La Tigra Properties - legal pages 1 - costa rica real estate investments agents north central valley san ramon san carlos fortuna arenal

Property Purchase in Costa Rica

How is title transferred ?

In Costa Rica, property is transferred from seller to buyer by executing a property transfer deed (escritura) before a Notary Public. Unlike common law countries (US or Canada) where the role of the Notary Public is limited to authenticating signatures, in Costa Rica the Notary Public has more extensive powers to act on behalf of the state. The Notary Public must be an Attorney and he/she may draft and interpret legal papers, as well as authenticate or certify authenticity of documents.

In order to close on the property, the buyer and seller must select a Notary/Attorney who will draft the transfer deed and register the sale in the centralized office known as Public Registry (Registro Nacional). All documents are centralized at this location and all deeds executed in Costa Rica must be filed in the Public Registry.

The custom is that the buyer may select his or her Notary/Attorney to draft the property transfer deed if the buyer is paying cash for the property. If any portion of the purchase price is financed by the seller it is common that buyer and Seller's attorney jointly draft the transfer deed and mortgage into a single document. This is a higher registration fee. The registration fees are discussed below in the section on closing costs.

At your option, the property can be purchased in an individual's name, jointly with other persons, or in name of a corporation. The decision as to ownership should be based upon your particular situation and only after your consultation with your Attorney. - We at La Tigra Properties usually recommend purchase through a separate Costa Rica Corporacion because of the liability and the
re-sale advantages and we recommend separate corporacions for any separate properties.

How can I ensure that I have clear title to the property ?

Costa Rican law requires that all documents relating to an interest and/or title to real property be registered in the property section of the Public Registry (Article 460 of the Civil Code). Most of all properties have a titled registration number known as the folio real, and the records database can be searched with this number or by name index. The Public Registry report (informe registral) provides detailed information on the property, including the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other recorded instruments that would affect title.

Since Costa Rica follows the doctrine of first in time, first in right, recorded instruments presented to the Public Registry are given priority according to the date and time in which they are recorded. Obviously, every situation differs and in some cases a review of the Public Registry record will not be enough to uncover all encumbrances. That is why it is important that the buyer have her or his attorney conduct independent title search and investigation rather than rely on seller's attorney.

How about closing costs ?

The general custom is for the buyer and seller to share equally in the closing costs. This custom can be modified by agreement and usually depends upon particular transaction. Closing costs involve three things:

1 - Government transfer taxes and registration fees

2 - Notary Legal fee

3 - Mortgage costs, if any

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