Things To Know About Buying Property in Costa Rica
Costa Rica - you visited. You loved it. You came back again. And again. And again. And now you are thinking about buying property in Costa Rica. We hear that story all the time. In fact, we are that story, but that’s for another time.
Believe it or not, buying property in Costa Rica is surprisingly easy! But it’s a big decision and there are plenty of things to think about. To help you make that big decision, here are a few key things you need to know about buying property in Costa Rica.
Ownership Rights For Foreigners in Costa Rica
A question we hear all the time is, "Can a foreigner buy property in Costa Rica?" The short answer is YES! In Costa Rica, foreigners are afforded the same property rights as citizens. If you buy property in Costa Rica, you actually own it. With one exception - concession properties, which make up nearly all of the beachfront property in Costa Rica. Concession property must be 51% owned by a Costa Rican...at least at the time of purchase.
Titled beachfront property does exist, but it’s rare. If you stumble upon it (and you can afford it) - buy it!
Finding Property in Costa Rica
You’ve likely noticed lots of homes for sale in Costa Rica displayed on lots of different websites. Unfortunately, there is not a Multi Listing Service (MLS) in Costa Rica like you find in many countries. This means properties are listed mostly on individual real estate office websites. And many times, the same house is listed on multiple sites. There are a few of the big boys, Coldwell Banker for example, who have multiple franchises in Costa Rica and pull all of their listings into one place. This gives you a broader view of what's available within the Coldwell Banker Costa Rica network but it doesn't incorporate listings outside of that network. In recent years, a couple of MLS-lookalikes have emerged, but there is not one that is mandated for use.
Real Estate Agents in Costa Rica
Currently, there is no licensure requirement to be a real estate agent in Costa Rica which means there are all sorts of people willing to "help" you buy property in Costa Rica. If you're considering buying property in Costa Rica, you'll want to make sure you're working with a qualified real estate agent.
Without a licensure requirement, there’s also no training requirement. Make sure the agent you are working with specializes and lives in the area you’re interested in. Ask around for a reputable agent, preferably one who has completed the CRGAR (Costa Rican Guanacaste Association of Real Estate) or CCBR (Costa Rican Real Estate Association) training, and consider working with an agent associated with one of the names you recognize. Read the reviews and ask a lot of questions. A reputable agent won’t mind and will gladly answer all of your questions.
Changes to the Costa Rican real estate industry seem to be coming. In 2019, the Costa Rican government starting requiring individuals selling real estate to register with an agency called SUGEF. While not explicitly stated, the idea is to legitimize the real estate industry. When choosing an agent, ask if they are registered with SUGEF. (For the record, we are.)
Paying For Real Estate in Costa Rica
The Costa Rica real estate market is almost exclusively a cash market. While there are a few lenders out there willing to offer financing, it’s typically very expensive, think 8-12% interest. There are a couple of companies in North America who claim to offer competitive financing for purchases in Costa Rica, but we’ve yet to see a deal closed using them. Don’t have $500K in your savings account? Think about a home equity line of credit (HELOC) or converting your 401(k) into a self-directed IRA.
The Process Of Buying Property In Costa Rica
An experienced real estate agent in Costa Rica will help you find properties to consider. Once you find your dream home in Costa Rica, they will help you draw up a purchase and sale agreement (PSA). Once the PSA is signed by both parties, the transaction typically gets handed over to a lawyer to do the rest. A good lawyer will check the property’s title, review its history, and review it with you before they draw up the paperwork and conduct the closing. Your real estate agent likely has an attorney they like to work with, chat with them before you jump in.
Many foreigners who buy property in Costa Rica create a Costa Rican corporation for their property purchase. It’s not a requirement but it's fairly common. In some cases, the seller will include the corporation in the sale of the property - make sure to ask. If a corporation doesn’t exist, creating one will likely increase your closing costs, but the extra protection is worth it to many. That said, there are annual costs associated with owning a corporation in Costa Rica, including the annual corporate tax. Don’t worry, your lawyer can help you figure out what’s the right answer for you.
Once the PSA is signed by both parties, the Due Diligence period starts - this is when your attorney will examine the legal status of the property and will let you know of any concerns they have. This is typically when you'll send your down payment to an escrow company. Once due diligence is completed and accepted, the attorney will do their thing and set up the closing. Depending on how you decide to purchase the property, you may or may not need to be present.
Once the final funds are sent, the paperwork is signed, you'll be the proud owner of a property in Costa Rica!
After Closing On Property in Costa Rica
After the closing, there are a few other things that need to happen, the most important perhaps is updating the ownership information with the Costa Rica public registry. If you bought a house, you'll also need to transfer the utilities to your name - many real estate agents will help you with this process. (For the record, we do.) And, if you're not moving to Costa Rica full time, you'll also want to find a property manager to look after your new home in your absence.
Considering buying a property in Costa Rica? Have more questions about buying property in Costa Rica? Contact our team of professional real estate agents in Costa Rica today, we'd love to help!
