February 16, 2024 in Tips for Buyers, Buying Process

Navigating Real Estate Investment in Costa Rica: Insights for Foreign Investors

Are you considering investing in Costa Rica's vibrant real estate market? Whether you're new to the scene or looking to expand your portfolio, understanding the local legal landscape is crucial. With over 25 years of experience, the team at Invicta Legal, led by founding partner Alberto Sáenz, has compiled a comprehensive guide to address the most common queries from foreign investors. 

We're delighted to present insights from our valued partnership with Alberto and his esteemed legal team through this compilation of Frequently Asked Questions about the legal aspects of investing in Costa Rican real estate. This marks the beginning of a series titled 'Ask a Costa Rican Lawyer.' We invite you to submit your inquiries for future editions by completing the form provided at the conclusion of this article, allowing you to directly "ask a lawyer" about your specific concerns.

Property Registration and Ownership

In Costa Rica, property registration is centralized in the National Registry in San José. Each property is assigned a unique number reflecting its location, property number, and ownership status. It's essential to know that full ownership rights, including possession and disposal, must be recorded here to be recognized legally.

However, there are exceptions, particularly in the Maritime Terrestrial Zone (MTZ), where properties are subject to specific regulations and often held under concession rather than full ownership. Additionally, properties based on possession rights might require a judicial process to obtain a formal title.

Buying as a Foreigner

Foreigners can indeed own property in Costa Rica, either directly under their name or through a Costa Rican company, which is often recommended for liability separation and operational ease. However, in the MTZ's restricted zone, foreign ownership is capped at 49% unless the foreigner has been a legal resident for over five years.

Acquisition Process

The property acquisition process typically involves several steps, starting with a Purchase and Sale Promissory Agreement and due diligence to ensure the property's legal standing and physical condition. Depending on the findings, the process proceeds to the official conveyance deed signing, facilitated by a Notary Public. Post-purchase, it's crucial to update the property's declared value with the local Municipality for tax purposes and transfer any public service accounts to the new owner's name.

Remote Transactions

For investors residing abroad, physical presence in Costa Rica is not a prerequisite for property acquisition. Powers of attorney can be granted for deed signing, simplifying the process for foreign investors.

Financial and Legal Considerations

Property transactions incur various fees, taxes, and legal costs, with the purchase price heavily influencing the total amount. Invicta Legal adheres to the Costa Rican Bar Association's recommended rates, ensuring transparency and fairness in all transactions.

For international investors, transferring funds to Costa Rica is secure and straightforward, typically through registered escrow services to safeguard the transaction integrity.

Municipal Obligations

Property owners are responsible for paying annual land taxes and, where applicable, urban service charges to their local Municipality. These taxes are based on the property's recorded value, with some Municipalities offering discounts for advance payments.

Partnering with Experts

Navigating the intricacies of Costa Rican real estate requires expert guidance. Invicta Legal, with its multidisciplinary team and extensive professional network, stands ready to support investors at every step, ensuring a smooth and secure investment journey.

Alberto Sáenz and the Invicta Legal team have dedicated themselves to demystifying the property acquisition process in Costa Rica, offering peace of mind to foreign investors far from home.

For a deeper dive into Costa Rican real estate laws and to explore how these insights can benefit your investment strategy, contact Osa Tropical Properties. Our team can provide you with the full legal memo and connect you with the experts at Invicta Legal for personalized assistance.

Login or register to comment
Recent articles