La Tigra Properties - legal page 2 - costa rica real estate investments agents north central valley san ramon san carlos fortuna arenal

Detailed Closing Cost Estimate

Government Transfer Tax and Registration Fees

(a) Real Estate Transfer Tax. - 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.

(b) Documentary Stamps - The government also requires that documentary stamps be affixed to deed. These stamps include: Municipal Stamp: (Timbre Municipal); Legal Bar Association (Timbre del Colegio de Abogados); Agricultural Stamp (Timbre Agrario); National Archives Stamp (Timbre del Archivo Nacional) and a Fiscal Stamp:(Especie Fiscal). The Public Registry also imposes it's own tax of 0.05% on documents for recordation to the Public Registry. (Derechos de Registro)

Notary Fees

The Notary that drafted the contract for sale, carries out the real estate closing and records the property title transfer is entitled by law to a fee which is based upon a percentage of the actual value of the transaction. The original decree established a fee which was equal to 1.5% of the first one million Colones of the actual sales price and 1.25% on the remaining balance.

Mortgage costs

It is customary for the person 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.

The Notary Public will charge separately for drafting and recording the mortgage instrument and
a fee is applied according to the same schedule as above. Mortgage documents pay registration fees and documentary stamps the same as transfer documents

The buyer should be aware that Costa Rican real estate transactions commonly operate on two-tiered system. Since many Costa Rican properties still have a realatively low property tax appraisal base in relation to market value, it has become a local practice to run property sales through at registered value, which may be substantially less than the actual sales price of the property. In such a case, all transfer taxes and fees above would apply to the registered value
as opposed to its sales price, with the exception of the notary fee.

Buyers should consult with Attorney about the potential risks when undertaking this practice.

Registration of the transfer deed

Once all the fees have been paid, it is the obligation of Notary Public drafting the transfer deed
to ensure that the deed is presented (anotado) and registered (inscrito) in the Property Section
of the Public Registry. The important thing is following up with the notary to ensure registration.

Although presentation guarantees your priority (i.e., first in time, first in right), it may not however automatically guarantee registration - Once a transfer deed is accepted for registration, the Public Registry will return the original document with all the documentary stamps affixed and properly sealed. Assuming no defects in transfer deed, it should be registered by the Public Registry with 45 to 60 days after presentation. It is therefore important to follow up with your Notary Public to ensure registration, otherwise you will run into problems in the future if you decide to sell the property, and find out that your sale was not properly registered.

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