Costa Rica Real Estate And Living

THE LAW - In Costa Rica foreigners can buy or sell real estate or property holding freely. The exception to this is land that is connected to concession rights. These are rights for certain beachfront properties in the country. When you are buying real estate it is generally recommended that you place the property in the name of a corporation to reduce the taxation costs associated with the sale of the land. This way your simply transfer all shares in the corporation to the new owner. There are now a few new taxes (as of late 2007 and 2008) that are applicable for this type of transfer as well but they are still less than what you would pay for a personally help title to be transferred to the new owner.

BUYING PROPERTY

is a simple process (if somewhat risky) here. You must make sure you check and recheck that title and that is why it is important to use a good and honest lawyer when purchasing. Lawyers in Costa Rica do not always have the best reputation and so please use caution when choosing one. I strongly recommend using title insurance whenever possible. It's a small additional percentage of the sale but will greatly increase your peace of mind in knowing that when that second title holder shows up at your door (or more likely the legal documents are served on you) you will be covered. Try and purchase insurance for the value of the land you want to get out of it and any buildings you are going to put on it and not necessarily amount that you paid for it. Strike a balance that works for you.

HOW TITLE INSURANCE WORKS

Title insurace will cover you for up to the value of insurance that is purchased. So if you buy one million worth of insurance you are covered to that amount at maximum even if you property is work five million developed. Insurance will only cover losses to the date the insurance was purchased. In other words any issue with title that developed before you bought the property and not something in the future. If say someone were to squat on your land and you did nothing to remove them for say, 5 years, they would have legal rights according to the Costa Rican legal system. (it actually starts at about 6 months so be careful!). This would not be covered by your insurance as the cause was not in the past but instead during your time of ownership.

Now say someone comes along with a title that covers part or all of your property and you need to defend you title as being the legal one and that this title was issued at a date before you purchased the land OR that the title was issued as a result of something that started before you became owner. This is where the title insurance is comes into play. The insurance company will go to court on your behalf to fight. If as a result you do not recover title or have losses, they will cover all losses to the amount of the insurance.

TITLE INSURANCE COMPANIES

Two leading title insurance companies are available to provide insurance in Costa Rica. First American Title and Stewart Title. Both are American owned (or at least are affiliated with thier American namesakes). Their are likely other but going with the well knowns are safer. Please check around.