon closing, the concession procedure must be immediately started. The concession request, the plot of the property and other legal documents must be filed at the corresponding municipality. The procedure to obtain a land concession will take form six months to one year, provided there is an approved Regulatory or Zoning Plan for such area.

Costa Rica Information


FEINZAIG, SCHARF & VAN DER PUTTEN
San José
Torre Mercedes Building 8th Floor, Paseo Colón
San José, Costa Rica
Tel: (506) 295 6699 Fax: (506) 295 6644
Guanacaste
Plaza