Purchasing land for sale in Costa Rica is a good investment: prices are reasonable, the laws are clear and many areas have great potential for growth in the near future. However, as with purchasing any land for sale, you should know what the law in Costa Rica is and how to protect yourself. The most basic protection you can have is to work with a reputable realtor. He or she will help you avoid an inappropriate purchase, help you negotiate a fair bargain, and help you find a property suitable to your needs, lifestyle and budget. Your American-European broker will guide you through the process described below.

Costa Rica Land: the title transfer process of land for sale

In Costa Rica, the seller transfers land to the buyer by executing a transfer deed (escritura) before a notary public. Unlike common law countries, such as the United States and Canada, in Costa Rica the notary public has extensive powers. The notary public must be an attorney and may draft and interpret legal documents, as well as authenticate or certify the 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 Public Registry (Registro Nacional). Locally it is customary for the buyer to select the notary/attorney who will draft the transfer deed if paying cash for the property.

If the purchase price is financed, there are 3 options for selecting the notary/attorney:

* If the seller is financing a large percentage of the purchase price and a mortgage needs to be drafted to guarantee payment, then the seller may request that her or his notary/attorney draft the transfer deed.
* If a property is purchased 50 percent cash and 50 percent financed, it is common for the buyer’s attorney and seller’s attorney to jointly draft the transfer deed and mortgage in a single document.
* Finally, the buyer may insist that his or her notary/attorney draft the transfer deed and let the seller’s notary/attorney draft a separate mortgage instrument. In this case, because the mortgage is being drafted separately, it carries a higher registration fee.

Land for sale in Costa Rica: Ways to own property

Property can be purchased in one person’s name, jointly, or in the name of a corporation. It is very common in Costa Rica for individuals to put property in the name of a corporation in which they own all the shares. You should discuss this asset protection with your accountant and attorney so that you will be informed of the tax implications in your individual situation.

Costa Rica Land: Checking for Clear Title

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 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 web site for the National Registry is www.registronacional.go.cr

The 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 regarding land for sale presented to the Public Registry are given priority according to the date and time in which they are recorded. For purpose of the transfer of real estate, this means that any mortgages or liens, which are not recorded at the time that title is transferred, are invalid. Since the certificate of title issued by the Public Registry is prima facie evidence of the condition of title on the date issued, any instrument not recorded at the time the certificate is issued is invalid. This eliminates the need for title insurance since any instrument omitted from the report is deemed invalid.

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 own attorney conduct an independent title search and investigation rather than rely on the seller’s attorney. And some buyers feel more comfortable purchasing title insurance, in which case the title guaranty company will take care of the search.