Buying Property Costa Rica : Role Real Estate Agents and Lawyers

Daniela Quiros,  Friday, 8 November 2013

 

This article is part of a series of 8 articles about buying property in Costa Rica. The other articles in the series cover the following topics:


Buying property in Costa Rica inevitably involves one, or both, of the following intermediaries: a lawyer, a real estate agent, or agency. Adopting the approach ‘I can do it myself’ may seem viable when applied to conditions and rules of your home country. However, any foreign country is sure to have legal terms and conditions that may not be found in the legal systems of any other country. For example, foreigners often ask about ownership title, while, in Costa Rica, it is transferable certificate. Besides, the Public Registry system and notarized deeds may be unknown to foreigners. These small intricacies may significantly affect your purchase, before, or after you close the deal. We do not advertise services of any real estate agency, or lawyer, in particular. On the contrary, we try to provide an objective, sober opinion on Costa Rican real estate market, and companies that feed off it.

Why Do You Need a Lawyer?

Having said that, we strongly recommend foreign buyers do their homework before even checking out the property listings. Finding a lawyer is the first priority buyers should look into. The lawyers in Costa Rica come in a great variety and origin; some of them are American and European expats. Buyer must look into the lawyer’s portfolio and determine whether the lawyer is qualified enough to assist in the project. You may want to inquire in your embassy for a list of lawyers working with foreign investors. Those are likely to be the most reputable and probably expensive.

In many European countries, both parties, the Buyer and the Seller, resort to the services of a lawyer only to close the deal, sign the deed and stamp the papers. Costa Rica has its own peculiarities, requiring a lawyer’s qualified assistance from the very initiating steps of acquiring a property. Here is why. We have dwelled on the Due Diligence period in our article dedicated to the buying process. A buyer is not secured from legal and bureaucratic obstacles and ambushes in Costa Rica. You need to be fully aware of that when you decide to enter the property market in Costa Rica. Irrespective of your intentions, be it a big investment project or realization of a small piece of paradise dream, you need to calculate the risks. A professional, well-established, resident lawyer is necessary to protect your investment from the obvious, and some ulterior, dangers. You must have a professional lawyer to run a thorough check of the property you are looking to buy. The lawyer makes an inquiry to the National Registry (informe registral) in reference to the property’s status: the owner, any legal problems, restrictions and issues, the nature of the land, ongoing judicial proceedings, pending claims, liens attached or any other legal encumbrances. The inquiry will also show if the property has any building limitations. In addition, it will show if the property is registered as a personal asset, or a under a company. In Costa Rica, this is often the case with real estate and even cars. If this is the case, the lawyer then researches the seller’s status to ensure the seller has sufficient privileges to transfer the shares of the company to a new owner. In case the property in question is registered land, it will show in Public Registry, but if it is untitled land, the risk in this purchase increases. One of the less advisable scenarios is to buy a ‘permission or occupation right.’ This alternative is often offered to foreign buyers in reference to beachfront properties, which may be Public or State Property if they are within 200 meters inland from the high tide mark. This is the Maritime Zone. The lawyer then inquires into municipal concession file on this land.

It is also in the lawyer’s competence to research on possible environmental restrictions in reference to your property. Costa Rica has an Environmental Agency, SETENA, which regulates the construction all over country, issuing permits for cutting down trees, altering water sources and the like. Likewise, the property may have some restricting orders from the agency which may significantly compromise your project.

Real Estate Agents and How to Choose One for You

Many foreign investors prefer to hire internationally recognized real estate agencies because international franchises have an established reputation and obey to standard regulations and rules. Sometimes, simply asking around will provide a list of reputable realtors because Costa Rica is a small country, and established companies are largely known.

A real estate agent will help you write an offer to the Seller to arrange the price, terms and the initial deposit. A reputable real estate agency may also know tips and tricks to getting financing in Costa Rica. Note: if your credit history is impeccable, obtaining a mortgage in Costa Rica is possible. However, local banks are quite reluctant in providing financing on property purchase to foreigners. We dwell in detail on Mortgages in Costa Rica in the corresponding section.

Checklist for Choosing a Good Agent:

  • Does the real estate agent live in the community where he is working?
  • Does he know the ins and outs of the local real estate market?
  • Does he have personal connections in the sphere? While the U.S. and European markets do not work that way, a Costa Rican lifestyle suggests many things can be done faster provided you know people who ‘know people.’
  • Is the agent an owner himself?
Being a tropical gold mine for realtors, Costa Rica is abundant in realtors operating from overseas. Would you like to deal with a realtor who does not even live in the country? Real estate agencies are barely regulated in Costa Rica making it sometimes difficult to estimate the agency’s reputability. However, there are a number of professional unions and organizations of real estate agencies. Inquiring if your agency belongs to one of them may answer some of your doubts. Although, membership in these unions is not obligatory, most professional realtors tend to have them. Some of the most acknowledged organizations are:

NAR, National Association of Realtors;
CCBR, Costa Rican Real Estate Association;
CRGAR, Costa Rican Guanacaste Association of Real Estate.

Overall, finding a decent real estate agency is not difficult in Costa Rica, since the main source of income to the country’s budget is tourism, and foreign investors have been largely active within the past decade. Thus, assisting foreign buyers has become an integral part of real estate market here, and experienced agencies know all the intricacies of the process.


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