The Purchase Process

Foreigners have exactly the same Constitutional rights as a Costa Rican to rent, purchase and develop land. As a property owner in Costa Rica you are entitled to:

• Possesion of Land - which can be individual (personalmente) or joint (en co-propiedad) when two or more people equally own a property; in trust (en fideicomiso) or in the name of a company or corporation (en nombre de una compania)
• Benefit from whatever the land can provide (except minerals, which are owned by the Costa Rica government)
• Alter the land or transfer it
• Defend your land from illegal trespassers
• Claim restitution of the land and indemnity for damages resulting from disposession, as long as your land is legally registered under your name

Buying as a Company or Corporation (Sociedad Anonima)

There are several reasons why buyers choose to purchase a property in the name of a company or corporation:

1. They remain anonymous
2. Personal assets are not held responsible for any costs that could arise from the property
3. If the owner is in debt, they won’t lose the property as a personal asset to pay back for the debt as the property is under the Corporation's name 
4. Owners avoid the official proving of a will (probate) in case of their death if the property is under their children's or spouse's name
5. There is no transfer tax when the property is sold as the shares of the holding company are sold to the buyer, which also makes it quicker
6. They pay very low taxes as holding companies only pay a property tax of 0.25% of the registered tax value 

There are two types of companies available: Corporations (Sociedad Anonima or S.A.) and Limited Company (Sociedad de Responsabilidad Limitada or Ltda.). To create a Corporation in Costa Rica you need: at least 3 board members (who don't have to be residents of Costa Rica), a fiscal and an agent that is a resident of the country (usually the lawyer). If the Corporation is acting as a holding company for the property, you pay no taxes on it. Only a yearly stamp (Timbre de Educacion & Cultura) is required which usually costs between $3.00 and $25.00. There is no capital gains tax so any transfer of stock is not taxable either. A Limited Company is a less used option in Costa Rica by buyers where only 1 manager is required to create it, but all shareholders must agree to any transfer of the shares (acciones). Starting up a company with a name of your choice can take some time here, so usually buyers purchase a ready-made Corporation from a law  firm that has had no commercial activity. These corporations usually cost $300.00 to $1,000.00 each and it is advisable to check thoroughly that this company is free from any liabilities and has had no activity prior to you taking over it as you will be held responsible for it.

The Purchase Process in Costa Rica

Before you decide on acquiring Real Estate in Costa Rica, the most important and crucial step is to choose a lawyer. Never use the seller's lawyer to save money as this may end up being very costly in the long run. A good lawyer that specializes in Real Estate should be chosen and he or she should ensure that the contract in question best serves your needs and interests and that they will protect you throughout the whole transaction process.

The basic legal steps to purchase real estate are:

• Check that your legal papers are in order. You will need your ID card (cedula de identidad) or passport for any legal transaction in Costa Rica so it makes sense to confirm that they are not out of date or missing the correct stamp.
• Find the property you want to buy and negotiate the purchase price and conditions through your broker. Find out how the seller expects payments to be made. You will be expected to make a guarantee deposit to be held against the completion of the purchase.
• Have the seller put in writing everything to be included with the property, especially if pre-closing documents are to be made up and signed.
• Make sure that the Plano Catastrado (plot map) from the Registro Nacional clearly shows that the property that you want is the one you are buying and if the owner is the seller.
• If the Plano Catastrado is outdated, have a topographer survey the land and establish the exact boundaries and size. Plot maps are registered in the Catastro department in the Registro de Propiedad of the Registro Nacional.
• Get the registration number or matricula de folio real of the property from the Registro Nacional.
• Perform a title search (estudio) of the public records for ownership (individual or corporation), property location, boundary lines, registered survey, liens or encumbrances (gravamenes), declared value of the property and any other annotations that can affect the transfer.
• If the seller insists on a pre-closing or guarantee deposit, don’t rush it. This might force you to close sooner and make mistakes or look over liens or encumbrances that might affect you later on. The best option is to place any money in trust or escrow with your attorney.
• The transfer deed (escritura) is drawn up and signed by seller, buyer and the notary attorney.
• The deed is recorded in the notary’s record book with a copy presented to the Registro Nacional for registration.
• Once the notary places the deed with the Registro Nacional, it can be annotated. This is a note to state the deed is in the process of being registered and it takes precedence over any other documents that might be presented.
• The Registro Nacional checks the title, making any necessary corrections and registers it under the new owner’s name. The title must be presented immediately to benefit from the 3 month protection that no other title or limiting documentation can be presented that could affect your property.
• Payment is made of all due taxes, stamps and notary fees (Usually the buyer and seller split these costs in half)
• Once all payments and fees are paid off and all conditions met, the deed must be registered within one year of presentation, otherwise it will be voided.
• Always check that the deed is registered by getting a copy of the closing document (testimonio) which has to be signed by the Registro and its computerized entry or Certificacion naming you our your company  as legal owners