by ZEWSBuying or selling property in Costa Rica can be an exciting yet complex endeavor, especially for foreign clients unfamiliar with the local laws and procedures.
Understanding the steps involved in the closing process is crucial for ensuring a smooth transaction. For that reason, here’s a breakdown of what you can expect.
Steps for selling or buying a house in Costa Rica
Initial Steps:
The process typically begins with the buyer requesting an option to buy from their real estate agent. This option allows the buyer’s attorney to conduct due diligence on the property.
The option to buy usually requires a 10% down payment from the buyer, which may be held by the real estate agent, attorneys, or a trust company.
Due Diligence:
As due diligence progresses, the buyer’s attorney may request various documents from the seller, which could incur expenses for the seller.
Negotiations may occur regarding the forfeiture of the initial 10% deposit if the buyer backs out of the deal.
Property Complexity:
Urban properties generally have simpler closings, while rural properties may present more complexities such as agrarian limitations, water and electricity issues, and possession disputes.
Larger properties may require deeper due diligence, involving specialized engineers to assess land extent, construction, soil quality, water availability, and subdivision possibilities.
Legal Analysis:
Your attorney will analyze the property’s registration in the Costa Rica National Registry and examine the property plat map to ensure accuracy and legality.
Determining the true identity and circumstances of the owner is essential, especially regarding marital status and potential family law issues.
Notary Public Role:
Notaries in Costa Rica, typically lawyers, play a crucial role in real estate transactions, recording all legal details in a special Protocol book.
The buyer usually selects the Notary for cash transactions, while the seller chooses for mortgage transactions.
Financial Considerations:
Both parties should be aware of the expenses involved, including legal fees and real estate agent commissions, which are subject to a 13% Value Added Tax.
Payment methods must comply with strict regulations to prevent money laundering, requiring careful consideration and planning.
Tax Implications:
Sellers should be aware of potential capital gains tax obligations based on the difference between the original purchase price and the sale price.
In this world of real estate, working with reputable real estate agencies and experienced attorneys is crucial for protecting your interests and ensuring a successful transaction. By understanding the steps involved and addressing potential challenges proactively, you can achieve a smooth and efficient house closing experience.
Contact us if you need more info or advice for selling or buying properties in Costa Rica.