Costa Rican Real Estate - An Overview

Purchasing Property in Costa Rica: The decision to purchase real estate in a foreign country can at first be a daunting proposition. However, it is possible to safely buy property in Costa Rica with the assistance of a reputable Realtor and attorney. Your Realtor should be able to help you to locate property suitable to your needs, educate you as to property values and other considerations in your chosen area, and assist you with negotiating a fair price. You should also use an attorney (Certified Public Notary) with a good reputation who can handle the financial aspects of the transaction and ensure that you will have legal title to your property.

Title Insurance: Is available in Costa Rica through well-known international companies such as First American Title Insurance, Stewart Title and Fidelity Life.

Ownership: It is possible to purchase Real Estate through direct transfer where one or more individuals acquire property in their personal name. Purchasing properties through a new or existing corporation is also very common in Costa Rica. The process of setting up a corporation is not complicated or expensive, but requires the expertise of your attorney to follow the legal protocols involved.

The Public Registry of Properties: All property in Costa Rica should be registered in the Public Registry of Properties, whether the property is fee simple or concession. By means of the Public Registry of Properties your attorney will be able to confirm that the seller possesses ownership of the property, and to discern if there are any restrictions on the property before the deal goes through. Avoiding the purchase of unregistered property is strongly recommended.

Folio Real Numbers and Catastrado: Each property registered in the Public Registry of Properties has a Folio Real Number, which is the unique number assigned to each property to identify it. The number is comprised of three parts, the first number indicates the province, the second group of six numbers is the number of the property itself, and the last group indicates how many owners the property has. All properties must have this number in order for clear title to be obtained. Each registered property also has a survey plan, or cadastral. In order to transfer, mortgage, or acquire a property, the survey plan must be recorded at the Public Registry of Properties.

Property taxes: In Costa Rica are very low, only ¼ of 1% of the registered property value. Certain standard closing costs are required in Costa Rica to transfer the title of a property from the seller to the buyer, and are usually split between the two. Closing Costs: Include: (1) Real Estate Transfer Tax, which is 1.5% of the registered value of the property on the deed; (2) Documentary Stamps, which total approximately 1.25% of the registered value; (3) The Notary Fee, which is 1.5% of the first million Colones and 1.25 % on the balance of the property sales price. This means on the purchase of a $100,000 property, closing costs would be approximately $4.250 and property taxes $250 per year or lower.

Financing: If you need to borrow funds, it is generally far simpler and interest rates are usually lower in your home country. However, if your credit rating is impeccable, financing in Costa Rica may be available. Some banks, such as the Bank of Nova Scotia, offer financing to foreigners. Usually the bank will finance somewhere between 40 and 50% of the purchase. Current rates could be easily obtained from local banks. Certain projects and/or private owners may also offer some kind of financing arrangement. Your realtor should be able to tell you which projects and owners offer financing.

Dominical Dot Biz Real Estate Services provides a team of real estate professionals educated to answer your questions about purchasing property, and are dedicated too helping you through the steps required to safely purchase your dream property in beautiful Costa Rica.

Dominical Land Values Cause a Fuss

There was recently a furor in the top Costa Rican Expats newsgroup over a new land development in between Dominical and San Isidro.

The post that started it all:
Yahoo! Groups : CostaRicaLiving Messages : Message 30992 of 31984: "In the Southern Pacific region, halfway between Dominical and San Isidro del General, at the end of a gorgeous rural valley where bars on the windows are not necessary (in fact, our house is totally open without walls). The lots range from 3.5 acres to 13 acres. All the lots come with a finished road, plantel, electricity and water."

This immediately followed:

Yahoo! Groups : CostaRicaLiving Messages : Message 31126 of 31961: "At the risk of sounding offensive I am going to make some comments about how this add offended me in fact it was borderline vulgar in the message it carried between the lines.

In my five years of watching and following real estate here I have not as yet seen a project that was so insultingly priced. For people who are new to the country or looking at moving or buying here this kind of trend has the ability to scare the heck out of those that may well think this is normal or that you need to be a millionaire to come here...

What Tico or sane person would suggest that $200,000 to $450,000 is a reasonable price to pay for a few acres with an ocean view in the lesser developed area of the country (south pacific) in an area in the mountains with no, like ZERO development or community infrastructure 9 kms off of pavement over a rough mountain road that could well be only 4 X4 territory in rainy season in an area that gets around 4 meters (12.5ft) of rain per year. Remember the three rules of real estate are location, location, location."

Well... this sparked off an interesting interchange, at times rather heated, about what the value of a property should be. And it appears that real estate in the Dominical area is at the center of the controversy.

There is another interesting post in the Dominical.biz real estate forum that also deals with this subject. Click here to visit that.

I was out on a property recently with a client that had just sold her house. She was telling me about a piece of property that was available near to hers. I have another client that had wanted to buy her house but lost it due to delaying. So she, the seller of the house, was telling me about this property that was in the same area and that had been bought a little while ago for $150,000, and now, 8 months later, the &$%@#*'s that bought it want $280,000. She made it quite clear that she felt these folks to be quite unethical, greedy, no goods, (my descriptors :o)

It is interesting the level of emotion that surrounds the value of land in the Dominical area, as though our having feelings about it matters. There is a free market out there that determines the value. A thing is worth what someone will pay for it.

In my previous life, I was an art dealer handling high end living artists. Some of the artists got well into the six figures for their art. Consider the actual cost of an oil on canvas. You've got some wood stretcher bars, canvas, oil paints, brushes, and of course, the artists time. I used to love watching one of my better known artists answer the question, "how long did it take you to paint that painting". He would always answer by stating his age. "That painting took me 58 years to be able to do just like that." The amount of time, in fact, was about 2 weeks and it would fetch $40,000... and people would stand in line for his paintings.

Supply and demand govern the market here, just like everywhere else in the free-market world. We are currently running low on inventory in the immediate Dominical vicinity due to huge demand. I suspect that what may be happening on occassion is that in this "foreign" land, some buyers arrive that are credulous - Disposed to believe too readily; gullible. There are stories of sellers and realtors preying on the buyer. Most of the land here has sold, at least once in the modern era. The National Registry (www.registronacional.go.cr) is computerized and lists the majority of the properties, and so the market has matured. There are comparables, and a number of experienced land buyers and sellers that require, in fact demand, that the contracts be professional, and the details of the deal spelled out fine script.

All business transactions should be entered into intelligently. Dominical is no different. If a seller is asking too much for a property, it won't sell. I presented the $280,000 property to my buyer, he didn't feel it to be a good value. So it goes.

A short article on Dominical land values