Legal Information

Legal facts of buying property here in Costa Rica

Transferring Property

When transferring property, a transfer deed ("escritura") is executed before a Notary Public ("notaria") between the Buyer and Seller. Additionally, the Buyer and Seller must select and pay for his or her own notary/attorney who will draft the transfer deed and register the sale in the Public Registry ("Registro Nacional"). It is customary for the Buyer to select his or her own notary/attorney to draft the transfer deed. However, if the purchase price is financed, the Seller will customarily select the notary/attorney.

Real Estate Transfer Tax

The government collects a property transfer tax ("Impuesto de Traspaso") which is equal to 1.5% of the registered value of the property. The Public Registry will not record a transfer deed unless the transfer taxes and documentary stamps have been paid.

Documentary Stamps

The government requires that Documentary Stamp Taxes of 0.325% consisting of the following be affixed to the deed:

 

 

 

The Public Registry also imposes its own tax of .05% on documents presented for recordation to the Public Registry ("Derechos de Registro").

Acquiring properties through corporations

A common practice in Costa Rica is to acquire properties through a new corporation or through an existing corporation that currently owns the property of interest. The process of setting up a corporation is not complicated, but does require a knowledgeable attorney who understands the exact protocols and procedures necessary to properly set up the corporation. The approximate cost to start/purchase a corporation is a one time fee of approximately $600-$800 USD. The advantage of this system is that it allows a buyer to protect their asset anonymously and to transfer the property more easily. If a purchaser acquires a property through an existing corporation that already owns the property, there are no government transfer taxes or stamps to pay. Transfer taxes and stamps are only paid when the name of the owner is changed.

Closing Costs

It is customary for the Buyer and Seller to share equally in the closing costs. However, this can be modified by the agreement and usually depends upon the particular transaction. Closing costs involve three things: 1) government taxes and fees, 2) notary fees, and 3) mortgage costs, if any apply.

Mortgage Costs

It is customary for the person who is receiving financing to pay the costs of drafting and registering the mortgage instrument. A mortgage can be created simultaneously at the time of sale by adding a mortgage clause in the transfer deed, or, a separate mortgage instrument can be drafted.

Public Notary

A Public Notary in Costa Rica must be an attorney; thus, giving the Notary more powers to act than in the United States. A Public Notary can draft and interpret legal documents, as well as authenticate and certify the authenticity of documents. Additionally, the involvement speeds the transaction process and allows foreigners to conduct activities from abroad.

Notary Fees

The Notary that drafts the contract for sale and carries out the closing is entitled by law to a fee equal to 0.5% of the first one million colones of the actual sales price and 1.25% on the balance. 

Once all fees have been paid, it is the obligation of the notary who drafted the transfer deed to ensure that the deed is presented (anotado) and registered (inscrito) in the Property Section of the Public Registry. The public Registry will not register a transfer deed unless all taxes and registration fees are included; a certified copy from the Municipality where the property is located is provided certifying that the seller’s property tax (bienes inmuebles) and municipal assessments (impuestos municipals) have been paid through the date of closing. Any prior encumbrances such as mortgages, liens, judgments, etc, must be lifted before your transfer deed will be registered.