Properties in Costa Rica Blog


Costa Rica’s Manuel Antonio appears in new Netflix show 👀

Costa Rica’s Manuel Antonio appears in new Netflix show 👀

May 10, 2022

Properties in Costa Rica

Costa Rica and its wonders is showcased yet again in the new Netflix produced series called “Our Great National Parks”. This time, viewers embark on a journey where they can get to know the world’s most stunning natural environments, narrated by former US president Barack Obama, and featuring Costa Rica’s very own Manuel Antonio National Park. The depiction of the flora and fauna found in these mesmerizing places is caught in full colors and motion, providing the audience with a raw experience of what these places are really like when they are healthy and well.

Specifically regarding Manuel Antonio, episode 1 focusses on the importance of one of the area’s most important creature: the three fingered sloth. What is so important about these sloths you ask? Well, it turns out that the ecosystem they foster in their fur produces a specific dye that scientist have learned can be used to fight off diseases such as cancer, malaria, and superbugs. (Fernández, 2022). The narrator even refers to the park as a “pharmaceutical factory” that scientists can utilize to look out for medical alternatives to common medical issues we see in our current world.

The problem that this environment faces is in terms of the increasing effects of climate change and this all stems from manmade disasters and indulgences, meaning that it is our job to reverse the situation and act as rapidly as possible to save the natural wonders our world has to offer. It is because of this situation that the show aims to highlight in breathtaking fashion the importance of preserving our natural parks, specifically when they look so vibrant and alive when fully prosperous. Don’t forget to pay Manuel Antonio a visit in your next trip here in Costa Rica and see for yourself the famous three-fingered sloths, white faced monkeys, and unique beaches this place has to offer.




Buying Process

Buying Process

April 25, 2022

Properties in Costa Rica

The buying process here in Costa Rica is similar to that of the United States and relatively straight forward. Below are some answers to frequently asked questions about buying in CR.

The process works as follows:

1) You decide which home you would like to purchase and we write up and present an offer to the seller and work out the terms and conditions of the deal.

It is customary to buy the property under a corporate entity. This for various reasons, such as liability, bills, bank accounts, plus it makes it easier to transfer the property to a family member if something happens. The cost for doing this is $750-$900. Most people do this during step 1 or 2 usually and most do it prior to leaving Costa Rica so you have it in place and ready to go.

2) Once you are in agreement; then the Offer to Purchase (OTP) is turned over to an attorney, who writes up a much more detailed Sales-Purchase Agreement (SPA). During this time you will be setting up your escrow account to send your deposit and eventual closing funds. You will also be setting up your Costa Rica holding corporation if you choose to use a corporate entity to purchase and own the property. Once the SPA is signed by both parties you would send the deposit (usually 10%, but whatever is agreed upon in the OTP and SPA) to an internationally certified escrow account. The home is now officially “under contract“. There are fees incurred for writing this contract and typically split by buyer and seller. If there is a mortgage with seller financing, the buyer pays to write and register the mortgage: about a $1,000 fee.

3.) Due diligence. This is typically 30 days, but more may be negotiated. During this time the deposit is refundable if any item in due diligence comes back unsatisfactory. The deposit is NOT refundable, for example, if you decide you do not like CR anymore. The buyer typically pays for all due diligence items. Items in due diligence include:

  • Checking the title of the property and searching for any liens, encumbrances, pending legal cases from past workers etc. The attorney does this part. We can do a preliminary title search and look up the property in the registry. However, investigation of liens, pending court cases, etc is something the attorney will do. The attorney will also look into the corporation that owns the property.
  • Checking property lines with a topographer – optional and recommended if lines are unclean and not properly marked. Approx. $400 – $600 depending on size of property.
  • Soil test – done more for lots without homes. Core samples of the soil are taken to determine its stability. $900 for the report in English and 3 core samples plus a perculation test for where a septic tank would go (if you are purchasing a finished home, this part is not needed). If you want to do this for a finished home on the slope below or above a house, it is the same concept. We will always ask if the owners did this prior to building and can save you some money if so.
  • Home inspection – This is to see what you are getting into and not to renegotiate the price like in the US. Homes here are sold “as is” and you cannot get an inspection and then negotiate on repairs. This is about $400 to $800 depending on size of home and detail of the report.
  • Get power, phone, TV bills and any insurance policies ready to transfer if the home has all those items.

4) Once due diligence is completed satisfactorily you would send the rest of the funds for closing and close anywhere from 5 to 30 days after completion of due diligence, whatever you negotiated.

5) Closing – The title is transferred to you under your corporation when you and the seller sign the closing documents. You will have to physically be here for closing unless you leave a specific Power of Attorney (POA) for someone here. This specific POA allows your assigned agent to close on the home, nothing else. Closing costs are typically split by the buyer and seller. Total costs are around 6%- which includes 1.5% – 2% for the attorney/notary fees and 2.5% for registration, transfer taxes, government stamps, etc. So you are looking at 3% on the buyer side (due diligence is an additional separate fee) for your side of closing costs. This can vary for more complex deals with seller financing; so there are some added costs of underwriting the mortgage and registering it (mentioned above). For cash deals the buyer’s attorney takes the lead and for financed deals the seller’s attorney will be the lead attorney and write the mortgage. It is not uncommon for one attorney to do the entire deal. Seller pays the commission.

Some notes on financing a property:

  • Real Estate transactions in Costa Rica are cash deals for foreigners. Most people cash in on investments or sell a property in their country of origin to purchase a dream lot or home in Costa Rica.
  • As far as financing here; typically seller financing is the best option to consider. Unless you can get a line of credit back home, then the best way to go is negotiate seller financing with a large deposit. Most sellers want a 60% deposit and to be paid in full within 2-3 years. Terms, interest rates, balloon or monthly payments are all negotiable items. You just want to make sure you can make your payments, because the property Is the collateral and if you default; then you lose the property, your deposit, and payments to date.

We hope this answered many of your questions, if you have any additional questions or concerns, let us know.




Important Update on Costa Rica Entry Requirements

Important Update on Costa Rica Entry Requirements

April 23, 2022

Properties in Costa Rica

Costa Rica’s doors are more open than ever since the beginning of the pandemic era and here are some of the entry requirements you need to look out for before traveling to the “pura vida” paradise. For the first time since the start of the COVID-19 virus spread, Costa Rica is now allowing travelers from all countries around the world, this according to the new April requirements that repelled all previous national health measures. Foreign travelers still have to comply with the standard migration processes established by the General Law of Migration and Immigration, so keep in mind some of the requirements that must be met:

  • A returning flight ticket (the officer will ask for it upon arrival).
  • Even with 90-day touring visa the immigration officer determines how much you can stay in the country according to your passport.
  • Obligation de declare: if you’re traveling with a sum of money larger than 10,000 USD dollars you would have to request and complete the corresponding form at the migration post and present it for verification.

Upon arrival, note that all establishments, activities, and events are functioning at 100% capacity; however, the use of masks is still obligatory as well as the usual hand wash, temperature checks, and ordinary sanitary protocols established by the corresponding touristic activities. It’s been a while but finally vacationing in Costa Rica is easier than ever, so start planning your summer 2022 and look out for the excellent vacationing plans this beautiful country has to offer.




4 Advantages and Disadvantages of Using a Real Estate Lockbox

4 Advantages and Disadvantages of Using a Real Estate Lockbox

March 30, 2022

Properties in Costa Rica

In 1955, a real estate professional by the name of Delbert Williams came up with what is now known as the realtor lock box. The lockbox then was just an aluminum container for the house key. This container was secured with a padlock and then hidden on the premises. Although simple in design, at the time, the lockbox had solved a problem that most real estate professionals encounter of having to go back and forth from their office or the house owners to get the keys to access properties they were selling.

The process took time away from showing a house to prospective buyers. The lockbox was the perfect solution, and many real estate professionals followed suite to make it easier for them to do their jobs.

If you’re just like Delbert Williams, and other real estate agents who run back and forth to the office or colleagues to get keys, then maybe you need a lockbox for your properties. However, you might have heard some disadvantages of using a lockbox, deterring you from buying. In this article, we’ll discuss four advantages and disadvantages of using a real estate lockbox.

Advantages of Using a Real Estate Lockbox

Lockboxes Can Save a Realtor’s Time

The main purpose of a lockbox is to save time. Without a lockbox, agents would have to get the keys to a property from the house owner, their office, or colleagues.

There is also the chance that the changing of hands could lead to an agent taking the wrong key. This mistake not only makes it difficult to show a house, but if a buyer has to wait for the right key to be found, they might get impatient because of the delay and just back out before even viewing the property.

A lockbox also helps a real estate agent with multiple listings under their care. It saves them from having to bring multiple keys with them as they work, lowers the risk of accidentally grabbing the wrong key, and avoids the possibility of losing a key.

Lockboxes Are Convenient for Houses with a Lot of Foot Traffic

A house for sale might have contractors, workers, agents, and occupants walking in and out of the property. Having a lockbox eliminates the need for all of these people to have copies of a house key.

If too many people had a key for the house, there is the possibility of losing it and giving people unauthorized access to the property. Aside from this, giving them a key would mean they would have access to the property whenever they wanted. This could be inconvenient if the house was occupied, or it can even lead to a serious security breach if there’s no one around.

Electronic Lockbox Access Can Be Set to a Specific Time

Electronic lockboxes have more advanced security measures, and one of these measures is the ability to set the time a lockbox can be accessed. For example, the house owner or an agent can allow people to unlock the lockbox only during daytime or office hours. The codes given to workers or other authorized personnel will only work during the given time. This security measure prohibits unauthorized access, especially if a property has a lot of foot traffic.

Electronic Lockboxes Can Track Access to Property

Another advantage of an electronic lockbox is its ability to track lockbox activity. Because electronic lockboxes have advanced security measures, smartphone apps or electronic key cards are required to access them. As these apps or key cards are assigned to a specific person, their information is logged in whenever they unlock the storage unit. Aside from their name, the time and date of when they accessed the lockbox are also recorded.

This security measure can help an owner track any unauthorized usage and suspicious behavior from their workers or agents. It can also deter workers or agents from abusing their access to the property as house owners will see who accessed the property and when it was accessed.

Disadvantages of Using a Real Estate Lockbox

Lockboxes’ Keys Can Get Lost or Stolen

The biggest disadvantage of using a lockbox that requires a key to open it is the risk of losing the key itself. A solution for this is to keep track of the key or place it somewhere safe. Another solution is to get a more advanced lockbox. Either a combination or electronic lockbox would provide better security. A combination code will not be stolen easily, and an electronic lockbox will have additional security features like those mentioned previously.

Combination Lockboxes’ Code Can Be Cracked

Although combination lockboxes can provide better security, the combination code can still be cracked.

In some cases, prospective buyers can sneak a peek as the agent enters the code. They might then return to the property to steal furniture or use the house for their enjoyment.

A real estate agent may also accidentally reveal the code. If they have it written down somewhere, this piece of information can get lost in the office or near the property, giving strangers access to the house. If the code is on a cloud server without password protection, the server could easily be hacked.

The greatest disadvantage to a combination lockbox is that some older models can be broken into by a thief trying all kinds of combinations. As these lockboxes don’t have a program to limit the combinations being entered, a malicious individual can keep guessing until they crack the code.

You can avoid these problems by taking extra measures to ensure the code combination will never get revealed or stolen. Obfuscating any line of sight as the code is being entered or getting the key before the visitors arrive are just some ways to safeguard the combination. It’s best to change the code regularly or right after a showing so that guests can’t use the code you previously entered.

Another solution is to get an electronic lockbox instead. Because electronic lockboxes use an electronic key card or a smartphone app to be unlocked, the lockbox isn’t as easily cracked as other types of storage units.

Older Lockboxes Can Deteriorate or Can Be Forced Open

You might be tempted to get an older model of a lockbox as these will be cheaper, but they can also pose a security threat.

Older models can be damaged by the elements. Lockboxes can that are subjected to heavy snow or rainfall can deteriorate over time. Thus, they can easily rust or break down, which will make it hard for an agent to open the lockbox and access the property. This type of damage can also make it easy for anyone to force open the lockbox, giving easy access to the keys of the property.

To guarantee that this never happens to you, ensure that the lockbox you buy is made of sturdy and durable materials that can withstand any type of weather or forceful impact. Newer models are also fire-proof and burglar-proof, giving them an added layer of security and protection.

Electronic Lockboxes Can Be Expensive

Because of the security features of an electronic lockbox, such models can be expensive for some homeowners. Good quality lockboxes with all the best features and an easy-to-understand smartphone app interface will usually cost around $100 or more. Many homeowners will balk at the price and feel like they should settle for something cheaper or not buy one at all.

But a lockbox is a great investment if you want to keep your home safe from invaders, especially if you’re opening it to several strangers in the hope that they will buy it.

Lockboxes provide several benefits to both house owners and real estate agents, such as ease of access to the property and added security. And while there may be some disadvantages to using a lockbox, these disadvantages still outweigh the many benefits that they can bring to the table.

Image by proagentsolutions.com




Zac Efron is back in Costa Rica! Take a look

Zac Efron is back in Costa Rica! Take a look

March 23, 2022

Properties in Costa Rica

Yet another Hollywood star is added to the list of people connecting with nature and relaxing in Costa Rica; this time, the country welcomed none other than Zac Efron. The 34-year-old was caught relaxing in beautiful Santa Teresa along with his brother and best friend, looking to relax from the intense environment that comes with being an A-list celebrity.

This has not been the first time he visits the country, as he was exploring towns in Limón and San Mateo while showcasing the sustainable practices taking place in each place for his famous Netflix show, “Down to Earth”.

It’s clear to see that Costa Rica is a place where the famous actor formed a unique and special bond. Efron had already visited the country back in 2016, where he touristed places such as the Osa and Papagayo Peninsulas and was pictured in wonderful waterfalls and beaches with his closest friends. A few days ago, he posted two pictures alongside his brother Dylan and left his followers with a heartfelt message to the country: “Mi corazón está aquí”, in other words, “My heart is here”.

Why is Costa Rica such a popular location for Hollywood stars you ask? Well, apart from the amazing flora, fauna, rainforest and green landscapes, the country is a place where people tend to wander off the cameras for a while and connect with themselves by going to the beach, waterfalls, volcanos, to name a few. One of these places is Santa Teresa, given that it combines a bit of everything, from it its pristine beach to its vivid town aura that has resonated with all your famous TV stars.




Costa Rica is making the first underwater museum in Central America, check it out!

Costa Rica is making the first underwater museum in Central America, check it out!

March 22, 2022

Properties in Costa Rica

Costa Rica is well known for its sustainability-oriented vision and initiatives towards the conservation of its most precious zones. This is not the exemption for the new underwater project that the Rocky Reef Conservation and the Punta Leona Hotel have been working on, combining art with the conservation of marine life. We’re talking about an underwater museum located 50 meters off the Central Pacific Coast and at a depth of 2 meters in low tides, making it perfect place to experience snorkeling or amazing diving sessions.

Costa Rica

The backbone of this project is the fact that it constitutes in a type of regenerative art where Costa Rican sculptor Fabio Brenes along with some help from James Madison University students created three stone and wood pieces that portray three of the most representative figures of the zone: the “Cacique Garabito”, a manta ray , and a sea turtle. With a renowned record of over 20 years working in wood sculptures, it is safe to say that Mr. Brenes knows his work and during his years of creation, most of his artwork has been inspired by the awe of nature and figurative elements that belong to it. Not only do these sculptures enhance the diving experience for the people, but this type of art also considers the habitants of the sea as they have been created to offer them another type of home. Keep in mind, this is only the beginning stage of the project, meaning that their efforts and actions towards creating even more habitats and places for marine flora & fauna to thrive is just starting. For those who love the sea, this is a great step in the direction towards a healthier relationship with our surroundings and the animals that live in it. Stay close for more updates on the wonderful underwater museum in Garabito, Puntarenas.

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10 Books That Will Get You Excited For Costa Rica

10 Books That Will Get You Excited For Costa Rica

March 7, 2022

Properties in Costa Rica

Costa Rica is a fascinating and picturesque country with beautiful nature and rich history of its foundation and development. Lots of Best Writers Online, who have ever been to Costa Rica or lived there, cannot be silent and stop describing this unique nature and people in their books.

If you are keen on Latin American countries and their peculiarities, we have gathered the best books about Costa Rica that will make you want to visit this country.

Lonely Planet Costa Rican Spanish Phrasebook & Dictionary

by Thomas Kohnstamm

Costa Rican people speak Spanish, but this language is a little different from the Spanish you may have learned on a language course. Due to the influence of Costa Rican culture and local traditions, the language was transformed, including jargon and dialects known to local citizens. This book will come in handy for people who want to familiarize themselves with the peculiarities of Costa Rican Spanish and dive into their culture. The book will be easier to read for those who know the fundamentals of Spanish but don’t be afraid of challenges to start learning a foreign language from scratch.

Monkeys Are Made of Chocolate: Exotic and Unseen Costa Rica

by Jack Ewing

This book consists of several narrations published in the chain of logic by Jack Ewing. The author has been living in Costa Rica for 30 years, which has pushed him to describe the fascinating nature and culture of this country in the book. Costa Rica is an exotic country with exciting nature that you won’t find anywhere else on the planet. This book is a kind of guide for people who are willing to visit Costa Rica for the first time but don’t know where to start their trip.

La isla de los hombres solos

by José León Sánchez

This book is supposed to be one of the most popular books of Latin American literature for the last decades. The book tells readers a true story based on the narration of a prisoner on the island of San Lucas, who was accused of a crime he didn’t commit. This book is a detailed biography of this prisoner, which he decided to tell the world after the release. A small spoiler—the author of the book is Sánchez, the prisoner.

The Birds of Costa Rica: A Field Guide

by Richard Garrigues, illustrated by Robert Dean

As we have mentioned previously in this post, Costa Rica is known for its picturesque flora and fauna. The great peculiarity of its nature is a huge variety of birds. As writing service reviews Trust My Paper writes, many tourists come to Costa Rica in the seasons of birdwatching—tours along with the places where you can see hundreds of different birds. This book is a kind of encyclopedia that tells readers about all kinds of birds you can see in Costa Rica, with their pictures and locations. You can boldly explore the nature of Costa Rica, being aware of its specifics.

Costa Rica: A Traveler’s Literary Companion

by Barbara Ras

This is a great piece of literature that combines 26 different stories from local citizens. By reading this guide, you can replenish your knowledge about the different regions and districts of Costa Rica, their culture, traditions, and differentiators. You can read the detailed descriptions of nature, landscapes, mountains, deserts, coasts, and so on. We promise you will fall in love with Costa Rica after reading this book, where the author shares sincere feelings and moods.

Cut the Crap & Move To Costa Rica: A How-to Guide Based on These Gringos’ Experience

by Steve & Nikki Page

This is a very useful guide on how to move to Costa Rica for all people that dream to change their location and travel the world. Here, readers can find practical and true-based tips on how to find the apartments, what insurance, and other documents you need to move. You will also find out how to find a job as soon as possible, get a bank account, and rent a car. Moreover, readers will read about the real stories of people who moved to Costa Rica from different countries and whether it is worth it.

The Ticos: Culture and Social Change in Costa Rica

by Mavis Hiltunen Biesanz, Richard Biesanz, and Karen Zubris Biesanz

This book is completely dedicated to the history and foundation of Costa Rica. The authors tell readers about the main factors that influence Costa Rica to make this place a country we can see nowadays. You can find out more about its history and key personalities, the current government, and social system, level of life, and values of local people. The writers have made a great exploration of the internal processes of the country to make people aware of everything before they decide to visit or move to Costa Rica.

The Best Short Stories of Quince Duncan

by Quince Duncan

The author of this book is considered to be the first Afro-Caribbean writer who succeeded to become popular and promote his art. This book is a combination of different short narrations from other black authors about the racial identity in Costa Rica. You can learn about the life stories of African descent race from the past till today to know the local people and their principles better.

A Beach House to Die For

by K.C. Ames

This is a fictional story about a middle-aged woman who has recently divorced and has a challenging period of life. But everything changes when she finds out about the inherited villa in Costa Rica, a beautiful and sunny country. So she decides to move to the house and start a new life from scratch. She gets into the fascinating world of nature and new people who inspire her to keep going.

Two Weeks in Costa Rica

by Matthew Houde and Jennifer Turnbull

The title of the book speaks for itself. This is a story of a couple who have spent two weeks in Costa Rica. They have visited numerous cities and places, communicating with local citizens and writing down their stories and experiences. The authors depicted the bright and saturated lives of Costa Rican people, the adventures they get in on a regular basis, and what aims they mainly follow in their lives.




New national holiday commemorating Afro Culture in Costa Rica!

New national holiday commemorating Afro Culture in Costa Rica!

February 8, 2022

Properties in Costa Rica

Afro-culture in Costa Rica has had a gigantic impact in “ticos” everyday life and its influence is appreciated in the multi-diverse heritage that it has given the entire Costa Rican population. Ever since the arrival of Christopher Columbus in the Caribbean coast back in 1502, Afro-culture has been installed in this beautiful sector of Costa Rica alongside its delicious food , rhythmic dances, striking art, and of course, an ever existent vibrant African culture.

On November 2021 , the new national holiday celebration decreed by law 10,050 declared August 31 the official national holiday and commemoration of the “Black Person and Afro-Costa Rican Culture”. This new holiday has been classified as a non-mandatory payment holiday, meaning that employees who work in non-commercial activities and opt to skip work for that day are not entitled to their ordinary daily salary.

With the intention of rescuing the Afro-Costa Rican traditions, the 31 st of august was already considered a day of celebration when the Union of Costa Rican Educators ( Sindicato de Educadores Costarricenses in Spanish) declared in the eighties that these traditions should be celebrated on a yearly basis to help preserve and showcase the overall role of the culture in the development of Costa Rica. The celebration activities nowadays revolve around a Grand Parade de Gala, in which Afro Costa Rican Families and people from all over the Caribbean coast join up and enjoy a delightful time soaking in the region’s music, dances, cuisine, clothing, concerts, just to name a few. Ultimately, the national holiday is a great step in the way to understand the values that were ingrained in Costa Rica’s traditions and have been forgotten because we haven’t seen them first hand, therefore meaning that our job should be to protect them and conserve them.

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Real Estate Insights

Real Estate Insights

November 26, 2021

Properties in Costa Rica

  1. Are foreigners and entities controlled by foreigners permitted to own real estate directly, or are there specific licence requirements or restrictions in place that must be complied with for a non-citizen to own real estate? Are there restrictions on ownership of beachfront or coastal land, or land near beachfront?

According to the Costa Rican Constitution, foreigners and entities controlled by foreigners have the same rights of Costa Rican citizens. Both are equally permitted to own real estate directly in Costa Rica. Moreover, an investment in real estate in Costa Rica, with a minimum of US$200,000 grants a foreign purchaser the right to opt for a resident investor visa. As for the second part of the question pertaining to owning beach front or coastal land, or land near a beach front, there is a special programme applicable in Costa Rica. Its regulations are provided in the Maritime Zone Act of Costa Rica (Act No. 6043 of 1977), which states that the maritime zone will be 200 metres wide starting at the ordinary high tide mark. After these 200 metres, the first 50 metres inward will always remain in the public domain and may be fully accessed by any interested party. Therefore, access cannot be restricted. As for the remaining 150 metres in the 200 metres in the maritime zone, which is defined as the “restricted zone”, the state may grant a real estate concession for private individuals. Concessions can be held by corporate entities controlled by foreigners with a percentage that does not exceed 50 per cent of the actual stock issued in said corporation.

  1. Is all real estate capable of being owned as a property right (fee/freehold), or is the land owned by a government or monarch with only the ability to acquire leasehold rights? What other forms of real property ownership exist other than property right or leasehold?

Under the Costa Rican legal system, the rules for owning real property will generally be classified as freehold (fee simple), whereas ownership by leasehold is not applicable. There are special programmes in Costa Rica with characteristics similar to leasehold right systems. An example of this system is the concession system under the Maritime Zone Act. To illustrate this point, concessions to the maritime zone are granted by the state and can derive in administrative property rights. This is particularly true in situations where the interested party used and enjoyed the concession for the granted legal period and possible renewal periods. Nonetheless, ownership of the area subject to concession will continue to be held by the government.

  1. What overriding rights of the public exist that may affect land, such as inalienable rights to access certain natural resources or the use of beaches? Who owns mineral or riparian rights?

First of all, it is important to clarify that mineral and riparian rights are owned by the State of Costa Rica. These rights may only be exploited by obtaining a concession from the government. As for the overriding rights of the public that could affect land in Costa Rica, many of these rights may be related to the environmental protection legal system, whose legal framework is described in question 18 in relation to the environmental framework. As for inalienable rights to access certain natural resources or to use beaches, the programme for the coastal areas and beachfront properties, as regulated by the Maritime Zone Act, grants the character of public domain and inalienable effects over the public area contained in the maritime zone. Moreover, the status of inalienability and public domain are extended to all-natural resources and override private interests. In addition to beachfront properties, similar regulations apply to the limits and setbacks in terms of rivers, lagoons, mangroves, wetlands, etc, as described in the Waters Act (Law No. 726), also included in the Wildlife Conservancy Act (Law No. 7317). To provide an additional example, private interests may also be overridden by public interest when it is declared by the government of Costa Rica in the form of an executive decree. These procedures must follow the provisions of the Expropriations Act of Costa Rica (Law No. 7495) and its Rulings. By means of the Expropriations Act, if a public interest is justified and determined for a determined property, the Public Administration may exercise its power to declare eminent domain.

  1. Is title insurance customary to obtain in connection with a purchase or a loan? If so, is it available?

Title insurance, as conceptualised in other jurisdictions, is not available in Costa Rica. On this point, the types of insurance available for real property, usually in connection with a purchase or a loan, are related to hardship or damages that could affect the property. It is important to note that in Costa Rica the insurance market is regulated by the Insurance Market Regulations Act (Law No. 8653) and its Regulations. Taking this into consideration, the good standing and complete validity of a real property’s legal title is not something for which insurance providers may issue coverage. Most of the precautionary measures regarding the legal title (its background, existence, validity, singularity, etc) are subject to review during the due diligence proceedings for the property. These proceedings are entirely advisable for a potential buyer before buying. Precautionary measures other than insurance, such as cadastral or registry alerts to avoid fraud, duplicated sales and similar irregularities are available to the public.

  1. Are boundary or other surveys typically completed delineating particular property boundaries, or is reliance placed on registered maps? How are boundary disputes customarily resolved?

Surveys are typically completed by delineating the correct boundaries, which is also an issue that should be verified during the legal and topographical due diligence procedures. These procedures are carried out to validate that the property boundaries and area completely match what is indicated in the recorded survey and title. For a survey to be properly recorded, it must be prepared and submitted by a topographer, as a commissioned expert in such matters. The topographer will register the survey at the Cadastral Department of the National Registry. If there are differences in the property related to its actual measurements or boundaries (due to subdivisions, the effects of rivers or other natural forces that may erode the area, etc), the survey for the property must be updated and a new record must be submitted to the National Registry that reflects the current measurements. Reliance on cadastral surveys is generally safe and possible, although disputes may naturally arise from boundary issues.

Interested parties may settle these issues by non-contentious mechanisms, but there are also judicial remedies available. As for non-contentious mechanisms, parties may request an opinion from independent experts (topographers) who may attest to the correct measurements for a property and the applicable boundaries based on the recorded titles, their background domains and measurements. If disputes are not settled by extrajudicial mechanisms, parties may turn to the summary proceedings established in article 106 of the Code for Civil Procedures (Law No. 9342 of 2018). Namely, they may file a motion for reinstatement of property boundaries. These summary proceedings will only resolve issues related to the real property’s momentary possession and not to the substantive issues. However, it is a method of relief available to the interested parties.

  1. What taxes or other fees are payable in connection with the purchase or sale of real property (eg, notary fees, recording, alien licensing), and what are the amounts of such taxes and other fees?

The overall applicable costs in a real estate transaction have varied in certain aspects that will be pointed out below, following the recent enactment of the Law for the Reinforcement of Public Finances (Law No. 9635, also referred to as the “Tax Law”), which was published in the Official Gazette on 4 December 2018, entering into force as of 1 July 2019.

This Tax Law significantly amended the Income Tax Law, as well as the Law for the General Tax on Sales. Among several changes in separate fields, this new Tax Law implemented two major changes in connection to real estate ventures: First,

the introduction of the Value Added Tax (VAT), applicable to services (including legal and notary services), on a general basis. The situation used to be the opposite prior to the implementation of the VAT, since the General Sales Tax applied on limited scenarios and services were generally exempt. Second, the Tax Law implemented the Capital Gains Regime, which focuses on passive income impacting the net worth of a person owning real estate, whether on a personal title or by means of a corporation.

Consequently, the capital gains tax will imply that if an asset is sold for a higher value than the amount that is registered in its accounting, said income will be taxed with an applicable rate of 15 per cent. It is important to highlight that the 15 per cent tax is calculated over the margin of profit. An exception is established for the capital gains tax when the transaction involves profits related to: (i) The sale of the asset that corresponds to the usual residence of the seller (whether an individual or corporate basis);

(ii) donations and (iii) inheritances. These assets are not subject to this tax. Moreover, as of the 15 per cent applicable tax, it is also relevant to highlight that there is an alternative for paying a 2.25 of the transactional value, if the seller is performing the first sale of an asset that was acquired prior to 1 July 2019. This exemption will not apply if the habitual economic activity is related to the sale of real property, in which case the applicable tax will be of 30 per cent, based upon the traditional income tax regime.

Considering the above, a purchase or sale of real property will pay transfer expenses (transfer tax and legal stamps), in addition to the notary’s legal fees. As for the legal stamps, the applicable percentage (which runs between 0.75 per cent and 0.8 per cent) may be calculated for real property transactions, whereas according to the Real Estate Transfer Tax Act (Law No. 6999 of 2012), the applicable taxes for transferring real property are 1.5 per cent, calculated on the transaction’s value set forth in the public deed or the property’s registered fiscal value (the higher of the two amounts). The transfer tax set out in the Real Estate Transfer Tax Act is payable for direct transfers (by conveyance using a public deed) or indirect transfers (if the property is sold indirectly, by selling the stocks or interests in the company that owns the property). In addition to the transfer tax, if the property is conveyed by public deed, it must also pay the legal stamps for said act at the National Registry. Moreover, the legal fees applicable to transferring real property will vary between 1 per cent and 1.25 per cent, according to the minimum fee schedule, which is established by the Costa Rican Bar Association and the government my means of an Executive Decree. In short, the total costs (including expenses and fees) will vary between 3.25 per cent and 3.55 per cent for the specific transaction. However, if we were to contemplate the payment of the capital gains tax (in the applicable scenarios) by using the differentiated rule of the 2.25 per cent above explained, said percentage in costs should be contemplated as a part of the transaction, with the clarification made in the sense that the capital gains tax is to be covered by the selling party.

  1. Which party customarily pays taxes and fees in connection with a purchase/sale of real property – the purchaser or the seller? What is the allocation of responsibility between a purchaser and seller of all taxes and fees payable to consummate a conveyance of real property?

Legally, the tax responsibility may be allocated to both the purchaser and seller in equal parts according to article 6 of the Real Estate Transfer Tax Act (Law No. 6999 of 2012), which expressly indicates that both parties are equally bound to make said payments. The customary practice in Costa Rica is for the parties to negotiate that the transfer costs and fees be allocated equally between the purchaser and seller. Nonetheless, the seller is the responsible party for covering the applicable capital gains tax, in accordance to the enactment of such regime by way of the Law for the Reinforcement of Public Finances (Law No.9635, also referred to as the Tax Law), which was published in the Official Gazette on 4 December 2018, entering into force as of 1 July 2019. On the subject of the capital gains tax, it results of relevance to indicate that if the property to be sold is owned by a non-Costa Rican resident, there is an obligation from the purchaser’s side to withhold the tax, in the sum of 2.5 per cent over the transactional value. In this scenario, a non-resident will be the person without a Costa Rican residency card or whose stay in Costa Rica does not surpass a time period of 183 days. This withholding obligation is furtherly explained in question 17.

  1. Can real estate be indirectly acquired by purchasing the shares or ownership interests of a corporation or other entity that owns real estate? What taxes and fees would be payable upon a purchase of shares of a company that owns real estate as compared to a purchase of the real estate directly?

Real estate in Costa Rica may also be acquired indirectly by purchasing the shares or ownership interest in a corporation, which is a common practice as well. For tax purposes, as referenced in question 6, the applicable taxes on the transfer of real property will be 1.5 per cent, as an indirect transfer. A possible benefit of this scenario is that the parties will not have to pay the stamps at the National Registry, since no change in ownership of the title would take place. The applicable legal fees will be the same as indicated in question 6, varying between 1 per cent and 1.25 per cent, according to the minimum fee schedule.

  1. What taxes and fees are paid on the conveyance of personal property accompanying a conveyance of real property, and in what amounts? Is it more favourable to allocate purchase price towards personal property or real property for tax purposes?

For registry purposes in terms of the conveyance itself, there are no distinctions in terms of personal property or real property for legal stamps and applicable fees. There are no distinctions either for tax purposes, depending on the purchase price for personal property or real property.

  1. What recurring annual fees or real estate taxes are payable in connection with the ownership of real property?

Owners of real estate must always pay municipal taxes on an annual basis, which are calculated in four quarters, from January to December. Municipal taxes will include fees for garbage collection and the property tax as calculated based on the value. If the ownership is held by means of a corporation, a yearly tax on corporations will also be applicable. Moreover, as will be mentioned below, there is also a solidarity tax (also termed luxury tax) that applies to the properties having an estimated value of more than US$210,000. The following list outlines the main taxes applicable to real estate in Costa Rica:

  • Municipal taxes: Includes Property Tax and Garbage Collection Tax. This tax is payable to the Municipality (local government) where the property is located and is based on the value of the property.

  • Solidarity tax: This tax is payable to the Ministry of the Treasury and applies to those properties with an estimated value of more than US$210,000 and is based on the value of the property.

  • Corporate tax: If the property is owned by a corporate entity, the owner corporation will have to pay an annual tax, in accordance with the Corporate Tax Act (Law No. 9478). This tax may vary depending on whether the corporation is economically active or not, and the payable amount will range between US$120 and US$380 approximately.

  1. Are preliminary agreements, memoranda of understanding or other concession agreements typically negotiated between purchasers/developers of real property and the government? What types of matters are incorporated into such preliminary agreements, memoranda of understanding or concession agreements?

Concession agreements must follow the rules and procedures that were outlined in questions 1 and 2 if they are subject to the maritime zone programme. In addition to those rules and procedures, the preliminary agreements and memoranda of understanding do not have to be negotiated with the government in connection to private property. Developers who will be selling the project’s units must register the draft agreements with the Ministry of the Economy, Industry and Commerce

(MEIC), based on the provisions for agreements for ongoing or continuous sales programs. The applicability of this procedure is established by the Law for the Promotion of Competition and Consumer Protection (Act 7472 or the Consumer Act), which contains public law provisions that must be followed. For real estate developers, if the previously referenced elements are concurrent, they should appear before MEIC and file for approval of the sale projects. The following are the conditions applicable to the registration requirements at the MEIC: (i) the programme must be offered publicly and in a generalised manner for consumers with no discrimination among the target consumers, (ii) the delivery of the good, service or project (depending on the programme) is conditioned on future execution of the terms and agreements contained in its obligations, (iii) the execution of the programmes depends on a person or entity either: (a) delivering the good; (b) providing the service, (c) Executing the project, and/or (iv) Allowing consumers to exercise their rights for any future programmes.

  1. What rights of first refusal or other rights exist by law in favour of third parties or tenants of real property?

Rights of first refusal in favour of third parties or tenants of real property are not applicable by law, although they are commonly negotiated between the interested parties. It is important to clarify that tenants do not legally acquire a right to purchase the property unless it is negotiated by private agreement. Moreover, the tenancy conditions for the property do not impede or affect the owner’s right to sell the asset.

  1. How is real property conveyed – by deed or other instrument of conveyance? What is the procedural process for completing a conveyance? Is there a registration or recording process?

For real property to be directly conveyed, the conveyance must be in the form of public deed instrument. In this case, the parties (seller and purchaser) must appear directly before a Notary Public, who will record the details of the transaction, including the elements requested by the Real Estate Assets Department at the National Registry. Once the public deed is issued, signed by the parties and authorised, an official deed certificate will be submitted to the National Registry that includes payment of the applicable taxes and legal stamps for the recording process.

  1. When is title actually and officially conveyed to a purchaser – upon execution of a deed or other instrument of conveyance, upon submission of the instrument of conveyance to a recording office or registrar, upon acceptance of such instrument of conveyance for registration or recording, or upon the happening of some other event?

Title to real property is officially conveyed when the public deed is registered with the National Registry after having followed the procedures indicated in question 13. In this regard, the Real Estate Assets Department of the National Registry will register the public deed within a period of five business days after the deed is submitted for filing.

  1. What types of governmental liens or encumbrances on title could result in a forfeiture of the land? Real estate taxes, government-owned utilities?

Governmental liens or encumbrances may derive from circumstances related to environmental protective measures, mandatory servitudes related to government owned utilities, eminent domain provisions, legal mortgages, etc. As for the latter, for example, failure to pay the applicable real estate taxes may result in a legal lien being placed on the property, once the competent collection authority initiates legal recovery proceedings. Real property may remain titled and still have governmental liens or encumbrances. However, if the measures affect the use and enjoyment of the property to a limited degree, they may be deemed expropriatory. To provide an example, a property may be categorised as Cultural Heritage (Law No. 7555). Such a measure may imply limitations applicable to the owner in terms of the permitted uses for the property. If the ownership is affected to the degree that freehold rights are being blocked, the property could be subject to definite forfeiture, following the procedures contained in the Expropriations Act (Law No. 7495) and its Rulings. As complementary examples, real property may have liens or encumbrances levied related to the Forest Law, which introduced the concept of Natural State Heritage as administered by the Ministry of Energy and the Environment (MINAE). The Natural State Heritage comprises forestland and national reservations and is inalienable and could affect legal title to real property.

  1. Upon a sale of real property, would any portion of profits or proceeds be required to be paid to any third party? For example, are employees entitled to a share of profits?

These provisions are not applicable under Costa Rican law. Employees or other third parties are not entitled to a share in the profits, unless there is a private and specific agreement declaring that they are entitled.

  1. Upon a sale of real property, what taxes must be paid in connection with any gain, and are there withholding taxes? Are taxes different if the seller is an entity?

As indicated previously, Congress approved the Law for the Reinforcement of Public Finances (Law No. 9635, also referred to as the Tax Law), which was published in the Official Gazette on 4 December 2018, entering into force as of 1 July 2019. As a result of this legislative amendment, which introduced major changes to the legal framework in Costa Rica and its tax regime, capital gains are currently applicable upon the sale of real property. The applicable tax will consist of 15 per cent based on the difference between the initial purchase price and the selling price. However, if the sale of real property is the party’s normal line of business, the applicable rate may be up to 30 per cent, based upon the traditional regime. There is a differentiated rate established in the law, which allows the selling party to pay a 2.25 per cent over the transactional value (not on the margin of profit) in the first sale and purchase of a property that was acquired prior to 1 July 2019. This is a significant change in Costa Rica’s real estate regulations, considering that this tax was not previously applicable in this jurisdiction. The tax is not of a withholding nature in principle, although if the transaction involves a selling party that is not domiciled in Costa Rican territory, then the purchaser has the obligation to withhold a 2.5 per cent over the transactional value. In this regard, the Notary Public in charge of conveying the property shall indicate in the public deed that the Tax Administration perceived the obligation related to the sale.

  1. Are there any environmental regulations, and are environmental assessments customarily performed prior to acquiring real property?

To answer the first prong of this question, Costa Rica has a broad legal framework targeting environmental protection. This framework grants major powers to the competent governmental authorities in terms of enforcing this legislation, as will be indicated below. Therefore, environmental assessments are customarily performed during the due diligence process. Moreover, it is highly advisable and relevant to obtain a certificate from the competent governmental authority that certifies that the property to be acquired is not acquired in a protected area and does not belong to the Natural State Heritage (PNE) that is administered by the MINAE. The Natural State Heritage is comprised of forestlands and national reservations and is inalienable. This point needs to be mentioned for this analysis since it could affect real property due to the previously explained reasons. To complement this idea, the following are some of the most relevant environmental regulations:

  • Water Act (Law No. 246 of 1942), currently in the process of imminent amendments by the Legislative Branch);

  • Biodiversity Act (Law Number 7788 of 1998);

  • Law for the Conservancy of Wildlife (Law Number 7317) and its recent Ruling, as amended in 2017;

  • Law for the Ratification of the Convention on International Trade of Protected Species (Law Number 5605 of 1975);

  • Law for the National Park Services (Law Number 6084 of 1977);

  • Forest Act (Law Number 7575 of 1995);

  • Constitutional Law for the Environment (Law Number 7554 of 1998) and its Rulings.

  1. Are there building, land use and zoning codes?

There is a broad applicable programme for this item. Construction activities in Costa Rica are subject to a broad regulatory framework that grants hierarchical priority to the specific provisions as adopted by the local governmental entities in each county. Consequently, the first point of reference to determine the applicable construction regulations and binding zoning regulations for a property is the Municipal Regulatory Plan, as approved by each Municipality for the specific districts under their territorial jurisdiction where the real property is located. In the absence of a Municipal Regulatory Plan, the construction activities will be regulated by the general acts and regulations of Costa Rica, as detailed below. The following are the main laws and regulations applicable to construction activities in Costa Rica:

  • Regulatory Plan of the Municipality where the property is located;

  • Regulatory Plans Administered by the Costa Rican Institute of Tourism (ICT);

  • Construction Act of Costa Rica (Act No. 833);

  • Regulations of the Constructions Act of Costa Rica, issued by the National Institute of Urban Housing (INVU). The current Rulings were published in the Official Gazette of Costa Rica on 2 March 2018;

  • Historical Heritage Act (Act No. 7555);

  • Act for Equal Opportunities for People with Disabilities (Act Number 7600);

  • Regulations of the Act for Equal Opportunities for People with Disabilities (Executive Decree No. 26831);

  • Code for Hydraulic, Mechanical and Sanitary Installations;

  • Code for Structural Foundations of Costa Rica;

  • Seismic Code of Costa Rica (Executive Decree No. 37070-MIVAH-MICIT-MOPT);

  • Rulings for the Electrical Code in Costa Rica (Executive Decree No. 36979);

  • Rulings for the National Fire Protection Association; and

  • Rulings for Contracting Services in Engineering and Architectural Services.

  1. Are there laws permitting or contemplating condominiums or otherwise subdividing properties, or creating multiple ownership existing on one plot of land or building?

There are laws permitting condominiums and regulating their function. The Condominiums Act (Law number 7933 of 1999) established the main rules that apply to real property and ownership when existing in subdivided properties, such as

condominiums. Moreover, when a property is located in a condominium, the ownership of the property will be subject to the regulations established in the by-laws of said condominium. Consequently, when performing due diligence, it is of the utmost importance to analyse said bylaws in relation to the interests of the potential purchaser.

  1. Are there any restrictions on, or specific legislation relating to, subsurface rights and air rights?

In Costa Rica, real property ownership does not grant subsurface rights and rights, which are elements in the public domain. Moreover, construction work on real property must abide by the regulations of the Directorate of Civil Aviation of the Ministry of Transportation. Mainly, in buildings or any sort of construction in zones influenced by airfields, airports, aerodromes or similar items, where it becomes necessary to obtain the approval for construction from the competent authority.

  1. Are there any laws relating to the preservation of views or light?

A lender for a real estate project can be a private or public financial entity. If lending is provided by a financial entity (whether private or public) this agent will have to be registered with the Superintendence for Financial Entities of Costa Rica (SUGEF) to be able to provide credit facilities and to handle and administer third-party funds. Entities or individuals (national or international) providing private money lending are required to be licensed by SUGEF in this jurisdiction to provide facilities for real estate projects.

  1. Is a lender for a real estate project in your jurisdiction required to register or be licensed in such jurisdiction?

A lender for a real estate project can be a private or public financial entity. If lending is provided by a banking entity (whether private or public) this agent will have to be registered with the Superintendence for Financial Entities of Costa Rica (SUGEF) to be able to provide credit facilities and handle third-party funds. Nonetheless, entities or individuals (national or international) providing private money lending are not required to be licensed in this jurisdiction to provide facilities for real estate projects.

  1. What determines the priority of a mortgage, charge- or guaranty trust – the date of the loan, the date of execution of the mortgage, charge or guaranty trust, the date such mortgage or charge is actually recorded or registered, or some other factor?

The priority of a mortgage in terms of recovery will depend on the degree of registration for the real property (depending on whether it is first degree, second degree or third degree). This priority degree for a mortgage derives from the date on which the obligation is recorded with the National Registry. Provisions related to the priority degrees are applicable to mortgages, which are regulated by Chapter IV of the Civil Code of Costa Rica. Nonetheless, guaranty trusts, which are subject to the provisions of the Commerce Code of Costa Rica, are commonly employed as a valid mechanism as collateral.

  1. What taxes or fees are payable by a borrower or by a lender in connection with a loan secured with real estate in your jurisdiction?

If the loan is secured with real estate, the expenses will depend on the amount of the security, as determined by the schedule of fees set forth by the National Registry. The applicable legal fees will be calculated in a range of 1 per cent to 1.25 per cent of the property’s value, as established by the Costa Rican Bar Association and the government, my means of an executive decree.

  1. What typical remedies does a lender with a security in real property in your jurisdiction have in the event of a default by its borrower?

In the event of default on payment, when the loan is secured by real estate, a typical remedy for the lender is to turn directly to the foreclosure procedures, to be explained in the following question. A lender also may secure the real property by means of a guaranty trust. In this scenario, the trust agreement should include a foreclosure procedure related to due process for the debtor, following a structure that is similar to the structure provided for in the legal foreclosure mechanisms. A benefit of the execution proceedings for a guaranty trust, in the event of a default in payment, is that the foreclosure proceedings for the property will be more expeditious since they will not be subject to a court decision. Instead, the proceedings will be handled by a trustee who is legally entitled to conduct the foreclosure. It is important to clarify that any direct award of the property to the lender, without having followed the procedures related to foreclosure and auctions, will not be deemed to be valid. The details related to foreclosure procedures are explained in the following section.

  1. Is there judicial or non-judicial foreclosure in your jurisdiction, and what is the foreclosure process generally?

There is judicial foreclosure in Costa Rica. The procedure is established in the Civil Code (1888) and the Code of Civil Procedure, which was recently updated in 2018. If the debtor fails to make payment, the creditor may file a foreclosure proceeding for the mortgage. The foreclosure procedure generally functions as follows:

  • To initiate the proceedings, the lender must file a petition with the court system (i) attesting to the existence of the mortgage with a certificate issued by the Public Registry, (ii) describing the debtor’s breach of contract, and (iii) indicating the total amount owed up to the petition date (principal and interest).

  • The first ruling issued by the judge must be served personally on the debtor by the court system or by a notary public appointed by the court system to do so. Furthermore, the court will instruct the Public Registry to annotate the process on the property’s title.

  • The debtor has the right to file a written objection. If the objection is legitimate and well grounded, the judge will set a date for an oral hearing, at the end of which a final ruling will be issued.

  • The debtor may terminate the process at any time by paying the total amount owed to the lender, including the legal fees and any related costs.

  • Three auctions on different dates are scheduled for each foreclosure. Bidders are invited through an announcement published in the judicial newspaper that sets the time, date, place, and the baseline for the bids at each auction.

  • As a condition to participate in the auction, each bidder must provide a certified check for an amount equal to 50 per cent of the opening bid.

  • The winning bidder will have three business days to pay the outstanding balance. Failure to complete the payment implies forfeiting the deposit, which is in turn credited to the debt. In such an event, the judge will announce three new auctions.

  • The starting bid in the first auction is the base value, which is agreed to by the parties in the mortgage document (usually the total amount owed for principal and interest).

  • If the first auction is unsuccessful because no bidders attended, the foreclosure will move on to the second auction. The starting bid will be 75 per cent of the baseline value. If the second mortgage is also unsuccessful, a third and final auction will be held in which the opening bid will be 25 per cent of the baseline value. As an example of how this procedure works, bids for a property with a baseline value of US$100,000 will begin at US$75,000 in the second auction, and US$25,000 in the third.

  • In the event of a successful bid and payment of the offered amount, the judge will transfer the property to the new owner and instruct the police to assist him or her in taking possession of the property.

  • If no auction is successful, the judge will assign the property to the lender as partial payment. The value of the assignment will equal the opening bid of the last auction. The debtor will continue to be liable for paying the outstanding balance of the debt; therefore, the lender may seek payment by seizing other assets owned by the debtor.

As referred in question 26, non-judicial foreclosure also exists in Costa Rica. Trustees of guaranty trusts upon creditor’s default execute foreclosure. Non-judicial foreclose must always follow due process through a procedure based on judicial foreclosure.

  1. What rights does a tenant have by law that cannot be varied by agreement or a lease?

The Tenancy Act contains mandatory provisions (law of public order) that are meant to protect the tenant’s interests. Said legal provisions cannot be relinquished by the will of the parties. For instance, tenants have the right to establish a lease agreement for a minimum period of three years, which is a period that cannot be varied by the lessor. Article 26 of the Tenancy Act provides for additional general rights that the lessor must respect in favour of the tenant, including guarantee of the safe enjoyment of the property. Among other rights that cannot be varied: the lessor may not block or throttle the basic utilities (potable water, electricity, sewers). Moreover, no increases or readjustments to the lease rent may exceed the limitations established in article 67 of the Tenancy Act, although it is important to point out that such increases do not apply to rents payable in US dollars.

  1. How long can someone own property as leasehold? What statutory or legal rights does a long-term leasehold owner have with respect to its property?

There are no maximum limits for holding property as leasehold. However, as mentioned previously, the Tenancy Act provides a minimum term of three years for housing lease agreements to the benefit of the tenant. Article 44 of the Tenancy Act provides the main requirements that the tenant must meet, including: (i) Prompt payment of the rent, (i) abiding by the use for which the property was leased, (iii) maintaining the property in good condition, (iv) delivering the property at the end of the lease, (vi) respecting the activities that are allowed based on the lease agreement. In connection to item (i), failure to pay the stipulated rent for more than seven consecutive calendar days grants the leasehold owner the right to initiate eviction procedures.

  1. What are the most common reasons for a dispute or a conveyance of real property in your jurisdiction not to be completed?

Examples of real estate disputes may usually involve individuals and/or foreign entities against the state. For example, in connection with the maritime zone programme as described above: disputes may arise between private individuals, disputes may arise due to the existence of duplicate titles on real property, or there may be registration inconsistencies or transactional frauds that could block the conveyance of real property.

  1. Does your legal system incorporate or defer to the laws of another country?

As a civil law jurisdiction, with a significant influence from the Napoleonic Code, rulings in connection to real estate and ownership will be based upon the written law. This is a major difference in relation to the common law jurisdictions, since the rulings by previous courts (precedents) are not binding in Costa Rica, but the written norm will prevail when they are being interpreted. There is respect and deference to the rule of law and the laws of other countries, but real property issues are mainly ruled by written acts, especially the Civil Code and the Civil Procedure Code.

  1. Is there a standard schedule of legal fees for real estate transactions? If so, what is it, and is it based on a percentage of the transaction value or some other methodology?

There is a minimum standard schedule for legal fees in real estate transactions, which is established by the Costa Rican Bar Association and the government by means of an executive decree. The current schedule sets a fixed amount of 1 per cent and

1.25 per cent for legal fees calculated based on the total value of the transaction. As of the enactment of the new Tax Law, all notary services are subject to the 13 per cent VAT. However, transactions for real estate are not subject to VAT

 

Creditos: COLBS STUDIO LEGAL

 




Wondering How Much to Charge For Rent? 8 Key Factors to Consider

Wondering How Much to Charge For Rent? 8 Key Factors to Consider

October 11, 2021

Properties in Costa Rica

If you have a spare house or room, renting it out can be a great idea to earn an extra source of income. You may also consider renting if you are moving to another location but don’t want to sell your house. Whatever be the reason, renting out a property is beneficial in most cases, provided that you have evaluated some pros and cons. Taking on a tenant can help you pay off your mortgages in a shorter period. The extra income you earn when you list your house for rent can also be put to good use by investing it in a financial goal like your retirement plan. So once you’ve decided that you want to rent out your house, you will want to consider some important factors before deciding on how much to charge for rent.

According to a TransUnion survey, around 84% of landlords said their biggest concern when it came to renting their property was payment. If you plan on staying as an independent landlord, the key to maximizing your income from rent is by fixing a rental rate that not only profits you but is also priced in a way that attracts responsible tenants. It can be quite a challenge to decide on the perfect rent. If you are tempted to set an aggressively high price for your property, hold that thought, because charging an unreasonably high premium could mean that your house has no takers, and it remains vacant for a long time. On the flip side, if your rent is too low, it will affect your income and bargaining power.

Let us now see what factors you should consider when deciding your rent, along with some hacks for estimating a good rental rate, and the importance of counting in several factors that landlords often tend to miss out on:

1. Know the rent control laws of your area

This is the foremost step in deciding the rental rate – knowing whether you are governed by rent control or not. All states do not have rent control laws. The states that do have rent control have a cap on the maximum rent you can charge from your tenants as well the increment in rent allowed every year. These laws work at the city level, so the average rental rate under rent control laws varies from city to city. Some of the cities that run under rent control are New York, Oregon, Washington D.C., Maryland, California, and New Jersey.
To check whether your city falls under the purview of rent control, you can consult an attorney or refer to government websites.

2. Do your research

The next thing you want to do after confirming rent control is to find out how your property fares against other similar properties in your area. This is called competitive research and you need to do it to ensure that you’re not pricing your property too high or too low. You can compare your property to others based on the number of bedrooms, bathrooms, and amenities on offer. Using your research, map out an average baseline to help you decide how much you can charge.

Besides the features of your property, your neighborhood also determines the rental rate based on the conveniences and services nearby. Tenants prefer neighborhoods that are safe and close to their office/school. However, remote work setups are slowly changing this preference.

Top amenities that tenants look for:

  • Parking space
  • Security
  • Walkability from nearby schools, markets, restaurants
  • Outdoor recreation options

3. Monitor local ups and downs in the market

The local property market is likely to experience highs and lows as time goes by. This can be due to many factors. You can adjust your rental rate accordingly. You can also choose to modify the rates when it is time to renew the lease. A lot of landlords have been kinder towards their tenants since it has been a rough year for many people.

4. Use a rental calculator

There are many tools available online to help you calculate an estimated rent for your property. Before you post your room for rent, all you have to do is enter certain parameters such as the area you live in, the size and square footage of the property, amenities offered, and other similar factors.

5. The 1% rule

There’s an old saying that the rent of a place should be approximately 1-2% of the total value of the property. While this rule may give you a broader sense of how much you should charge as rent, it may not factor in many factors such as inflation and rise in property prices and taxes as compared to the rent prices.

6. Tis the season

Seasons greatly affect rental rates. It is seen that the demand for rental property rises during spring and summer but quiets down around winter. One of the reasons for this trend can be that people do not like to move in the cold season or during the middle of a school year.

7. Repairs and maintenance

Your property is likely to incur costs related to repair, maintenance, and facilities such as gas, electricity, and water over time. You need to factor these costs into the rent as well. You can use a simple spreadsheet to calculate these costs.

8. Rent collection

Lastly, it is important to figure out how you will collect the rent. A lot of renters prefer paying their rent online. You can work out a way to collect rent that is convenient for both you and your tenant. Some ways to collect rent are through a property manager, mail, direct deposit, online payments, or rent collection apps.
Once you’ve estimated how much you want to charge as rent, you should look into how to list your house for rent. One of the most common ways to post a room for rent is through a real estate agent but they’re most probably going to ask for a hefty commission, sometimes equivalent to a month’s rent. An easy way to list houses for rent is to publish your real estate listing online on Cirtru and reach out to countless potential renters easily!



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