Real Estate Legal Procedures Process on Costa Rica through Los Cielos Estates

Just like any other real estate transaction there are a myriad of legal procedures to follow and legal paperwork to be completed.

Obtaining a Public Registry for Properties in Costa Rica

Request that your attorney conduct a title search at the Registro Publico (Public Registry) for the Costa Rican property you want to buy - by law all properties must be registered in Registro Publico. Most properties have a title registration number called the "Folio Real." Once you have this number you can search the database. The Registro Publico's Report, called the "Informe Registral," contains legal information such as the name of the title holder, boundary lines, tax appraisal, liens, mortgages, recorded easements, and other records that could affect the title.

Drafting Transfer Deed for Costa Rican Property

Your attorney drafts the transfer deed and registers the sale at the Registro Publico. Custom dictates that if the buyer pays in cash, he selects the attorney to draft the transfer deed and legal paperwork. If the purchase is financed, then the transfer can be made in various other ways.

• If a large percentage of the purchase price is financed by the seller and a mortgage needs to be drafted to guarantee payment, the seller's attorney may draft the transfer deed upon seller's request.
• If a property is purchased 50% cash and 50% financed, the buyer's attorney and seller's attorneys can draft the transfer deed and mortgage in a single document. This process is called a co-notariado.
• Buyer may have his attorney write the transfer deed and let the seller's attorney draft a separate mortgage instrument. Since the mortgage agreement is being drafted separately, registration fees are higher.

Register The Transfer Deed

To register your transfer deed, take it to the Registro Publico (Public Registry) the following legal documents:

• Proof of payment of all taxes and registrations fees
• Certifications issued by:
  • Finance Ministry, confirming that all sellers’ property taxes were paid;
  • The local Municipality, stating that buyer and seller are up to date on municipal taxes.
• Proof that all prior mortgages, liens and judgments (if any) have been resolved.

Once all fees are paid, make sure that the attorney who drafted the transfer deed registered it in the Property Section of Registro Publico. It should be registered by the Registro Publico 45 to 60 business day after presentation.

Closing Costs associated with Properties in Costa Rica

By custom, buyer and seller split the closing costs, but the split may be negotiated as part of the purchase contract.

• Taxes - Documentary Stamps – Agrarian, Hospital, Municipal, Bar Association, National Archive and Fiscal – totaling 0.55% of sale price.
• You must pay a Real Estate Transfer Tax at 3% of the sale price and a Registration Fee of 0.5 % of sale price
• Notary Fees - 1.5 % of the first $5,000 (million colones) and 1.25 % of the balance
• Mortgage Registration Fees - Usually, the person getting the financing pays for the costs of drafting and registering the mortgage instrument. A mortgage may be issued at the time of the sale by adding a mortgage clause to the transfer deed. A mortgage within a deed costs 0.25% in registration fees and approximately 0.53% in documentary stamps. For drafting the document, the notary receives between 0.5% and 1.25% of the amount of the mortgage.