How to Buy Property in Costa Rica

Property Rights for Foreigners

Costa Rica's Constitution guarantees foreigners the same property rights as Costa Rican citizens. This means you can:

• Buy, own, and sell property in your personal name
• Inherit and transfer property without restrictions
• Mortgage your property with local or international banks
• Rent your property to generate income

You don't need to be a resident to buy property. You can complete the entire transaction with a tourist visa.

Important Exceptions

Maritime Terrestrial Zone (ZMT)

The ZMT is the 200-meter strip measured from the ordinary high tide line (average high tide). This zone has special regulations:

• First 50 meters (Public Zone): State property, not buildable, mandatory public access
• Next 150 meters (Restricted Zone): Requires municipal concession, with restrictions for foreigners

Foreigners can obtain concessions in the Restricted Zone through a Costa Rican corporation where they are minority partners (maximum 49%), or after 5 years of legal residency.

Other Restrictions

• Border zones: Limitations within 2 km of international borders
• Indigenous reserves: Purchase prohibited for non-indigenous people
• Protected areas: National parks and biological reserves are not marketable

Property Registry System

Costa Rica has a centralized and digitized National Registry that documents all titled properties. This system provides:

• Complete property history
• Recorded liens and annotations
• Cadastral plans with exact measurements
• Public access for verification

Anyone can check a property's status online at www.registronacional.go.cr

Step 1: Preparation and Search

Define Your Objectives

Before starting your search, consider:

• Primary use: Permanent residence, vacation, investment, or retirement
• Preferred location: Beach, mountain, city, or rural
• Total budget: Including closing costs (3.5-4.5% additional)
• Necessary services: Water, electricity, internet, paved access

Work with Professionals

• Real estate agent: Look for agents with experience in your area of interest and good references. In Costa Rica there's no mandatory licensing, so references are crucial
• Independent lawyer: Hire your own attorney, never use the seller's. Look for bilingual lawyers with experience in international transactions

Step 2: Offer and Negotiation

Once you've identified the property, submit a Letter of Intent or Purchase Offer that includes:

• Offered price and payment method
• Conditions (subject to due diligence, financing, etc.)
• Due diligence period (typically 30 days)
• Amount and conditions of earnest money deposit
• Estimated closing date

The seller can accept, reject, or counter-offer. Negotiations are common and expected.

Step 3: Legal Due Diligence

Your lawyer will conduct a thorough investigation including:

Title Verification

• Confirm the seller is the legitimate owner
• Review the chain of title for at least 10 years
• Verify the cadastral plan matches the physical property

Liens and Encumbrances

• Existing mortgages
• Judicial seizures or annotations
• Right-of-way easements
• Tax or utility debts

Municipal Aspects

• Permitted land use
• Existing building permits
• Municipal tax debts
• Compliance with local regulations

Services and Access

• Verify potable water availability (letter from AyA or local water utility)
• Confirm electrical service (letter from ICE or cooperative)
• Evaluate legal access (registered easement if access crosses another property)

Step 4: Purchase Agreement

The formal contract includes:

• Complete identification of parties
• Detailed property description (finca, plan, boundaries)
• Price and payment method
• Suspensive or resolutory conditions
• Seller warranties
• Breach clauses
• Closing date and location

Typical deposit: 10% of price, held in escrow until closing.

Step 5: Closing and Transfer

Closing takes place before a notary public, who:

1. Verifies the identity of the parties
2. Reads and explains the transfer deed
3. Obtains signatures from buyer and seller
4. Calculates and withholds applicable taxes
5. Registers the deed with the National Registry

Registration typically takes 5-15 business days. Once registered, you receive a certificate confirming your ownership.

Real Estate Attorney

The attorney is your primary protection in the transaction. They should:

• Be independent from the seller and agent
• Have specific experience in real estate transactions
• Be bilingual if you don't speak fluent Spanish
• Provide verifiable references from previous clients

Services should include:

• Complete due diligence
• Contract review and negotiation
• Presence at closing
• Follow-up on registry inscription

Typical fees: 1% to 1.5% of purchase price, minimum $1,500-2,000

Notary Public

In Costa Rica, notaries are attorneys with special State authorization. The notary:

• Formalizes the transfer deed
• Calculates and withholds taxes
• Registers the document with the National Registry
• Is legally responsible for the document's validity

Generally the buyer chooses the notary, though it can be different from the attorney who did the due diligence.

Real Estate Agent

While not mandatory, a good agent can:

• Identify properties matching your criteria
• Provide local market information
• Facilitate negotiations
• Coordinate visits and logistics

Important: The agent's commission (typically 5-6%) is paid by the seller, not the buyer.

Other Professionals

Depending on the property, you may need:

• Surveyor: To verify boundaries and plans
• Building inspector: To assess structural condition
• Accountant: For tax planning
• Property manager: If you plan to rent

Payment Options

Cash Payment

Most transactions with foreign buyers are cash. Advantages:

• More aggressive price negotiation (5-15% discounts)
• Faster closing
• No interest expenses

Local Financing

Some Costa Rican banks offer mortgages to foreigners, though with stricter conditions:

• Down payment required: 30-40% of value
• Interest rates: 8-12% annually in dollars
• Maximum term: 15-25 years
• Requirements: Proof of income, credit history, residency in some cases

Banks that work with foreigners: Banco Nacional, BAC, Scotiabank

Seller Financing

Some sellers offer direct financing:

• 30-50% down payment
• Terms of 3-10 years
• Negotiable rates (generally 6-10%)
• No bank verification

This option can be more flexible but requires proper legal documentation.

International Financing

You can obtain financing in your home country:

• Line of credit against existing assets
• Refinancing of foreign property
• Personal loans

Fund Transfers

To transfer money to Costa Rica:

1. Bank wire transfer: Most common and secure method
2. Escrow account: Funds held in custody until closing
3. Letter of credit: For more complex transactions

Compliance requirements:

• Documented source of funds
• Compliance with anti-money laundering regulations
• Possible temporary hold by receiving bank

Before Buying

• Visit multiple times in different seasons, including rainy season
• Rent before buying in the area you're interested in to get to know it better
• Talk to neighbors and expats who already live in the area
• Personally verify access, especially during rainy season
• Confirm services (water, electricity, internet) with provider companies

During the Process

• Never transfer money without your attorney verifying the property
• Stay involved in the process, ask questions constantly
• Document everything in writing, including verbal agreements
• Don't sign anything you don't fully understand
• Be wary of deals that seem too good to be true

After Purchase

• Register the property in your name immediately
• Pay taxes on time to avoid fines and surcharges
• Consider property insurance especially in risk zones
• Maintain the property even if you don't occupy it permanently
• Establish local relationships with neighbors, managers, and service providers

Common Mistakes to Avoid

1. Buying without seeing the property in person
2. Not hiring an independent attorney
3. Skipping due diligence due to rushing
4. Not verifying legal access to the property
5. Ignoring the Maritime Zone on coastal properties
6. Underestimating closing costs and maintenance
7. Not considering rainy season and its effects
8. Trusting verbal promises without documentation