Investing in real estate abroad is an exciting and scary change. However, proper preparation and a supportive real estate team can help make sure you have a great experience and are able to make a seamless transition to Costa Rica. At Evoke Realty Costa Rica, we pride ourselves on giving our clients a great experience when it comes to buying a home in Costa Rica.
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5 things to know before buying a home in Costa Rica
- Foreigners can purchase a home and/or property here. There are only two restrictions:
- you cannot own any IDA (INDER) property, which is donated to low income farmers
- you cannot own 100% of property in a Maritime Zone (ZMT). Any property that is within 50 meters of the high tide line is public and protected. The 150 meters adjacent to the protected area is a ZMT. A non-citizen can only own up to 49%.
- Most property in Costa Rica is titled. You will need a qualified real estate attorney to ensure the title transfer is legal. Title insurance is available, but almost never used here in real estate purchases.
- There are zoning restrictions in many areas of the country. Due to the numerous protected areas there will be setbacks from rivers and forests. These are noted in the National Registry and the zoning plan needs to be checked before you buy any land. The zoning plan will indicate if it is agricultural or residential and if there are any restrictions. You can, and should, also request the survey or plot map (here it is called the cadaster plan).
- The National Registry is almost completely digital now. You can purchase certifications of a property, the powers of attorney of a corporation, and a copy of a survey.
- Make sure you have your team and money in place ahead of time. You don’t want to be scrambling to make a good deal and then take all the steps to ensure it goes through. If you are considering buying a home in Costa Rica, you should have:
- A real estate agent – Even if you spotted your dream property or home on the web or while you were vacationing in Costa Rica, you want to hire an agent. Listings online are notorious here for being out of date and that property you spotted may have been snatched up after you left. In addition, there is no database (like Zillow) where you can go and find everything available, so you will need an agent with access to all that information. You don’t want to miss your potential dream home because you didn’t find it on Google.
- A real estate attorney – Make sure you find a bilingual attorney who specializes in real estate. That lawyer should also be notary public, because only they can record a purchase in the National Registry through a protocolized deed. The lawyer you hire should also use a title company or have Financial Institution Superintendency (SUGEF), so earnest money can be held in escrow without any legal problems.
- Escrow – It may seem like you’re getting ahead of yourself by securing and wiring money ahead of time. However, banks in Costa Rica typically hold the money for several days to comply with money laundering laws. You want to wire the complete purchase price and any necessary legal fees into escrow well before the closing date, which will make buying a home in Costa Rica much easier.
- Visit Costa Rica and the property and/or home before purchasing. Anyone can make something look nice online and it is easy to fall in love with the pictures of the beautiful views and sunsets. It is important to get your feet in the sand to ensure the home and the community is really what you want. If you just can’t wait, we offer complimentary digital services, so you can get as up close and personal as possible through technology.
Investing in real estate abroad is exciting and scary. Proper preparation and a supportive team will ensure you have a great experience.
Things you should ask and do before buying a home in Costa Rica
If you have purchased real estate before, you know it is important to have a list of negotiables and non-negotiables. That part is not really much different when buying a home in Costa Rica. Do you have to have that pool and do you want to pay to maintain it? Do you want a view of the ocean? Is it important to you to be close to schools? All of those questions and more are common considerations.
There are some other things you may not be used to asking or doing if you haven’t purchased abroad before. Here are some questions and things to consider.
Things To Ask
- Can I drink the water?
- Can I flush toilet paper in the toilets?
- Are the roads to the house drivable in the rainy season?
- What type of wildlife is in the area?
- How is the drainage on the property?
- What are the expansion or development plans for the area / neighborhood?
- Has this home been a rental in the past?
- What improvements have been made recently on the property / home?
- Have there been any major repairs in the past 5 years?
Is this road drivable during the rainy season? Don’t forget to ask questions before you buy!
Things To Do
- Check the water pressure
- Check the internet signal / connectivity
- Check the phone signal
- Get a copy of recent utility bills
- Hire a professional inspector
- Explore the surrounding area
- Visit the property at different times during the day
- If you’re buying a condominium, ask for a letter that ensures the HOA fees are up to date.
You want to be extremely happy with your real estate investment. Asking questions, thoroughly inspecting the property, and exploring the area will help you avoid unwanted surprises.
Other things about the buying process
- Realtors receive a commission from the seller. Commission is generally 6% of the agreed upon purchase price, and is often split evenly between the agents representing the Buyer and Seller. In most cases, when buying a home in Costa Rica, the full commission is paid by the Seller. Therefore, as a Buyer, it costs you nothing to enlist the services of an expert real estate agent.
- Your real estate agent will write up your offer on a property. When you have found a property and you are ready to submit an offer, your real estate agent will draft a Purchase and Sale Agreement, including all conditions of the purchase and a period for due diligence, and submit it to the listing agent for presentation to the sellers. Once both parties agree to the terms contained within the Purchase and Sale Agreement, the property status becomes “Under Contract.” At this point, the buyer will generally have approximately 10 calendar days to pay the deposit amount (normally 10% of the purchase price) to the escrow company.
- It is easiest to be in Costa Rica for the Closing. However, if that is not possible, you can arrange for a power of attorney for your lawyer’s assistant, your real estate agent, or another person you trust to complete the purchase of the property.
- There are additional closing costs. Closing costs, including attorney and transfer fees, are normally between 4-5% of the purchase price and are usually shared between the buyer and the seller equally. You will want to budget additional money for these expenses.
- Once the sale is complete, register the title. You can register the title in your name or you can share the title in equal parts with a spouse, family member, or business partner.It is also possible to purchase in a corporation and your attorney can help you with that type of transaction.
- There are annual property taxes. At closing, you will have to pay the annual property taxes at the local municipality. The seller should bring a certification that property taxes are up to date.
- You are required to reassess the property value every 5 years, or the municipality will do it for you.
- There is also an annual luxury tax for luxury homes. It is on a sliding scale, which changes almost every year. Your agent and attorney will know if the home you’re buying requires a luxury tax.
Our Evoke Realty team will do everything it takes, so you get the best deal and are satisfied and excited about your new adventure.
Our team at Evoke Realty Group will make sure all you are taken care of throughout the buying process
If you are considering buying a home in Costa Rica, our Evoke Realty team is here for you. We will be your advisors. We will be the voice of reason. We will be your devil’s advocate. Our team will do everything it takes to make sure you get the best deal and to make sure you are completely satisfied and excited about your new adventure.
